Verisk Estimates Industry Insured Losses in U.S. for Hurricane Helene Will Range Between USD 6 Billion to USD 11 Billion

Rhea-AI Summary

Verisk (Nasdaq: VRSK) estimates industry insured losses for Hurricane Helene in the U.S. will range between USD 6 billion to USD 11 billion, excluding NFIP losses. Helene made landfall on September 26 near Perry, Florida as a Category 4 hurricane with maximum sustained winds of 140 mph, becoming the strongest hurricane to hit the Big Bend region in recorded history.

The hurricane caused significant damage along Florida's Gulf coast and into Georgia, with record storm surge and rainfall in some areas. The impact was similar to 2023's Hurricane Idalia but with a larger storm surge footprint. Substantial flooding occurred in North and South Carolina due to hurricane-induced precipitation.

Florida's building codes and flood insurance coverage were highlighted, noting that many affected areas may have insufficient flood insurance. Verisk is also monitoring Hurricane Milton, forecast to make landfall in Florida on October 9.

Positive

• Verisk demonstrates expertise in catastrophe modeling and risk assessment
• The company provides valuable insights for the insurance industry
• Verisk's analysis helps insurers prepare for and respond to major weather events

Negative

• The estimated insured losses of USD 6-11 billion may impact insurance companies' profitability
• Potential for increased claims and payouts in the affected regions
• Possibility of litigation and fraud related to claims, which could increase costs for insurers

Insights

Catastrophe Risk Analyst

Hurricane Helene's estimated insured losses of $6-11 billion represent a significant event for the insurance industry. This range is comparable to other major hurricanes in recent years, such as Ida ($36 billion) and Ian ($50-65 billion), though not as severe.

Key factors contributing to the losses include:

• Record-breaking wind field size of 430 miles
• Category 4 intensity at landfall with 140 mph winds
• Unprecedented storm surge levels (up to 10 feet)
• Extensive flooding in the Carolinas

The impact on insurers will be substantial, likely leading to increased premiums in affected areas. Reinsurers may also face significant claims, potentially tightening capacity in future renewal seasons. This event underscores the growing importance of climate risk modeling in the insurance industry.

Meteorologist

Hurricane Helene was a historic storm for the Big Bend region of Florida, breaking several records:

• Strongest landfalling hurricane in the area since 1851
• Lowest central pressure (938 mb) for a Florida landfall since Hurricane Michael in 2018
• Widest wind field of tropical storm-force winds for a Florida hurricane

The meteorological conditions that led to Helene's rapid intensification and expansive size are concerning. This trend of stronger, larger hurricanes aligns with climate change projections. The record rainfall in southern Appalachia, with over 31 inches in some areas, highlights the increasing inland flood risk from these systems. Future hurricane seasons may see more Helene-like storms, posing greater challenges for forecasters, emergency managers and insurers.

Insurance Industry Analyst

The $6-11 billion loss estimate for Hurricane Helene will have significant implications for the property & casualty insurance market:

• Insurers with high exposure in Florida and Georgia will likely face substantial claims, potentially impacting Q4 earnings
• Reinsurance treaties may be triggered, affecting capital positions of both primary insurers and reinsurers
• The event could accelerate the hardening of property insurance markets in coastal areas
• Flood losses not covered by standard policies highlight the protection gap and may renew discussions about private flood insurance markets

Verisk (VRSK) stands to benefit from increased demand for catastrophe modeling and risk assessment services in the aftermath of Helene. Their expertise in quantifying losses from complex events like this hurricane strengthens their market position. Investors should watch for potential revenue growth in Verisk's Extreme Event Solutions segment in coming quarters.

BOSTON, Oct. 08, 2024 (GLOBE NEWSWIRE) -- The Extreme Event Solutions group at Verisk (Nasdaq: VRSK), a leading global data analytics and technology provider, estimates industry insured losses due to wind, storm surge and hurricane precipitation induced flood in the U.S. for Hurricane Helene will range between USD 6 billion to USD 11 billion. 

Please note that this figure does not include NFIP losses.

Meteorological History of Helene 
On September 23, the National Hurricane Center (NHC) identified and designated a low-pressure system over the northwestern Caribbean as Potential Tropical Cyclone Nine.  

Starting early on the 26, Helene began a prolonged period of rapid intensification. During this time, Helene’s wind field of tropical storm-force winds grew to be 430 miles wide, a purported record for Florida, just edging out 2017’s Hurricane Irma (420 miles). 

Helene made landfall shortly before midnight on September 26 near Perry, Florida as a Category 4 hurricane with maximum sustained winds of 140 mph. This makes Helene the strongest hurricane to make landfall in the Big Bend region in recorded history (i.e., since 1851), shattering the previous record set by the Cedar Keys Hurricane of 1896 (125 mph). Helene’s minimum central pressure at landfall was 938 mb, which is the lowest for a landfalling hurricane in Florida since Michael in 2018 (919 mb) and the ninth lowest since 1900. Record storm surge was observed farther north along the coast, including Cedar Key (9.3 feet) and Steinhatchee, which went offline after recording 10 feet of storm surge at 11:30 p.m.   

Helene’s wind footprint scathed the Gulf coast of Florida and eventually made landfall along the Big Bend region in Taylor County. Much of the damage was similar in locality and intensity to 2023 Hurricane Idalia but with a much larger storm surge impact and footprint extent.  

As Hurricane Helene tracked north and crossed into Georgia, the wind field extended significantly east of the track impacting large swaths of central counties. Substantial tree induced damage was observed from Valdosta up to Augusta and Savannah. As a result of tree damage, water ingress and debris induced damages were observed across the eastern portion of the state. Wind damage to cladding, roof cover and attached structures was also widely observed and reported. 

Record rainfall had fallen in three days (September 25 - 27) over southern Appalachia and in particular western North Carolina. The largest recorded three-day rainfall of 31.33 inches was observed at the North Carolina Forest Service’s RAWS station in Busick. Asheville, which was the worst hit, received 13.98 inches in three days. 

A wide majority of damage was related to hurricane precipitation induced flooding when it came to communities and cities in North and South Carolina. Flooding will certainly be the cause when it comes to insured and economic losses across these states.  

“The devastation and loss of life caused by Hurricane Helene is truly heartbreaking,” said Rob Newbold, president of Verisk Extreme Event Solutions. “This event is a reminder to the insurance industry to remain diligent in efforts to learn from and understand the profound impacts of catastrophes. The resilience of communities facing such devastating challenges is remarkable and we are inspired by how they have already started to rebuild and prepare for a safer future. We are committed to supporting recovery efforts however we can.” 

Building Codes in Florida 

Florida has a long history when it comes to the evolution and adoption of building codes. From its first adoption of the statewide building code in 2002, it has been a pioneer nationally in wind design specifications. The Big Bend region of Florida where hurricane Helene made landfall has the lowest design winds statewide, between 120 and 130 mph. The same is true for southwestern parts of Georgia that experienced strong winds from Hurricane Helene. The impacts from Helene in this region from a wind perspective should be like that from Hurricane Idalia last year. A significant portion of the building inventory along the track of Hurricane Helene predate the International Codes, i.e. are built prior to the year 2000.  

The National Flood Insurance Program (NFIP) and Flood Insurance Take Up Rates 

Homeowners who choose to purchase flood insurance most commonly do so through the National Flood Insurance Program (NFIP), and Florida has the highest proportion of NFIP policies of any state – about 35 percent, according to Fitch Ratings. These policies typically cover up to USD 250,000 in damages and do not include additional living expense coverage, suggesting that even for some homeowners with flood insurance, there may be a gap between coverage and rebuilding costs.    

Most homeowners in these areas will not have flood insurance, given in most cases it is not required as these areas are generally outside of the designated Special Flood Hazard Areas (SFHAs).

Verisk is actively monitoring Hurricane Milton and supporting our clients in preparing for this event. The center of Milton is forecast to move just north of the Yucatan Peninsula today and approach the west coast of the Florida Peninsula on Wednesday. The hurricane is forecast to make landfall in Florida Wednesday night, October 9.

Verisk’s loss estimates do not include: 

• Losses paid out by the National Flood Insurance Program 

• Losses exacerbated by litigation, fraudulent assignment of benefits, or social inflation 

• Storm surge or inland flood losses paid on wind only policies due to government intervention 

• Explicit modeling of losses due to landslides or mudslides 

• 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 

### 

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

What are the estimated insured losses for Hurricane Helene according to Verisk (VRSK)?

Verisk estimates that industry insured losses for Hurricane Helene in the U.S. will range between USD 6 billion to USD 11 billion, excluding losses paid out by the National Flood Insurance Program.

When and where did Hurricane Helene make landfall?

Hurricane Helene made landfall shortly before midnight on September 26 near Perry, Florida as a Category 4 hurricane with maximum sustained winds of 140 mph.

How does Hurricane Helene compare to previous hurricanes in the Big Bend region of Florida?

Hurricane Helene is the strongest hurricane to make landfall in the Big Bend region in recorded history (since 1851), surpassing the previous record set by the Cedar Keys Hurricane of 1896 (125 mph).

What areas were most affected by Hurricane Helene according to Verisk's (VRSK) analysis?

Hurricane Helene significantly impacted Florida's Gulf coast, the Big Bend region, and parts of Georgia. Substantial flooding also occurred in North and South Carolina due to hurricane-induced precipitation.