Billions of USD in economic losses anticipated for Hurricane Otis: Aon

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Hurricane Otis, the strongest hurricane ever to hit Mexico, has not only left a trail of destruction but is poised to deliver a staggering blow to the local economy, with initial expectations from independent experts suggesting total economic losses will likely reach into the billions of USD, according to a new report from Aon.

Aon’s weekly cat report released on October 27, highlights the dire economic consequences of Hurricane Otis. With Acapulco boasting a significant commercial, industrial, and residential exposure, insurers are bracing for a significant industry event.

Hurricane Otis, which unexpectedly strengthened into a Category 5 storm just hours before making landfall in Acapulco, has already caused catastrophic damage.

The storm, known for its rapid intensification, struck the city in the early hours of October 25, with estimated maximum wind speeds of 165 mph (270 kph), becoming the most potent hurricane to ever make landfall in Mexico.

In addition to its historical intensity, Hurricane Otis has brought catastrophic wind gusts and heavy rainfall, causing extensive damage, especially in the Acapulco metropolitan area.

Initial reports confirm 27 casualties, and the death toll is expected to rise. The true extent of the damage is believed to be much more severe, if not catastrophic, for Acapulco, the report noted.

Images circulated in the media and on social platforms display widespread flooding, debris-laden streets, and thousands of windows blown out in resort hotels and high-rise buildings.

Local officials have reported that all power lines in the metro area were knocked down, adding to the challenges faced by residents and recovery efforts.

A large-scale recovery and relief operation is currently underway in the affected areas, with damage assessments set to continue in the following weeks. The community of Acapulco, along with national and international support, is working tirelessly to recover from one of the most intense hurricanes to ever strike this region.

The true extent of Hurricane Otis’s impact will become clearer as the damage assessments progress, but one thing is certain: the road to recovery for Acapulco will be long and challenging, both in terms of human and economic costs, Aon noted.

Catastrophe risk modeller CoreLogic has estimated that the insurable loss from wind damage caused by Hurricane Otis, which made landfall as a Category 5 storm over the greater Acapulco, Mexico area on Wednesday morning, is between $10 billion and $15 billion.

Prior to Otis, Hurricane Pauline in 1997 was the most recent significant event to hit Acapulco, although this brought only Cat 1 force winds to the area, and heavy rainfall.

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