It is 25 years ago this week since Hurricane Andrew devastated parts of Florida and in the process bankrupted 11 US insurance companies.

Bermuda saw a major wave of insurers and reinsurers set up on the island in the aftermath of the Category 5 hurricane, which caused $15.5 billon of insured losses in Florida when it made landfall near the city of Homestead.

This week it has been estimated that at today’s prices and exposures such a storm would cause insurance industry losses of $56 billion in the US.

And that damage would escalate significantly if a Cat 5 storm made landfall eight miles north of Homestead, just south of Miami. In that scenario, the losses would top $138 billion, according to AIR Worldwide.

To give that context, the greatest insured loss from a US hurricane was Hurricane Katrina, in 2005, at $60.5 million.

At the time, Andrew was the most destructive hurricane to hit Florida since Hurricane Betsy in 1965, and only the third Cat 5 storm to make US landfall since 1900.

Peter Sousounis, assistant vice-president and director of meteorology at AIR Worldwide, said: “Category 5 Hurricane Andrew tore into South Florida on August 24, 1992, 17 years after the previous landfall of a major hurricane in that state.

“Andrew killed dozens and caused an estimated $15.5 billion in total insured losses, according to Property Claims Services, and resulted in the insolvency of 11 insurance companies.

“The costliest natural disaster in US history at the time, Andrew changed for ever how reinsurers an insurers approach hurricane risk management, spurring the growth of the emerging catastrophe modelling industry and ultimately prompting the development of insurance-linked securities.”

AIR Worldwide provides risk modelling solutions. It has researched possible Florida hurricane scenarios. It estimates that if a major hurricane were to strike Miami, it would “would prompt immediate activity in the marketplace for insurance-linked securities”.

AIR believes that in such an instance, 25 catastrophe bonds would be triggered, 47 tranches would take losses, 38 tranches would be completely exhausted, and there would be a $6.3 billion loss to the catastrophe bond market principal.