Hurricane Delta onshore insured property loss close to $1.25bn: KCC

Onshore insured property losses from hurricane Delta in both Mexico and the United States are seen as only coming close to $1.25 billion, by catastrophe risk modelling specialist Karen Clark & Company.

Image source: The Advocate. Photo by: Bill Feig/AP

The first official estimate of insurance and reinsurance market losses from the most recent hurricane to make landfall in the United States, confirms the fact that even including offshore losses and flood losses to the NFIP, the total public and private insurance market bill from hurricane Delta will still only be in the low single-digit billions.

KCC explained that based on analysis using data from its high-resolution US and Mexico Hurricane Reference Models, the company estimates the total insured loss to onshore properties from hurricane Delta will be close to $1.25 billion, $950 million of which resulted from wind and storm surge losses in the U.S. and $300 million from wind losses in Mexico.

Surge losses in Mexico will be an additional cost, especially as some hotels in tourist regions such as Cancun were hit, but this isn’t going to move the dial too much higher on the Delta insurance and reinsurance market impact.

Neither will the addition of any offshore losses, which are seen in the low hundreds of millions at most, we understand.

KCC’s estimates includes the privately insured wind and storm surge damage to residential, commercial, and industrial properties and automobiles only.

Nothing has been factored in for the potential effects of the COVID-19 pandemic KCC said, with this still being an unknown as to how it could play into loss adjustment costs or potential loss creep over time from 2020 storms.

KCC explained some of the impacts from hurricane Delta:

Impacts in Mexico
Moderate wind damage occurred in Cancun and Cozumel, including damage to roofs, openings, and building facades, but no widespread structural damage was reported. Over 200,000 customers lost power across the impacted region due to downed utility poles and fallen trees snapping power lines. Toppled trees in the Yucatan Peninsula also obstructed roadways.

Impacts in the US
Delta’s high winds brought moderate damage to southwestern Louisiana. Window openings, roofs, and building facades were damaged in an area from Lake Charles to Abbeville and inland to Opelousas. Structural damage in this area was confined to lightweight structures, such as warehouses and gas station pavilions, old structures, and buildings impacted by fallen trees.

Lake Charles—the city most impacted by Laura—also experienced high winds from Delta. Many roofs waiting for repairs had tarps blown off, likely causing additional damage to these buildings. Other properties in the area not impacted by Laura have been damaged by Delta.

Light wind damage, which encompasses damage to roof coverings and downed trees, was widespread throughout Louisiana, including in Baton Rouge and Lafayette. Parts of southwestern Mississippi and eastern Texas also experienced similar modes of damage. Over 700,000 customers were left without power in the affected states as a result of the storm.

Our sources had been suggesting a low single-digit billion dollar loss with hurricane Delta prior to landfall.

Now, this modelled analysis shows that the storm will be the latest minor hurricane loss, falling mainly to primary insurers. But this will also exacerbate conditions in reinsurance markets and likely cause some erosion of aggregates and small losses from carriers already hit by previous hurricanes this year.