RMS pegs Hurricane Hanna insured losses at up to $400m

Risk modelling firm  RMS has estimated that the US insurance losses from Hurricane Hanna will not exceed $400 million, including losses to the National Flood Insurance Program (NFIP) of $100 million or less.

Hurricane Hanna was the eighth named storm of the 2020 North Atlantic hurricane season. It made landfall on Saturday, July 25, 2020 on Padre Island, Texas as a Category 1 hurricane on the Saffir-Simpson Hurricane Wind Scale with maximum sustained winds of 90 mph (150 km/hr). Hanna maintained this intensity and made a second landfall shortly after in Kenedy County.

RMS expects losses to the NFIP to represent approximately $100 million or less of the total insured loss estimate. Texas has the second highest number of NFIP policies-in-force in the US, many of which are located in coastal areas impacted by storm surge from Hanna.

The total loss estimate includes property damage and business interruption from wind and storm surge-driven coastal flooding to residential, commercial, industrial, and automobile lines of business.

It also includes wind-driven damage to offshore platforms in the western Gulf of Mexico; however, offshore platform loss constitutes a small fraction of the overall insured loss.

According to RMS, storm surge losses reflect the impact of coverage leakage, an escalation in claims severity for wind-only policies in instances where wind and water hazards co-exist in residential lines of business. Losses associated with inland flooding are expected to be negligible because the storm maintained its forward motion after landfall and only caused high rainfall totals in isolated areas.

Jeff Waters, senior product manager, RMS North Atlantic Hurricane Models, said: “Wind and storm surge-driven losses for Hanna are expected to be consistent with losses projected by RMS’ HWind forecast product suite prior to landfall. The storm made landfall in southern Texas as a Category 1 hurricane with stronger winds than expected. However, the impacted region is an area with low industry exposure.”