Hurricane Maria losses could reach $85bn

Insured losses for Hurricane Maria in the Caribbean will be between $40 billion and $85 billion with Puerto Rico accounting for more than 85 percent of the loss, according to catastrophe modelling firm AIR Worldwide.

Hurricane Maria was another major catastrophe for the central Caribbean region, compounding the damage done by Hurricane Irma just two weeks ago. It spared a few islands devastated by Irma, but brought additional destruction to others, and wrecked some locations that had escaped Irma’s wrath.

Hurricane Maria slammed into Dominica on Tuesday, September 19 as a Category 5 storm, devastating the island and triggering widespread flooding in adjacent Guadeloupe. It weakened briefly to a Category 4, then intensified again to Category 5 as it cut west-northwest over the warm waters of the northeastern Caribbean Sea. The eyewall brushed the western edge of St. Croix in the Virgin Islands on Tuesday night, bringing storm surge and large waves to southern shores.

Maria was downgraded slightly to Category 4 before it made landfall on Puerto Rico on September 20 with maximum sustained winds of 155 mph. This was Puerto Rico’s first direct landfall from a Category 4 tropical cyclone since the notorious San Ciprian hurricane in 1932.

AIR’s estimates include “demand surge,” which is the increase in the cost of labor and materials that is often observed in the aftermath of major catastrophes. Demand surge translates to an increase in the cost of rebuilding that ultimately results in higher insured losses than would otherwise be the case. Demand surge arises from shortages and potential constraints in the movement of labor, and it can be exacerbated when multiple disasters occur in a short timeframe, as is the case with hurricanes Harvey, Irma, and Maria.

AIR’s modeled insured loss estimates also include insured physical damage to onshore property (residential, commercial, and industrial) and autos due to wind and precipitation-induced flooding; insured loss to contents; losses due to business interruption; losses to industrial facilities; and additional living expenses (ALE) for residential claims.

AIR’s estimates do not include losses to infrastructure; losses from hazardous waste cleanup, vandalism, or civil commotion whether directly or indirectly caused by the event; losses to offshore properties, pleasure boats, and marine craft; losses resulting from the compromise of existing defenses (e.g., levees); and losses to uninsured properties.

Get the latest re/insurance news sent to your inbox every day -  Sign up to our free email newsletters

Lloyd’s appoints SCOR exec as new head of risk aggregation

Ironshore expands agency business into US and London Markets

Pool Re publishes first quantitative assessment of terrorism

Insurers must reduce risks to customers’ data, claims start-up founder

MarketScout unveils $25m insurtech venture fund

AXIS reveals time table to finalise Novae deal

Starr seeks geographical and product line expansion with new hires

Don't miss our insurtech email newsletter - sign up today