It may come as small comfort to Florida’s storm-battered residents, but Thomas Larsen, senior vice president of EQECAT Inc., the Oakland Calif.-based catastrophe modeling specialist, announced that a Florida landfall by Hurricane Ivan, coupled with Hurricanes Charley and Frances, would create a confluence of events that statistically only has a 2 percent chance of occurring in any year in the United States.
Ivan is currently fluctuating between a category four and category five storm (See related article in “International), and if it does hit Florida the insured losses could be substantial.
EQECAT CEO Rick Clinton noted: “A similar series of events have happened several times early in the last century: 1926, 1933 and 1935. Computerized models created by EQECAT take into account such a series of events and enable insurance companies to incorporate those eventualities into their plans.” In 1926, three hurricanes struck Florida, including a category four storm, which ripped through what is now Miami-Dade county, and in 1933, another three storms struck Florida.
“Two years later, the 1935 “Labor Day” storm hit the Florida Keys and the southern Gulf Coast of Florida. It was one of only three storms since 1900 designated a category five hurricane, to strike the U.S. Gulf and Atlantic Coast,” EQECAT said. In 1964, three hurricanes struck Florida, but they were category two storms.
“The last category five hurricane to strike the U.S. was Hurricane Andrew in 1992. When it struck in 1992, it caused $15.5 billion of insured losses. It is estimated insured losses would be $24 billion if a storm like Hurricane Andrew were to occur now. Losses due to Andrew could have been much higher had it hit the more densely populated areas of the Miami metropolitan region,” the bulletin continued.
It also pointed out that “the potential insured losses resulting from storms of the sizes which struck early in the last century would be even greater than Andrew since the population of Florida in the 1920s and 1930s was only a small fraction of the current population.” As an example EQECAT said a “computerized re-creation of the 1935 Labor Day storm could cause insured losses exceeding $60 billion. The EQECAT re-creation of the 1926 storm that struck Miami could result in losses exceeding $50 billion.”
According to EQECAT’s estimates “the insured losses for a strike near the Tampa/ St. Petersburg metro area could exceed $35 billion if Ivan continues along its expected path and remains a category four or five storm – both of which are very uncertain this far away from possible landfall. Taken together, the sum of losses from Hurricanes Charley, Frances and Ivan would push the 2004 hurricane insured losses to more than $45 billion for the season beginning in June, making this a one in 50 year loss.”