Irene triggers $500M to $1.1B in insured losses in Caribbean, analyst says
This image of Hurricane Irene was captured from NASA's Terra satellite when the storm's center had passed Puerto Rico at around 11 a.m., Aug. 22. (Credit: NASA Goddard/MODIS Rapid Response Team.)
Boston-based AIR Worldwide estimated Friday that insured losses in the Caribbean from Hurricane Irene will reach between $500 million and $1.1 billion, with the Bahamas accounting for more than 60 percent of the insured loss.
This estimate includes wind and precipitation-induced flood damage to insured residential, commercial and industrial properties, automobiles, and business interruption losses in the Bahamas, Puerto Rico, Dominican Republic, Turks and Caicos, and other Caribbean territories.
AIR Worldwide has been in the business of analyzing the catastrophy industry since 1987. Today it models the risk from natural catastrophes and terrorism in more than 50 countries.
Earlier this week, Hurricane Irene cut across the entire length of the Bahamian archipielago causing significant wind and flood damage to Abaco, Cat, and Eleuthera islands. On its current projected path, the storm is expected to reach the U.S. east coast by Saturday afternoon.
“Fortunately, Irene tracked east of densely populated New Providence Island and Grand Bahama Island, subjecting them to only tropical storm force winds,” said Scott Stransky, scientist at AIR Worldwide.
In the capital city of Nassau, located on New Providence Island and home to nearly a quarter million people, trees were downed, streets were flooded, and debris was strewn throughout. The Straw Market in downtown Nassau, a popular tourist shopping center located in a metal-framed canvas tent, was destroyed.
Irene began its trek across the Caribbean late last week, passing through Puerto Rico Sunday and Monday as a tropical storm that soon turned into a Category 1 hurricane. The storm caused extensive flooding and triggered dozens of landslides.
“For residential lines in the U.S. territories of Puerto Rico and the U.S. Virgin Islands, estimates reflect AIR’s view that insurers will ultimately pay 10 percent of modeled precipitation induced flooding damage under wind policies; in all other territories, 100 percent of flood losses are assumed to be covered,” AIR said, without providing an estimate of the insured losses for Puerto Rico.
In the wake of the storm, Gov. Luis Fortuño pegged overall losses at more than $500 million, while President Barack Obama declared a “state of emergency” for the island, opening the door to federal recovery assistance.
It would be interesting to follow the use of the claims payments in Puerto Rico. Depending on the clauses of the insurance contracts, most money is targeted to repairs or replacement but some may not be targeted. If so, that money could be diverted to cover other obligations so the impact would not be towards an economic recovery but towards a financial stabilization of the affected.
NIMBUS may be a channel to follow up on this.