Hurricane Milton

Hurricane Milton

The following is a precis of the main points of a HUR Bulletin emailed to our clients this evening:-

• Hurricane Milton made landfall on Wednesday evening, 9 October, as a Category 3 (maximum 120mph sustained winds) near Siesta Key, an island off the coast of Sarasota, Florida. The storm then moved east across the peninsula at Category 1-2 strength before exiting near Cape Canaveral on the Atlantic coast of Florida.
• Our current working assumption, as we await commentary from underwriters and catastrophe modelling companies, is of an insured loss in the region of $40bn-$60bn excluding National Flood Insurance Programme (NFIP) losses. The NFIP protects homeowners mainly in Texas and Florida and itself buys reinsurance.
• Current expectations are that Hurricane Milton will prove to be an earnings event for the industry with reinsurers taking the bulk of the loss. Significant insured losses are also expected for E&S property underwriters, with the Lloyd’s market having the largest market share, estimated at 16.9%.
• The loss from Hurricane Milton will be complicated too by tornadoes spawned by Hurricane Milton, along with the impact of Hurricane Helene which had made landfall as a Category 4 storm only two weeks previously on 26 September with wind speeds of 140mph in Florida’s ‘big bend’ region northwest of Tampa.
• More recent insured loss estimates for Hurricane Helene have been issued by both Verisk and Moody’s RMS earlier this week with Moody’s estimated range being $8bn-$14bn and Verisk $6bn-$11bn.
• There will be uncertainty as to the exact cause of loss, whether it is Hurricane Helene or Hurricane Milton in areas affected by both hurricanes. In addition, there will be uncertainty about “wind versus water”. The wind driven water is typically covered by insurance policies but rain flooding/storm surge is generally excluded in homeowners’ policies unless purchased separately. It is generally covered and sub-limited in commercial policies.
• Expectations this year were for an active hurricane season owing to the warm seas of El Nino, which typically enhances hurricane activity. We expect Hurricane Helene to drive modest reinsurance losses but overall Q3 catastrophe losses estimated in a range of $17bn to $24bn are below the mean historical average, inflation adjusted $29.4bn.
• We expect losses in Q3 therefore to be under syndicates’ catastrophe loss budgets but Hurricane Milton will be above.

Further commentary in the Hampden Bulletin sent to clients this evening.

Other up to date articles available as below:-

• Andrew Siffert of BMS "Tropical Update" 10 October 2024 - click here
• Guy Carpenter - post event report - click here