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Thursday, 04 October 2018 20:05

Florence Impact on Insurers Tempered by Mostly Uninsured Flood Losses

Written by Amy O’Connor, Insurance Journal
This enhanced satellite image made available by NOAA shows Hurricane Florence off the eastern coast of the United States on Wednesday, Sept. 12, 2018 at 5:52 p.m. EDT. This enhanced satellite image made available by NOAA shows Hurricane Florence off the eastern coast of the United States on Wednesday, Sept. 12, 2018 at 5:52 p.m. EDT. NOAA via AP

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Insurance industry losses from Hurricane Florence, which hit the Carolinas mid-September as a Category 1 storm, will be manageable and not have a severe impact on insurers, according to experts.

 

As the storm turned out to be less of a wind event and with flood excluded on most homeowners’ insurance policies, it is expected that insurers will not experience the significant losses that were initially feared. However, uninsured flood losses could cost nearly $20 billion, by some estimates.

 

“All indications we have seen is [Florence] was more of a flood event than wind issue,” said Brian O’Neill, executive vice president for JLT Re’s National Catastrophe Practice.

 

According to Fitch Ratings, wind speeds from Florence diminished as the storm approached the U.S. coast and Florence was downgraded to a Category 1 hurricane before making landfall in North Carolina on Sept. 14. Fitch said the level of wind-related damage to property is expected to be modest as a result of the significant decline in wind speeds, limiting losses to primary property insurance writers.

 

Catastrophe modeling firm AIR Worldwide estimated that industry insured losses from Florence’s winds and storm surge will range from $1.7 billion to $4.6 billion. Losses include downed trees that caused damages to homes and automobiles, downed utility poles and shingle loss with isolated cases of more extensive roof damage.

 

Karen Clark & Co. said it expects insured losses from Hurricane Florence will reach $2.5 billion. That estimate includes insured losses to residential, commercial and industrial properties.

 

CoreLogic said Sept. 24 that it estimates wind losses will total between $1 billion and $1.5 billion.

 

State Farm, the number one insurer in both North and South Carolina, said in North Carolina it has received approximately 2,280 auto claims totaling about $2.5 million, and approximately 15,000 homeowner claims totaling $2.7 million related to Hurricane Florence as of Sept. 24.


In South Carolina, State Farm had received approximately 560 auto claims and 1,800 homeowner claims. The insurer has paid approximately $749,000 in homeowner claims and approximately $498,000 in auto claims as of Sept. 25. It expects these numbers will increase as customers discover and report claims/damage.


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