Hurricane season 2017 will leave many scars. A succession of September Hurricanes have left trails of devastation across many Caribbean Islands, as well as caused widespread flooding and loss across many southern states of the U.S. In fact, it was the most active September for tropical cyclones in the Atlantic on record using the Accumulated Cyclone Energy measure.
This year’s hurricane season is also setting new meteorological and insurance industry precedents. A range of estimates are already starting to emerge for Hurricane Maria, but a consensus is yet to be reached. Hurricane Irma ravaged a broad swathe of Florida, amassing insured losses that have set new records in terms of state-wide damage as it moved across the Florida Keys and made landfall near Cape Coral, before heading north, parallel to the west coast of the panhandle.
These two storms followed on from Hurricane Harvey, which hit in late August and brought prodigious rainfall accumulations across Texas as it made landfall at peak intensity of Category 4, and moved inland. This storm moved-slowly for the next few days and actually came back offshore into the Gulf of Mexico, before headings east to take more heavy rain into Louisiana.
After 12 years without a major hurricane (Category 3 or higher) hitting the U.S. coastline, this month we had two hit in Harvey and Irma, and then Puerto Rico felt the full force of a Category 5 storm as Maria devastated the island. Many of the Caribbean Islands, especially the Leeward Islands have also been hit hard with barely time to recover between storms.
Lack of insurance
The protection gap is wide for many of the Caribbean Islands, with uninsured property and communities in desperate need of support and recovery efforts, and aid can be slow to reach those who need it.
This problem is partly addressed by the Caribbean Catastrophe Risk Insurance Facility, which pays out quickly (within 14 days of a hurricane) based on wind and excess rainfall triggers. But the level of support this provides, although fast, is limited to around $50 million, which does not cover anywhere near the extent of the damage observed so far. If sovereign parametric triggered products can be sustainably scaled, they may help further close the protection gap in the longer term.
Hurricane season officially ends on November 30, but we’ve already seen massive impacts from this season, which are resonating throughout the industry. By tomorrow, the season’s tally is expected to be 14 storms with the advent of Tropical Storm Nate, which the National Hurricane Center currently expects will become Hurricane Nate by Sunday. Although the peak has passed, there’s still potential for further storms to add to the losses already incurred.
Insured losses of over $100bn have been estimated from Harvey, Irma and Maria. However, the market has yet to converge on an accurate total so far from the hurricane season. Loss estimates, for Maria especially, have varied widely, which highlights the need for multiple views when figuring out the impacts that the market will have to absorb.
Stay tuned for my next blog: A hurricane season of record-breaking storms – Part 2: What will the future hold?
As part of ongoing efforts to evaluate, validate and build industry models that can help in the assessment of losses from storms such as the recent hurricanes, the Willis Research Network collaborates with a wide range of leading scientists around the world to provide new insights, data and applications, to be used for Willis Towers Watson’s client services. Willis Research Network experts from Columbia University, the National Center for Atmospheric Research, and Wharton Risk Management and Decision Processes Center will present some of their recent findings at the WRN Autumn Seminar (for more information check the WRN events page). To register to attend this event please email firstname.lastname@example.org.