RMS Estimates $67 Billion In Losses From Ian
RMS estimates total private market insured losses from Hurricane Ian to be “between US$53 billion and US$74 billion, with the best estimate of US$67 billion.”
The hurricane hammered Florida, causing catastrophic damage and over 100 deaths.
A spokesperson said, “RMS also estimates the National Flood Insurance Program [NFIP] could see an additional US$10 billion in losses from storm surge and inland flooding as a result of the event.
| Wind incl. coverage leakage | Storm Surge excl. NFIP | Inland Flood excl. NFIP | Total* | Best Estimate | |
| Private Market Insured Loss | $46 – $67 bn | $6+ bn | $1+ bn | $53 – $74 bn | $67 bn |
*Losses rounded to nearest billion
“Ian was a historic and complex event that will reshape the Florida insurance market for years to come. Given the complexity of the event and the multiple drivers of the loss, our ability to deploy multiple RMS field reconnaissance teams to conduct damage assessments throughout Florida, including the heavily affected areas of Fort Myers and Cape Coral along the southwest coast, has been a critical component of our analysis. Their assessments have proved invaluable in helping our modeling teams to reconstruct and validate the extent and severity of Ian’s wind and water impacts, and our assessment of the magnitude of the various drivers of the total industry loss,” said Mohsen Rahnama, Chief Risk Modeling Officer, RMS.
A spokesperson said, “The RMS estimate reflects losses from property damage, contents, and business interruption, across residential, commercial, industrial, automobile, infrastructure, watercraft, and other specialty lines. Given the complexity of this event and the multiple loss drivers, our ability to couple our detailed review of satellite and digital imagery together with the deployment of multiple RMS field reconnaissance teams have proved to be pivotal in establishing losses across the various business lines. The estimate also considers the impacts of post-event loss amplification [PLA], inflation, and non-modeled sources such as the Assignment of Benefits and litigation.”
“Much of the building stock affected by Ian was also impacted to varying degrees by Hurricane Irma in 2017 and Hurricane Charley in 2004. In some cases, roofs or structures were replaced after Irma and performed well in Ian. However, where buildings were not upgraded to recent codes, Ian’s destructive wind and storm surge will cause widespread roof replacements or total losses. In the loss estimation process, we also considered key aspects of the Florida Building Code, including mandatory limit extensions for ordinance and law, and the application of the 25 percent roof replacement rule. Aside from property damage, we expect significant losses to automobile and watercraft lines in this event due to fewer evacuations in the worst-affected region,” said Jeff Waters, Staff Product Manager, Product Management, RMS.
“A sizable portion of the losses from Ian will be associated with post-event loss amplification and inflationary trends. A combination of high claims volume, additional living expenses related to the massive evacuation efforts, prolonged reconstruction in the worst-affected areas, and the prevalent higher-than-average construction costs will contribute to a significant economic demand surge. Additionally, we expect the Assignment of Benefits and litigation – despite recent legislative efforts to curb their misuse, to influence the overall loss severity, especially in cases where coverage leakage of water losses onto wind-only policies is likely. All these social inflation factors will lead to complex and lengthy claims settlement processes in this event, amplifying loss adjustment expenses and corresponding claim costs,” said Rajkiran Vojjala, Vice President, Model Development, RMS.
“RMS expects the majority of total insured losses from Ian to be driven by wind. However, a sizable portion [up to 25 percent] of the total insured losses [incl. NFIP] will be driven by surge and flood. While insured wind losses and losses to the NFIP will be driven by residential lines, surge and inland flood losses to the private market will be dominated by commercial, industrial, and automobile lines.
“In addition to the U.S., Hurricane Ian also impacted parts of the Caribbean, notably Cuba, with strong winds, heavy rain, and flooding. While Cuba saw severe economic and infrastructure damage in the event across many areas, RMS estimates insured losses in Cuba will be minimal due to low insurance penetration in the region.”
