RMS Models Economic Losses From Hurricane
Analysis by RMS, a global risk modeling and analytics firm, has found that economic losses caused by wind, storm surge, and inland flood from Hurricane Harvey could be as high as U.S. $70-90 billion.
“The majority of the overall loss is likely to be from inland flooding in the Houston metropolitan area, where there are over seven million properties representing over $1.5 trillion in value,” RMS said.
“Considerable uncertainties around final losses remain, as the flooding is still ongoing and will take some weeks to come to an end. Accordingly, this preliminary RMS analysis of potential economic loss will be updated – and it’s emphasized that today’s announcement is not the RMS official insurance loss estimate.
“The component of the overall economic loss caused by wind and sea storm surge continues to be very modest in our assessment, because the storm did not affect the most highly-developed coastal areas. Initial recreations of the hurricane suggest less than 10 percent of the economic loss will be driven by wind and storm surge damage to property and off-shore platforms.”
Michael Young, RMS head of Americas climate risk modeling, said: “Hurricane Harvey has already broken all U.S. records for tropical cyclone-driven extreme rainfall, with observed cumulative amounts of 51 inches.
“And with the rain still falling heavily and the waters rising, the situation is too fast-moving to be stating with certainty what the losses in Texas could be. We have used the power of the new RMS U.S. High Definition Flood Model to give valuable, preliminary insights to our clients. It will be followed by an official insurance loss estimate in the coming weeks.”
