Hurricane Dorian Insured Losses in Caribbean from Wind, Storm-Surge Could Hit $6.5B

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Insured losses in the Caribbean from Hurricane Dorian is estimated at $3.5 billion to $6.5 billion, according to RMS, the risk modeling and analytics firm.

This estimate represents insured losses associated with wind and storm surge damage across the Caribbean region, most notably in the Bahamas, which was the most severely impacted country, said Newark, Calif.-based RMS.

RMS estimates that nearly all of the Caribbean insured losses will come from the Bahamas, particularly Grand Bahama and Abaco Islands. This loss estimate reflects property damage and business interruption caused by wind and storm surge-driven coastal flooding to residential, commercial, industrial, marine and automobile lines of business, plus factors for both post-event loss amplification (PLA) and non-modeled losses.

“There is a high degree of uncertainty on the potential impact of post-event loss amplification from this event,” said Jeff Waters, senior product manager, RMS North Atlantic Hurricane Models.

“Nevertheless, we expect PLA in the Bahamas to be significant due to constrained access to the islands and infrastructure damage,” he added.

“Port closures, damaged roads, and severe damage to the airport will make it difficult to deliver the necessary labor and materials to impacted areas. It will also limit the ability of residents and business owners to return to damaged homes and buildings. Consequently, cost of materials is expected to inflate, and repairs could be prolonged, both of which are expected to amplify the cost of the claims from this event.”

Business interruption losses are expected to be significant in the Bahamas as a result of the storm, as hotels and resorts comprise a large portion of the overall commercial exposure in the two most heavily impacted islands 鈥� Grand Bahama and Abaco.

Peter Dailey, vice president, Model Development at RMS, said: “Insured losses in the Bahamas are also expected to settle over a longer period than in a typical Caribbean hurricane given an expected spike in demand for claims adjusters, many of whom will be unable to inspect properties or even access the two main affected islands for some time.”

Hurricane Dorian was the fourth named storm of the 2019 North Atlantic hurricane season, and the first major hurricane of the season. Dorian made landfall on Sunday, Sept. 1, 2019 at Elbow Cay on the Abaco Islands in the Bahamas as a Category 5 hurricane, making it the strongest storm to make landfall in the Bahamas on record. It later reached peak intensity with maximum sustained winds estimated by RMS HWind to be 185 mph (297 kilometers per hour), before becoming nearly stationary for more than 36 hours, causing catastrophic damage to the northern Bahamas, particularly to Grand Bahamas and Abaco Islands.

For this loss estimate, wind and storm surge impacts were simulated using version 18.1 RMS North Atlantic Hurricane Models and RMS ensemble footprints, which are hazard reconstructions of Dorian’s wind and storm surge fields.

Source: RMS