The deadliest hurricane in 11 years has struck around a fortnight ago. After tearing a path through the Caribbean, across Haiti and Eastern Cuba, through the Bahamas and then along the east coast of the U.S., it was finally absorbed into a frontal weather system heading eastwards across the Atlantic.

Meteorological timeline

Hurricane Matthew lasted for nearly a fortnight. Hurricane Hunter investigations initially recorded tropical storm force winds on the 27th of September, but it took until the 28th of September after further reconnaissance flights to reveal a closed circulation in the pressure pattern just west of Barbados, and it was at this point that Tropical Storm Matthew was named. The storm moved steadily westwards as it gathered strength and became a hurricane on the 29th of September.

Over the warm waters and favourable atmospheric conditions, it underwent a period of explosive intensification, doubling its wind speed within 24 hours. This took the hurricane from Category 1 to Category 5 on the Saffir-Simpson Scale in just a day. It achieved a maximum intensity of Category 5 just north of the Colombian coastline.

Hurricane Matthew was the first Category 5 hurricane in the Atlantic since Hurricane Felix in 2007

Hurricane Matthew set a new record for the southernmost Category 5 hurricane to ever be recorded in the Atlantic Basin, being located at only 13.3 degrees North, and was also the first Category 5 hurricane in the Atlantic since Hurricane Felix in 2007.

The storm faltered and slowed slightly as it underwent an eye-wall replacement cycle, but Matthew maintained itself as a powerful Category 4. It then took a right turn and set a course for the Windward Passage, between Haiti and Cuba. In a hurricane, the stronger winds are normally expected on the right hand side of the storm, and therefore Haiti bore the worst of the storm as it arrived.Still as a Category 4 hurricane, and the strongest storm to hit the country since the 1960’s, it hit the coast near Les Anglais, with winds of 145mph (230km/h) on October the 4th. Later that day, it made a second landfall in Maisí, Cuba with winds around 140mph (220km/h).

Matthew interacted with the rougher terrain of these islands which weakened the storm, becoming a Category 3 as it advanced towards the Bahamas. It intensified again as it approached Nassau, and returned to a Category 4 strength for a time. Heavy rain and ferocious winds whipped through the Bahamas as the storm progressed more quickly towards the U.S. coastline.

The hurricane weakened again to a Category 2, as it neared Florida and followed the curve of the coastline. Matthew lashed coastal communities with torrential rain, damaging winds and a significant storm surge. A storm surge is considered to be the height of the water above the normal tidal levels, but Florida, Georgia, and North Carolina all saw longstanding records broken with surges of 4 to 8 feet recorded widely.

The hurricane moved northwards along the east coast of the U.S. as a Category 2 hurricane, gradually easing to a Category 1. It made a brief landfall in South Carolina on Saturday October 8th before heading offshore again and ending its run just off of the North Carolina coast.


Ravaging winds and torrential rain left isolated survivors without homes, clean water and food

Despite large scale evacuations, extensive news coverage and timely warnings, Hurricane Matthew had a huge impact to those in its path and it will take time for communities to bounce back. The insurance industry meanwhile has been given a very real test.


There is no doubt that the worst affected areas were in Haiti, where the humanitarian crisis is still very real, and will leave a long lasting impact. Southern Haitian towns devastated by the ravaging winds and torrential rain left isolated survivors without homes, clean water and food. Bouts of Cholera have been reported and the death toll may increase further. According to the Global Disaster Alert and Coordination System (GDACS) report, 473 deaths have been confirmed by the Haitian Government’s Directorate of Civil Protection with many more injured or missing, while Reuters are estimating over 1000 fatalities according to their interactions with local officials. The UN OCHA (UN Office for the Coordination of Humanitarian Affairs) estimated on the 11th of October that 1.4 million people in Haiti are in need of humanitarian aid. A Flash Appeal has been launched to raise USD$120 million to provide life-saving relief.

Cuba and the Bahamas

In Cuba, 90% of housing in Baracoa and Maisí municipalities (home to 110,000 residents) were severely damaged and 180,000 people were in need of food assistance. In the Bahamas, 95% of homes in Eight Mile Rock and Holmes Rock in the west of Grand Bahama, were also severely damaged. Damage is estimated to be at least USD$ 200 million for the Bahamas.

The U.S.

The U.S. has seen 38 deaths due to Hurricane Matthew so far. Widespread breaks in power supply with over a million people affected in Florida, 250 thousand people went without power in Georgia, and over a million were left without power at some point across the Carolinas. There were also widespread road blockages and flooding due to heavy rain and/or storm surges.

Insurance industry ripples

Estimates have varied widely within a range of around USD$ 16-40 billion

Early estimates were around USD$ 30-50 billion, but these estimates fluctuated as the storm approached the coastline, and as the forecasts evolved day by day. Now that the storm is over, and reports of damage have started to become more accurate over the last few days, estimates have begun to converge.

According to Reuters, at the end of last week some estimates were still around USD$ 25 billion, but these were slashed to USD$ 4 billion on Friday morning. Recent estimates, by KCC (Karen Clark Company), CoreLogic and Kinetic for example, have been between USD$ 4-7 billion. While economic loss, including non-insured properties, is still difficult to determine, estimates have varied widely within a range of around USD$ 16-40 billion.

Our teams in Willis Re North America are currently surveying the damage and collecting the relevant storm data to provide estimates for our clients. Detailed briefings will be available once the analysis is complete.

Anxious Cat bonds

Initial thoughts on potential loss were putting a number of cat bonds at high alert, but with the reduced insured loss estimates of late, most appear to be remaining intact. However, this uncertainty has caused ripples in the market according to the Swiss Re Global Cat Bond Index, which took its largest decline since 2012 due to the threat posed by Matthew. It is expected that the index will recover, if the cat bond market escapes major losses.

Parametric pay outs triggered

Matthew has initiated a pay out from the Caribbean Catastrophe Risk Insurance Facility SPC (CCRIF SPC) of a little over USD$20 million after the storm triggered the country’s tropical cyclone policy. This is the largest single pay out in the parametric insurance scheme’s history. Matthew also triggered excess rainfall payments to Barbados, St. Lucia, St. Vincent and the Grenadines while it was still a Tropical Storm, taking the total to just over USD$ 29 million. Insurance impact is limited to that which is covered in the insureds policies of course, but this is increasingly intertwined with government backed relief efforts through parametric insurance products and insurance pools, like the CCRIF SPC, as the protection gap (the difference between insured and economic loss) is slowly eroded.

Matthew and climate change?

Tropical cyclones may not necessarily become more frequent in the future but there is an expectation that they will become more intense

There has also been a fair amount of media attention made around certain comments on social media regarding Hurricane Matthew and climate change. It certainly is an important consideration to think about how this storm fits within the projected climate scenarios. There is still some uncertainty with exactly how the extremes of weather will change in a warmer climate system, but the general consensus in the scientific community is that tropical cyclones (aka cyclones, hurricanes and typhoons), may not necessarily become more frequent in the future when taking anthropogenic global warming into account, but there is an expectation that they will become more intense, as explored in my previous blog here.

There is still plenty to study, for example, the question of rapid, or explosive, intensification tends to occur for the most intense storms, so how might this change with different climate scenarios. Through the Willis Research Network (WRN) we have been researching both future climate extremes and the impact of tropical cyclones in current climate conditions. Our WRN Fellow at the National Center for Atmospheric Research (NCAR), Dr James Done, provided Willis Towers Watson with a quote to say: “The message is that hurricanes that do occur in the future, the major ones, will be stronger. The proportion of category four and five hurricanes could double or triple in the coming decades”. Dr Done was also quoted with a similar sentiment in a story by The Guardian, published during Matthew’s onslaught.

How we deal with the potential for increasing intensity of tropical cyclones over the coming years and decades is an open question. The insurance market has a built-in flexibility due to the yearly renewals and review of rates and pricing. However, new research into understanding the question of correlations of events across territories, increasing understanding of long term trends and their impact of extremes, and the application of ever-improving seasonal and longer range forecasting capabilities, all show great promise for improving our view of risk and building resilience to when devastating storms strike.

Catastrophe Briefings

During the life of Hurricane Matthew, “eVENT Hurricane Tracking Advisory” documents were regularly produced (example), along with complementary “Willis Research Network Hurricane Commentary” reports (example). If you would like to sign up to receive these briefings, you can join the Catastrophe Briefings email list here: Sign Up.

About Geoffrey Saville

Geoffrey Saville is a member of Willis Towers Watson's Analytics Technology Team, having joined the company in 2013…
Categories: Natural Catastrophe, Property, Reinsurance, Weather risk | Tags: , , , ,

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