Re/insurance broker Aon has released the highest industry loss estimates yet for the two major hurricanes that hit the U.S last year, estimating total re/insured losses of $11 billion for Hurricane Michael and $5.5 billion for Hurricane Florence. Hurricane Michael. Source: AP Photo/Gerald Herbert The updated figures came as part of Aon’s March Event Recap Reports, which also put economic losses from Michael at $25 billion and from Florence at $24 billion. Aon’s new estimates are significantly higher than its initial projections of around $8 billion for Michael, and are also above the most recent estimates from Munich Re, who put total re/insured Michael losses at $10 billion and Florence at $5 billion. Hurricane Michael made landfall in the Florida Panhandle on October 10, 2018 as a 155mph (250kph) Category 4 storm, causing widespread wind and coastal storm surge damage in Florida as winds gusted beyond 120mph (195kph) and water heights topped 20 feet (6 meters) in height. Additional wind and inland flood damage was recorded in Georgia, Alabama, the Carolinas, Virginia, and Maryland. The storm’s impact confirmed the assumption that older building stock without proper retrofitting – or ineffective newer construction – can be vulnerable to strong hurricane winds, Aon noted. Another overlooked component of the damages was the multi-billion dollar economic cost to agriculture, the broker added, with some crop output likely to be set back by several years before returning to pre-Michael levels. Michael’s unusually slow degradation of the wind field also led to extensive wind-related damage to property well inland from the landfall location. According to the Florida Office of Insurance Regulation, the total value of paid claims from Michael was $6.1 billion as of March 15, with 20.3% of claims still open (29,229 claims). Most claims filed were due to residential property damage, though a sizeable portion also included other lines of business (such as vehicles) and commercial property, Aon said. In total, more than 144,000 claims were filed in Florida alone. Hurricane Florence, meanwhile, made landfall in North Carolina on September 14 as a Category 1 storm with 90mph (150kph winds), although it peaked as Category 4 on its approach to the U.S. Florence caused coastal storm surge inundation, strong winds and catastrophic inland flooding, with states of emergency declared in North Carolina, South Carolina, Virginia and Georgia. Aon noted that the slow-moving nature of hurricane imposed unprecedented strain on local infrastructure and agriculture unaccustomed the volumes of rainfall brought by Florence. Around $18.5 billion (~77%) of damages of the total damages were uninsured, according to Aon’s figures, largely due to the significant water element of Florence and the low flood insurance penetration in the affected regions. “Florence highlighted the need to minimize the wide protection gap that exists across the United States for the flood peril,” Aon stated. “With only a small fraction of inland residences with active National Flood Insurance Policies (NFIP) in place, this leads to a higher risk of damage being left uninsured.” Compared with Florence, a much higher proportion of the damage resulting from Michael was caused by wind as opposed to coastal or inland flooding, meaning a more of the overall costs to physical properties were covered by typical homeowner policies. “However, a several billions of dollars in damage was incurred to the agricultural sector,” Aon noted. “A fairly sizeable portion of those losses were not covered by public or private insurance entities.” In January, Aon estimated that catastrophes caused around $90 billion of re/insured losses in 2018, covering about 40% of an estimated $225 billion of global economic costs.
Aon has revised its reinsurance industry loss estimates for Hurricane Michael and asset Florence , predicting significantly greater losses than initially predicted . The broker has now estimated Hurricane Michael losses at $ 11bn , up from its original $ 8bn estimate , and those from Hurricane Florence at $ 10 . Aon ’s are the highest industry loss estimates for the firm to exceed and exceed Munich Re ’s projections of $ 10bn for 2007 and $ 5bn for Florence .