A leading catastrophe modeller expects insured losses caused by Hurricane Dolly to amount to less than $750 million.

The category two storm hit southwest Texas near the border of Mexico on Wednesday.

The estimate by Risk Management Solutions (RMS) includes wind, flood, and storm surge damage to residential, commercial, and industrial properties, as well as crop damage and business interruption resulting from power outages. Some 500,000 people are expected to be impacted by the storm.

Sparsely-populated Padre Island bore the brunt of the hurricane, while Brownsville, which was expected to experience the highest winds, escaped a direct hit. Dolly skimmed past several oil platforms in the Gulf, causing minimal damage and keeping insured losses relatively low.

"The largest uncertainty in the loss estimate comes from potential flood damage," said Christine Ziehmann, director of model management at RMS.

"The amount of rainfall is currently well below the level of extreme historical events in the area, like Hurricane Amelia in 1987, which resulted in 48 inches of rain, and Beulah in 1969. If the flood damage is limited then we expect the total insured loss to come in much lower than $750 million."

There have been reports of significant flood damage to cotton crops in the Lower Rio Grande Valley, and this region is also a major producer of fruit and vegetables, but RMS said it was not yet clear how much of the crop production has been lost.