Posted 09/09/2019 – News
Hurricane Dorian has left the (re)insurance industry facing a multi-billion dollar loss having caused catastrophic damage to the Bahamas between 1st and 3rd September, where after it skirted the coastal waters of Florida, the Carolinas and Virginia (until 6th September) before tracking into the Atlantic Ocean. It later (on 8th September) passed over Nova Scotia as a much reduced storm.
Dorian stands as the most powerful hurricane to have ever made landfall on the Bahamas, with maximum sustained windspeeds of 185 mph. In doing so, it became tied with the Labor Day Hurricane of 1935 as the strongest hurricane to have made landfall in the North Atlantic basin since records began.
A key feature of Dorian was the uncommonly slow progress it made whilst positioned over Grand Bahama and Abaco Island.
Early loss estimates forecast by modelling agency Karen Clark suggest the Bahamas will suffer $7bn of economic losses from Dorian, an incredibly high figure when compared to its annual GDP of $12bn, illustrating the extreme severity of damage inflicted.
AIR Worldwide, another modelling agency, has estimated insured losses in the Caribbean (including the Bahamas) in the range of $1.5bn to $3bn.
The consensus amongst the reinsurance industry is that this forecast is possibly at the lower end of expectations, with $3bn to $5bn a more likely range, especially once storm surge damage and power outages in the Carolinas are accounted for.
RMS, possibly the leading risk modelling agency, has estimated total insured losses across all territories to be the range of $3.5bn to $6.5bn.
The damage to the Bahamas has been incredibly severe, with approximately 50 lives lost in the 48-hour period when Dorian was positioned over Grand Bahama and Abaco Island. Each island will require a major relief effort and the worst affected parts rebuilding from scratch. Having narrowly avoided making landfall in the United States whilst a major hurricane, Dorian will not produce a loss bill akin to that of Hurricanes Harvey, Irma and Maria, which cost the (re) insurance industry $30bn each. On this basis, 2019 remains a year of below average major loss activity.