RMS Estimate: Insured Losses from Hurricane Hanna Won’t Exceed $400M

July 30, 2020

Catastrophe risk products and services company, Risk Management Solutions Inc. (RMS), has estimated that insurance losses in the U.S. from Hurricane Hanna will not exceed $400 million. This estimate represents insured losses associated with wind and storm surge, including losses to the National Flood Insurance Program (NFIP).

“The storm made landfall in southern Texas as a Category 1 hurricane with stronger winds than expected. However, the impacted region is an area with low industry exposure,” Jeff Waters, senior product manager, RMS North Atlantic Hurricane Models, said in a prepared statement.

RMS’ estimate includes property damage and business interruption from wind and storm surge-driven coastal flooding to residential, commercial, industrial, and automobile lines of business. The estimate also includes wind-driven damage to offshore platforms in the western Gulf of Mexico; however, offshore platform loss constitutes a small fraction of the overall insured loss.

Storm surge losses reflect the impact of coverage leakage, an escalation in claims severity for wind-only policies in instances where wind and water hazards co-exist in residential lines of business. Losses associated with inland flooding are expected to be negligible because the storm maintained its forward motion after landfall and only caused high rainfall totals in isolated areas.

RMS expects losses to the NFIP to represent approximately $100 million or less of the total insured loss estimate. Texas has the second highest number of NFIP policies-in-force in the U.S., many of which are located in coastal areas impacted by storm surge from Hanna.

Hurricane Hanna was the eighth named storm of the 2020 North Atlantic hurricane season and the earliest eighth named storm on record. It made landfall on July 25, 2020, on Padre Island, Texas, with maximum sustained winds of 90 mph. The storm maintained this intensity and made a second landfall shortly after in Kenedy County.

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 Hanna’s wind field and storm surge.

Source: Risk Management Solutions Inc. (RMS)

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