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Thursday, 24 September 2020 22:10

Insurer Impact from Sally Expected to be Moderate; Losses Estimated at $1B to $3B

Written by Amy O’Connor, Insurance Journal

Index

Insured losses from Hurricane Sally could reach as much as $3 billion, according to catastrophe modelers, but ratings agency Moody’s expects a moderate impact on property & casualty insurers and reinsurers.

“Because Sally appears to be primarily a flood event, we expect that the National Flood Insurance Program (NFIP) …will absorb significant losses because standard property and casualty (P&C) homeowners policies do not include flood damage,” Moody’s said in a Sept. 18 circular to investors.

 

Moody’s analysts predict that P&C (re)insurers will face losses on commercial and some residential properties, though the full impact will take weeks to tally.

 

Karen Clark & Co. pinned insured losses to onshore properties from the Category 2 storm at around $2 billion, while AIR Worldwide estimates that losses to onshore property resulting from Hurricane Sally’s winds, storm surge and inland flood will range from $1 billion to $3 billion, with wind representing the majority of the losses.

 

KCC said its estimates were based on the KCC high-resolution U.S. Hurricane Reference Model and include the privately insured wind and storm surge damage to residential, commercial and industrial properties and automobiles. The estimate does not include NFIP losses, losses to offshore assets or any potential impacts on losses due to COVID-19.

 

AIR Worldwide included losses to onshore residential, commercial and industrial properties and automobiles for their building, contents and time element coverage in its estimates.

 

Hurricane Sally made landfall near Orange Beach, AL, on Sept. 16, with maximum sustained wind speeds of 105 mph. KCC noted Sally was the first hurricane to make landfall in Alabama since 2004’s Ivan, which occurred 16 years earlier to the day.

 

The storm began to intensify as it moved inland toward the Florida Panhandle with winds of 80 mph, then diminished to a tropical storm.


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