Damage costs likely to range between $50-100 million BF&M CEO Wight
The losses from Hurricane Gonzalo will be much less than feared, an insurance firm boss predicted yesterday.
John Wight president and chief executive officer of BF&M, the biggest property insurer on the Island, said damage costs were likely to total between $50-$100 million — not the $200-$400 million suggested by catastrophe modelling firms.
Mr Wight said: “Much discussion has taken place in recent days comparing the damages to Bermuda from Hurricane Fabian in 2003 versus Hurricane Gonzalo.
“Insured losses from Hurricane Fabian were approximately $250 million.”
Mr Wight was speaking after catastrophe modellers AIR Worldwide conducted a damage survey across Bermuda last Sunday and Monday.
AIR said that roofs had borne the brunt of the hurricane, but that older buildings had also suffered structural damage. The AIR report added that hotels and resorts had fared well, with only minor damage to more exposed units.
The firm also said that commercial buildings — like warehouses and garages which were not subject to the Island’s strict building controls — had also taken hits.
Mr Wight added: “Modellers, from experience, typically model losses in excess of what the losses actually end up being.
“The range of losses indicated by the company in respect of Hurricane Gonzalo are in excess of what we expect them to be.
“It’s based on the inputs to the system and modellers prefer to be conservative by nature.
“It’s never an exact science and it’s more prudent to be estimating on the high side rather than the low side.”
Mr Wight said the surprise strength of Tropical Storm Fay the week before Gonzalo had encouraged people to take the hurricane seriously and protect property.
He added: “Also, the direction of the storm when it hit Bermuda was more a westerly-easterly hit rather than the southerly course Fabian took and that benefitted Bermuda and made the damage less than would otherwise have occurred.”
BF&M and Argus jointly announced last week that they would be waiving the double deductible for the separate Fay and Gonzalo storms.
Alison Hill, chief executive officer of the Argus Group, estimated the total Island-wide bill for Fay and Gonzalo would be between $100 million and $125 million.
She said: “We are proud of the community for taking storm preparation seriously and know that the extent of damages could have been much worse without everyone’s diligence. Still, Tropical Storm Fay and Hurricane Gonzalo left many residents with significant damages to their property.”
Ms Hill added: “Everyone has experienced a stressful few weeks with Tropical Storm Fay followed closely by Hurricane Gonzalo.
“Our community has suffered damages to homes, power losses, transportation shortages and disruptions to daily routine.
“In an attempt to ease the financial burden on our residential clients, we have decided to consider Fay and Gonzalo as one event, which will mean only one deductible will apply for damages sustained to residential properties from these storms.
“We hope this policy will allow our residential clients to focus on repair work and more quickly recover from these back-to-back natural disasters.
Mr Wight added that BF&M staff had coped well with the flood of claims following the double whammy of Fay and Gonzalo.
He said: “It’s going according to plan. We had a large influx of claims following the hurricane, but the last couple of days claims have tapered off and we expect any more claims coming in to be few in number.”
Mr Wight said BF&M had been open on Saturday, the day after Gonzalo, and that staff had been working overtime to deal with claims.
He added: “They’re having the weekend off and spending time with their families, which they should be doing at this point.”
AIR’s estimate included damage to onshore property and the cost of business interruption — but not damage to boats, many of which were damaged or sunk as Gonzalo swept across the Island.
AIR added that the cost of Fabian-related losses — which it set at around $300 million — would be $650 million at today’s prices and exposures.
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