September 07, 2017
The (re)insurance industry is on high alert as Hurricane Irma continues to tear a deadly path through the Caribbean and toward southern Florida after reducing buildings to rubble and causing multiple fatalities on the small island of Barbuda.
Hurricane Irma is a powerful Category 5 storm, with sustained winds of 185mph and gusts of up to 224mph that forecasters say could be the most powerful hurricane to strike the Atlantic coast in more than a decade.
After passing north of Puerto Rico in the early hours of Thursday (7 September), Irma is now expected to pass to the north of the eastern Dominican Republic.
Irma is predicted to reach the southeastern Bahamas by Thursday evening, with projections suggesting that Irma could potentially hit Miami on Sunday (9 September).
Officials in Florida are already planning evacuations and making provisions for vulnerable residents, while Miami-Dade County mayor Carlos Gimenez has declared a state of emergency.
Miami-Dade is Florida’s most populous country with 2.7 million residents.
Florida has not had a Category 3 landfall since Wilma in October 2005.
That event caused insured losses of $2.1bn in 2005 money, according to Swiss Re's Sigma. Indexed for 2016 prices the event cost the industry $15bn, according to analyst estimates.
In a worst case scenario, catastrophe modellers have drawn parallels with the 1926 Great Miami hurricane, which killed about 400 people in what was then a resort town with a population of about 100,000.
That event represented an insured loss of $119bn adjusted for inflation and exposure increases.
While Florida P&C carriers may be in for losses from Irma, their reinsurers may also take a hit should the storm maintain its strength and swerve north into Florida. Most of the Floridians have robust reinsurance coverage.