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Moody’s estimates up to $5bn in Idalia losses

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Stephanie Foley, 41, brushes mud off a framed picture of her and her sisters found among the wreckage of an old house destroyed in Hurricane Idalia, in Horseshoe Beach, Florida. She fears the magic of the close-knit community will vanish with the town’s rebuilding and an influx of new neighbours (Photograph by Rebecca Blackwell/AP)

Moody’s RMS estimates total private market insured losses from Hurricane Idalia of between $3 billion and $5 billion, with a best estimate of $3.5 billion.

The estimates represent insured losses associated with wind, storm surge, and precipitation-induced flooding.

Moody's had previously said in a note on Thursday that preliminary estimates could put the total cost of damages and economic disruption from Idalia between $12 billion and $20 billion, somewhat less than other recent hurricanes.

Unlike other such hurricanes though, while the multi-state damage was significant it was not catastrophic, and the storm’s path was largely through rural, undeveloped areas.

Total insured loss estimates for Hurricane Idalia are: $2.2 billion to $3.4 billion in wind damage; $500 million to $1.3 billion in storm surge excluding the National Flood Insurance Programme; and $300 million in inland flooding excluding the NFIP.

Moody’s RMS developed and validated the wind, storm surge, and inland flood reconstructions and corresponding loss estimates using publicly available data, including wind station observations, river-gauge water-level data, web reconnaissance and analysis of aerial imagery.

Jeff Waters, staff product manager, North Atlantic Hurricane Models, Moody’s RMS, said: “Major Hurricane Idalia could have been much more impactful had the storm taken a different track or not weakened just before landfall.

“As a result, the tight gradient of damaging winds combined with limited exposure and low flood take-up rates in the worst-affected area should reduce the overall level of insured losses.

“Nevertheless, we expect this event will test Florida re/insurers on the heels of new legislation passed over the last several months to stabilise the market and curb the impacts of social inflation.”

In addition to the private insurance market, Moody’s RMS estimates about $500 million in losses to the NFIP from this event, primarily in Florida.

Its estimated losses reflect property damage and business interruption to residential, commercial, industrial, watercraft and automobile lines of business, and consider sources of post-event loss amplification, inflationary trends and non-modelled sources of loss.

While insured losses from Idalia will be driven by wind and storm surge, flood could contribute up to a third of the total event losses. Insured wind and NFIP losses will be driven by residential lines, while private market water losses will be dominated by commercial and automobile lines, mostly in Florida.

Julie Serakos, senior vice-president, Moody’s RMS, added: “Prior to Idalia, Florida’s ‘Big Bend’ region was largely untested by landfalling major hurricanes. Much of the building stock affected by Idalia is older and built before the onset of statewide building codes during the 1990s.

“However, wind observations from the event suggest Idalia’s wind speeds were just around the design wind speed levels for the region. In addition, newer roofs on many properties installed in recent years after hurricanes Irma and Ian should help minimise extensive damage in Florida.

“As for water impacts, Idalia caused significant storm surge-related damage in several areas along the Florida and southeast US coastlines. For inland flooding, while it was wide in its extent, it was nominal in severity.”

Rajkiran Vojjala, vice-president, Model Development, Moody’s RMS, commented: “While post-event loss amplification is typically nominal for such low magnitude events, we must consider the ongoing effects of inflation and residual impacts from major Hurricane Ian on claims severity for major Hurricane Idalia.

“Construction costs have come down from record levels in recent years, but they remain higher than their long-term averages. Additionally, Florida requires state-certified contractors to complete roof repairs, and the widespread extent of wind damage in Idalia may exacerbate the existing fragile labour situation in Florida and lead to an unexpectedly long recovery.”

Moody’s said: “Major Hurricane Idalia was the ninth named storm of the 2023 North Atlantic Hurricane Season, the third hurricane, and the second named storm to make landfall in the US this season.

“Idalia was the first major category hurricane to make landfall in the Florida Big Bend region since record-keeping began in 1842, and the eighth major hurricane to make landfall in the continental US since 2017 [Harvey, Irma, Michael, Laura, Zeta, Ida, Ian].

“Idalia made landfall on August 30, 2023, near Keaton Beach, Florida, as a Category 3 hurricane on the Saffir-Simpson Hurricane Wind Scale, with maximum sustained winds of 125mph, resulting in the fourth consecutive year that a major hurricane has made landfall in the US.

“The storm brought a combination of strong winds, storm surge, and heavy rainfall to coastal and interior areas of Florida’s Big Bend region, before weakening and moving inland through parts of Georgia and the southeast US, including the Carolinas. Prior to impacting the US, Idalia hit parts of Cuba as a Category 1 hurricane.

“As we approach the climatological peak of the season in mid-September, more than two months remain in the 2023 North Atlantic hurricane season, officially ending on November 30.”

Jewell Baggett walks amid debris strewn across the yard where her mother's home had stood, as she searches for anything salvageable in Horseshoe Beach, Florida, after the passage of Hurricane Idalia (File photograph by Rebecca Blackwell/AP)
Damage estimates for sprawling Hurricane Idalia included property and business losses and considered sources of post-event loss amplification, inflationary trends and non-modelled sources of loss

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Published September 05, 2023 at 7:58 am (Updated September 05, 2023 at 7:40 am)

Moody’s estimates up to $5bn in Idalia losses

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