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Verisk estimated $30-50 bn insured property losses from Hurricane Milton

Verisk estimated $30-50 bn insured property losses from Hurricane Milton

Verisk has estimated insured onshore property losses from Hurricane Milton between $30 bn and $50 bn. These estimates come from Verisk’s Extreme Event Solutions group and include wind damage, privately insured storm surge, and precipitation-induced flood losses following the hurricane’s landfall in Florida.

The majority of these losses are attributed to wind.

The loss estimate covers damages to residential, commercial, and industrial properties, along with automobiles. This includes coverage for building damage, contents, time element, and the impact of demand surge.

However, the estimate does not account for payouts from the National Flood Insurance Program (NFIP) or other non-modeled losses, such as tornadoes caused by the storm.

Verisk estimated $30-50 bn insured property losses from Hurricane Milton

Karen Clark & Co. (KCC) provided a similar estimate, placing privately insured losses from wind, storm surge, and inland flooding in the U.S. at around $36 bn.

KCC’s estimate includes damages to properties and vehicles, as well as business interruption. It excludes boats, offshore properties, and NFIP losses. The loss estimates are based on KCC’s high-resolution U.S. Hurricane Reference Model.

In contrast to Hurricane Helene, the majority of damage from Milton was wind-related, meaning more of the damage is likely to be insured.

Verisk noted that Milton and Helene struck Florida in quick succession, which could affect loss development and claims settlements for both events.

The firm mentioned that only hurricanes Ivan and Jeanne in 2004 hit Florida as major hurricanes within a shorter timeframe.

Verisk warned that determining which storm caused specific losses might pose challenges. Areas like Tampa Bay, Siesta Key, and the coast toward Fort Myers were hit by both storms, with significant storm surge from each.

This could also lead to aggregate flood limits being reached for some claims. While Milton is expected to result in higher insured losses than Helene, this is due in part to lower flood insurance uptake in areas impacted by Helene, especially inland regions affected by precipitation-induced flooding.

Verisk’s modeling of both storms indicates that the overall levels of damage between the two events are comparable but given much higher proportion of loss due to wind from Milton, a far higher percentage of the potentially insurable loss will be paid out by the insurance industry.

Included in the industry insured loss estimate are losses to onshore residential, commercial, and industrial properties and automobiles for their building, contents, and time element coverage, as well as the impact of demand surge. 

Verisk’s loss estimates do not include

  • Losses paid out by the National Flood Insurance Program
  • Losses exacerbated by litigation, fraudulent assignment of benefits, or social inflation
  • Storm surge leakage losses paid on wind only policies due to government intervention
  • Losses to inland marine, ocean-going marine cargo and hull, and pleasure boats
  • Losses to uninsured properties
  • Losses to infrastructure
  • Losses from extra-contractual obligations
  • Losses from hazardous waste cleanup, vandalism, or civil commotion, whether directly or indirectly caused by the event
  • Losses resulting from the compromise of existing defenses (e.g., natural and man-made levees
  • Loss adjustment expenses
  • Other non-modeled losses, including those resulting from tornadoes spawned by the storm
  • Losses for U.S. offshore assets and non-U.S. property

Meteorological History of Milton

Milton became a hurricane on October 6 and continued to steadily strengthen through the overnight hours, becoming a Category 2 hurricane, while moving generally eastward at a slightly faster pace. 

This strengthening overnight and into October 7 marked the beginning of a nearly unprecedented episode of rapid intensification for Milton that saw the hurricane become a major hurricane around daybreak and reach Category 5 intensity around midday.

Milton would continue strengthening during the second half of the day, reaching its peak intensity that evening with maximum sustained winds of 180 mph and a minimum central pressure of 897 mb as recorded by a Hurricane Hunters mission, making it the fifth lowest pressure of any Atlantic hurricane ever recorded.

Milton’s central pressure dropped an astounding 84 mb in 24 hours (the third fastest Atlantic basin rapid intensification on record, behind Felix and Wilma), and in less than 24 hours, the system had gone from a fledgling Category 1 hurricane to a powerful Category 5 storm. 

On October 9, conditions began to deteriorate across the southern Florida Peninsula as Milton’s outer bands began to reach shore, led by a robust tornado threat owing to the highly sheared environment over Florida produced dozens of reports across the southern part of the state during the day.

Several of these tornadoes caused structural and roof damage to buildings in populated areas like Fort Myers on the Gulf Coast and Vero Beach on the Atlantic Coast.

Yana Keller by Yana Keller