By Jeff Dunsavage, Head of Research Publications and Insights, Triple-I
Insured losses from Hurricane Isaias are expected to settle at the low end of the low- to mid-single-digit billions of dollars, according to Gallagher Re. That figure includes anticipated claims to the National Flood 鶹 Program (NFIP), which covers flood losses most standard homeowners policies exclude.
Isaias made landfall on October 9 near Destin, Fla., in the western Florida Panhandle, as a weakening Category 2 storm packing maximum sustained winds of 105 mph. The storm’s track shifted slightly eastward, carrying its strongest winds away from the densely developed Pensacola area and into a less populated stretch of coastline. That shift, combined with a tight radius of maximum winds, meant the storm’s worst winds largely missed the region’s biggest concentration of insured property.
The overall economic cost – including underinsured and uninsured losses – is expected to run roughly 40 to 50% higher than the final insured loss total, the Gallagher report says, due largely to inland flooding that was registered across several states.
“Current NFIP take-up rates, as of September 30, in coastal Alabama, Mississippi, and the Florida Panhandle generally range from roughly 10% to 25%, depending on the county or locality but quickly diminish to just 2% to 5% or less across many inland counties,” the report says. “As a result, a substantial portion of water-related residential and commercial property damage is expected to fall outside the insurance sector, contributing to a notable protection gap and elevating the broader economic impact on households, businesses, and state / local government recovery costs.”
Given abundant reinsurance market capital, Isaias is unlikely to influence upcoming January 1 reinsurance renewal discussions, Gallagher said.
Isaias peaked as a Category 3 hurricane, with one-minute sustained winds of 120 mph. That strength didn’t last. Wind shear — strong upper-level winds that disrupt a hurricane’s internal structure — tore at the storm’s core as it neared land, degrading its eyewall and weakening it to Category 2 by the time it made landfall.
Isaias dropped torrential rain from Alabama to North Carolina, triggering notable inland flooding in several communities along its path. Storm surge set a notable mark in Panama City, Fla., where water rose more than 5.6 feet above mean higher high water – the standard reference point for normally dry land. That was the second-highest reading ever recorded at that location.
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