Losses from Hurricane Dorian estimated between $15bn and $25bn as storm heads towards land

Upgraded to a hurricane, storm Dorian has been described as "extremely dangerous" by the National Hurricane Center (NHC) with the potential to become a category 4 hurricane as it tracks towards Florida.

The latest forecasts suggest landfall will be late on Sunday September 1 or early Monday September 2 US east coast time with winds of up to 132mph. The weather system is predicted to pass over the northern parts of the Bahamas, before turning towards Florida.

Hong Kong based ILS Advisers, part of the HSZ Group, said that as hurricane Dorian is the first significant event of the year “the variance of loss potential is therefore at its highest”.

The advisers explained that uncertainty remains over losses as a category 3 storm will “predominantly erode inner deductibles of aggregate contracts and have less effect on directly attaching to reinsurance and retrocession occurrence layers”. While a category 4 and above event “would typically begin attaching and impacting reinsurance and retrocession layers directly”.

Early estimates put industry losses between $15 billion and $25 billion, ILS Advisers said.

“We are continuously monitoring and tracking this event, working together with those we are invested with, as well as our partnering modelling firm, to quantify the likely impact on the portfolio. Further, we are closely monitoring and communicating with the ‘live cat’ market for opportunities to proactively respond, where we feel would be strategically advantageous to the fund.

“To note, we have strategically repositioned our portfolio proactively over the recent months to increase the amount of geographical and peril diversification. This proactive portfolio management has lowered our exposure US Wind relative to previous years. As we approach the 1/1 renewal year, we are continuing to re-engineer the portfolio towards our targeted position.”

Yesterday (Thursday August 29) global property analytics and solutions provider CoreLogic, estimated that 668,052 single-family and multifamily homes along the east coast of Florida could be affected by the hurricane. It estimated a reconstruction cost value of around $144.6 billion.

Based on earlier category 3 storm projections (forecast by NHC on 29 August at 5pm EDT), the analysts warned of storm surge damage of “100 percent destruction of all at-risk homes” at landfall, although they added that this was a worst case scenario.

They said “as hurricane Dorian approaches Florida, its path will become more certain and the metropolitan areas at risk will narrow”.

Get all the latest re/insurance industry news with our daily newsletter -  sign up here.

Sirius seeks to streamline insurance underwriting with new global structure

Green groups pressure AIG not to insure Australian mining project

Apollo, Athene strike acquisition deal with GE Capital unit

Paris-based underwriting agency launches ‘quick to set up’ parametric cover platform

Landmark taps head of global professional indemnity from Liberty

Berkley One appoints new chief claim officer from Chubb

Feature:  10 ways insurers are using insurtech to drive new business