Initial estimates point to Hurricane Idalia insured loss of below $10 billion

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Initial estimates for insurance industry losses from Hurricane Idalia, which made landfall in Florida on Wednesday as a major Category 3 storm, are lower than previously feared and point to insured losses of less than $10 billion.

florida-stormSo far, there’s been a range of early estimates for insured losses from Hurricane Idalia, ranging from as low as $3 billion to around the $9 billion mark.

The Big Bend area of the Florida coast where Idalia made landfall is far less densely populated than the region devastated by Hurricane Ian last year. In contrast to Hurricane Idalia, there were approximately 1 million people within 30 miles of landfall for Ian, while there were about 38,000 people within that distance for Idalia, according to an AccurateWeather report.

AccuWeather’s preliminary estimate of the total damage and economic loss from Hurricane Idalia in the southeastern United States is $18-20 billion.

AccuWeather’s report only provides an economic loss estimate for Idalia, but others have issued early insured loss estimates.

BMS Re, the reinsurance arm of global broker BMS Group, has said that it feels confident of an insured loss of between $3 billion and $6 billion, with the firm stating that the lower end of this range is more likely given the size of the wind shield and inland impacts.

“This is not the devastating event that was feared even 24 hours ago,” said the broker.

Meanwhile, reinsurance broker Gallagher Re has estimated a low to mid-single-digit billion-dollar loss for the insurance industry from Idalia, including expected payouts from the National Flood Insurance Program (NFIP).

Gallagher Re noted that the overall cost will be higher, and also highlighted the high level of inflation impacting the State of Florida at this time.

“The latest Consumer Price Index data from the US Bureau of Labor Statistics suggested that inflation rates are running nearly double the entire US average. This dollar pressure, in addition to standard spikes in product costs following a disaster (known as demand surge) and still-elevated construction / labor costs, is expected to drive the cost of claims higher than typically expected,” said the firm.

According to a Reuters report, UBS bank has estimated average insured losses of $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% likelihood of losses of $25.6 billion, based on August 28th data.

As well as its initial impacts in Florida, the hurricane has also impacted Georgia and the Carolinas, so there will be more losses for the industry from those regions from flooding and wind damage, which may not have been included in the early estimates.

So, the majority of sources point to an industry loss of less than $10 billion from the impacts of Hurricane Idalia, with a suggestion that it could fall to the lower end of the current $3 billion to roughly $9 billion range.

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