Hurricane Michael is due to make landfall on the north west coast of Florida later today (Wednesday 10 October).
Having been upgraded to a Category 4 hurricane last night, significant damage is expected across the Florida ‘Panhandle’ region and the adjacent Alabama and Mississippi coastlines commonly referred to as ‘the Big Bend’.
The latest data (as of 12:00 GMT 10 October) shows the storm generating maximum sustained wind speeds of 145 mph. Should it continue at this strength, Hurricane Matthew will be the strongest hurricane to make landfall on the Panhandle since records began in 1851.
At this stage, forecasts suggest the eye of the storm will pass over the vicinity of Panama City and Pensacola, which have populations of approximately 40,000 and 55,000, respectively.
Peak storm surges of up to 13 feet (4 meters) have been forecast.
Unlike Hurricane Florence, which drenched North Carolina a month ago, current expectations are for Hurricane Michael to be more of ‘wind’ than a ‘water’ event. Furthermore, it is thought the storm force winds of Michael will penetrate further inland than normal, passing over Georgia and the Carolinas before dissipating into the Atlantic on Friday.
More detailed commentary via the Wunderground Cat 6 website can been accessed here.
Alpha comment: Hurricane Michael is shaping up to be the most expensive catastrophe event for Lloyd’s insurers so far this year. Whilst pre-event estimates of insured losses are unreliable, the relatively low concentration of values in the expected landfall zone (compared to Miami or Tampa for instance) would suggest that Michael is unlikely to produce insured losses in excess of $20bn. Though a loss of this order would add to the pain suffered from Hurricane Florence and the various natural catastrophes in Japan over the summer, in the context of today’s surplus of global reinsurance capital, we consider an insured loss of at least $100bn from a single event to be required for an immediate and lasting turn in the market cycle to be effected.