Verisk Estimates Industry Insured Losses in U.S. for Hurricane Beryl Will Range Between USD 2 Billion to USD 3 Billion
Verisk (Nasdaq: VRSK) estimates that Hurricane Beryl will cause industry insured losses to onshore property from wind in the U.S. ranging between USD 2 billion to USD 3 billion. Beryl, which formed on June 28, became the earliest Category 5 hurricane on record in the Atlantic before making landfall near Matagorda Bay, Texas on July 8 as a Category 1 hurricane with 80 mph winds.
The storm caused widespread power outages affecting nearly 3 million households in Texas, with over 2.2 million in Harris County alone. These outages may lead to significant claims due to food spoilage, mold, and losses to additional living expenses and business interruption coverages. The estimates exclude various factors such as storm surge losses, National Flood Insurance Program payouts, and litigation-related losses.
- Verisk provides detailed industry insured loss estimates, demonstrating expertise in risk assessment
- The company's analysis covers a wide range of factors, showcasing comprehensive modeling capabilities
- The estimated insured losses of USD 2-3 billion may impact insurance companies' profitability, potentially affecting Verisk's clients
Insights
Verisk estimates that industry insured losses from Hurricane Beryl will range between
From a short-term perspective, insurance companies are likely to see an increase in claim payouts. This could put pressure on their liquidity and potentially affect their stock prices negatively. Investors in insurance stocks should be aware of potential earnings hits and increased claims reserves.
In the long term, these kinds of events often lead to premium rate increases. Insurance firms may adjust their models to better account for risk, potentially making policies more expensive for consumers. This could stabilize earnings over time but may also lead to customer attrition.
Investors should also consider the exclusions detailed by Verisk, such as storm surge and flood losses not covered by standard policies, which means the actual financial burden could be higher for uninsured losses, affecting broader economic conditions.
The estimation of losses provides a clearer picture of the market dynamics in the insurance sector post-Hurricane Beryl. Given its early formation as a Category 5 and subsequent weakening, yet still significant damage, the situation underscores the unpredictable nature of such events.
For investors, it’s important to note the sectors most affected. Property insurers and businesses in the Texas and Louisiana areas will likely face the brunt of the financial impact. This event may also prompt discussions about climate change and its increasing influence on the insurance industry.
Additionally, with heavy power outages and the resultant claims from food spoilage and business interruptions, there may be supply chain disruptions affecting local economies. It’s important for investors to factor in these broader economic impacts when assessing their portfolios.
Longer-term, such impactful weather events could drive demand for innovative insurance products and advanced risk modeling solutions, making data analytics firms like Verisk potentially more valuable. Investors might see opportunities in tech-driven insurance solutions.
BOSTON , July 19, 2024 (GLOBE NEWSWIRE) -- The Extreme Event Solutions group at Verisk (Nasdaq: VRSK), a leading global data analytics and technology provider, estimates industry insured losses to onshore property from wind in the U.S. for Hurricane Beryl will range between USD 2 billion to USD 3 billion.
Meteorological History of Beryl
Beryl formed on the evening of June 28, quickly becoming a hurricane on the 29 and strengthening into a major hurricane the following day. On July 1, Beryl passed through the Windward Islands as a Category 4 hurricane and would go on to become a Category 5 hurricane later that day, the earliest Category 5 hurricane on record in the Atlantic. On the morning of the 2, Beryl reached its peak intensity with 165 mph sustained winds before beginning to slowly weaken later in the day as the storm encountered increasing wind shear.
Despite tracking through an environment with favorable conditions for intensification, Beryl’s imperfect structure played a role in the storm, only strengthening to a fledgling Category 1 hurricane before making landfall near Matagorda Bay, Texas at around 4 a.m. CDT on July 8. At landfall, Beryl had estimated maximum sustained winds of 80 mph and a central pressure of 979 mb. Subsequently, the storm tracked north as it made its way inland.
Impacts on the Built Environment
Widespread and prolonged power outages in Texas are likely to be a legacy of Beryl’s arrival in the state. At peak, nearly 3 million households lost power in Texas from Beryl, with more than 2.2 million in Harris County alone. The outages could well drive significant claims due to food spoilage, mold, and losses to additional living expenses and business interruption coverages. Heavy rainfall led to roadways and homes becoming flooded throughout the Houston area and in portions of western Louisiana. In terms of wind, there were reports of tree damage to roofs. Moderate levels of wind damage in the form of broken windows and tree damage to residential and apartment complexes were observed.
Verisk’s loss estimates do not include:
- Excess impacts due to power failures which may not be implicitly modeled
- Losses from storm surge
- Losses paid out by the National Flood Insurance Program
- Losses exacerbated by litigation, fraudulent assignment of benefits, or social inflation
- Storm surge leakage losses paid on wind only policies due to government intervention
- Losses from precipitation-induced flooding
- Losses to inland marine, ocean-going marine cargo and hull, and pleasure boats
- Losses to uninsured properties
- Losses to infrastructure
- Losses from extra-contractual obligations
- Losses from hazardous waste cleanup, vandalism, or civil commotion, whether directly or indirectly caused by the event
- Losses resulting from the compromise of existing defenses (e.g., natural and man-made levees)
- Loss adjustment expenses
- Other non-modeled losses, including those resulting from tornadoes spawned by the storm
- Losses for U.S. offshore assets and non-U.S. property
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About Verisk
Verisk (Nasdaq: VRSK) is a leading strategic data analytics and technology partner to the global insurance industry. It empowers clients to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud and make informed decisions about global risks, including climate change, extreme events, sustainability and political issues. Through advanced data analytics, software, scientific research and deep industry knowledge, Verisk helps build global resilience for individuals, communities and businesses. With teams across more than 20 countries, Verisk consistently earns certification by Great Place to Work and fosters an inclusive culture where all team members feel they belong. For more, visit Verisk.com and the Verisk Newsroom.
FAQ
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