Insured losses from Hurricane Erick, which made landfall last week in southern Mexico, are expected to remain limited, according to AM Best.
Parametric insurance contracts are unlikely to be triggered by the storm.
Hurricane Erick struck Mexico’s southern Pacific coast last Thursday as a Category 3 storm, after reaching Category 4 strength prior to landfall.
AM Best stated that the primary exposure for insurers operating in the Oaxaca and Guerrero regions is expected to result from business interruption, caused by extended power outages, flooding, and food supply disruptions.
Material losses to commercial and residential properties, including high-value hotels and resorts, are projected to be relatively minor.
While Erick is the strongest hurricane ever recorded along Mexico’s Pacific coast this early in the season, AM Best estimates that insured losses will remain well below the $1.97 bn recorded from Hurricane Otis in 2023.
Salvador Smith, Associate Director at AM Best, stated that Mexico’s insurance industry remains strongly capitalized and maintains adequate catastrophe reserves to reduce the financial impact of events such as Hurricane Erick.
Mexico’s insurance industry is strongly capitalised and has sound levels of catastrophic provisions aimed at mitigating the effect.
Salvador Smith, Associate Director at AM Best
He added that AM Best will continue monitoring the storm’s financial implications on rated insurers, including credit risk with counterparties and insurer liquidity.
About Hurricane Erick
Hurricane Erick struck Mexico’s southern Pacific coast in mid‑June 2025. It formed as a tropical depression on June 16, upgraded to a tropical storm by June 17, and rapidly intensified to Category 4 with peak winds of ~145 mph and central pressure of 939 mb.
Erick weakened to Category 3 before making landfall near Oaxaca on June 19, with sustained winds near 125 mph.
Erick delivered heavy rainfall—up to 250 mm—in Oaxaca and Guerrero, triggering flash floods and mudslides.
The storm caused extensive power and mobile network outages, impacting at least 30,000 people in Puerto Escondido and 277,000 overall. The event claimed at least 23 lives, injured 28, and left two missing. Economic losses included ~Mex 2 bn (US $105 mn) in Oaxaca and ~Mex 1.88 bn (US $99 mn) in Acapulco.
Insurers are expected to face mainly business‑interruption losses due to prolonged outages, flooding, and supply disruptions in Oaxaca and Guerrero.
Damage to commercial and residential structures—including resorts—should be limited. Parametric insurance triggers are unlikely, as Erick did not meet threshold criteria.
