For Immediate Release:
AIR Worldwide Estimates Industry Insured Losses for Hurricane Maria in the Caribbean Will Be Between USD 40 Billion and USD 85 Billion
BOSTON, Sept. 25, 2017 - Catastrophe modeling firm AIR Worldwide estimates industry insured losses for Hurricane Maria in the Caribbean will be between USD 40 Billion and USD 85 Billion. Puerto Rico alone accounts for more than 85% of the loss. AIR Worldwide is a Verisk (Nasdaq: VRSK) business.
Hurricane Maria was another major catastrophe for the central Caribbean region, compounding the damage done by Hurricane Irma just two weeks ago. It spared a few islands devastated by Irma, but brought additional destruction to others, and wrecked some locations that had escaped Irma's wrath.
Hurricane Maria slammed into Dominica on Tuesday, September 19th as a Category 5 storm, devastating the island and triggering widespread flooding in adjacent Guadeloupe. It weakened briefly to a Category 4, then intensified again to Category 5 as it cut west-northwest over the warm waters of the northeastern Caribbean Sea. The eyewall brushed the western edge of St. Croix in the Virgin Islands on Tuesday night, bringing storm surge and large waves to southern shores.
Maria was downgraded slightly to Category 4 before it made landfall on Puerto Rico near the town of Yabucoa at 6:15 a.m. ET, Wednesday, September 20th with maximum sustained winds of 155 mph. This was Puerto Rico's first direct landfall from a Category 4 tropical cyclone since the notorious San Ciprian hurricane in 1932. Maria lost some organization as it interacted with Puerto Rico's mountains but brought a storm surge anticipated to be 6 to 9 feet in some areas and inundated the country with 12 to 18 inches of rain, with higher amounts in some locations. Maintaining its track, it then passed close offshore of the northeast coast of Hispaniola delivering heavy precipitation, Category 3 winds, and storm surge to the northern Dominican Republic.
Islands in the Caribbean devastated by the storm, and by Hurricane Irma two weeks earlier are in the early stages of what will inevitably be a very lengthy recovery period. It is abundantly clear that this has been a major catastrophe for the region.
More than 3 million people in Puerto Rico, for example, remain without electricity, drinking water, and gas; other essentials are in short supply. Communications are challenging, with 95% of cell phone towers reportedly toppled. Many towns have been cut off by landslides, floods, or torrents of muddy water; widespread damage is reported.
As heavy precipitation continued, the dam on the Guajataca River was significantly compromised and was deemed in danger of an imminent break Friday afternoon. Some 70,000 people downstream were advised to evacuate immediately. The dam is an earthen structure built in 1929 to provide drinking water, irrigation, and power generation. It has not failed, but remains in danger of doing so.
Hurricane Maria is expected to continue moving north for the next two days, slowing and weakening as it goes, and staying well east of the southeast coast of the United States. Maria will likely bring coastal flooding, high winds, and rain to parts of the North Carolina coast and Virginia Tidewater through Wednesday. It is expected to have become a tropical storm by Tuesday night, to turn toward the northeast by Thursday, and to dissipate mid-ocean.
Note that AIR's estimates include "demand surge," which is the increase in the cost of labor and materials that is often observed in the aftermath of major catastrophes. Demand surge translates to an increase in the cost of rebuilding that ultimately results in higher insured losses than would otherwise be the case. Demand surge arises from shortages and potential constraints in the movement of labor, and it can be exacerbated when multiple disasters occur in a short timeframe, as is the case with hurricanes Harvey, Irma, and Maria.
AIR's modeled insured loss estimates also include insured physical damage to onshore property (residential, commercial, and industrial) and autos due to wind and precipitation-induced flooding; insured loss to contents; losses due to business interruption; losses to industrial facilities; and additional living expenses (ALE) for residential claims.
AIR's estimates do not include losses to infrastructure; losses from hazardous waste cleanup, vandalism, or civil commotion whether directly or indirectly caused by the event; losses to offshore properties, pleasure boats, and marine craft; losses resulting from the compromise of existing defenses (e.g., levees); and losses to uninsured properties.
About AIR Worldwide
AIR Worldwide (AIR) provides risk modeling solutions that make individuals, businesses, and society more resilient to extreme events. In 1987, AIR Worldwide founded the catastrophe modeling industry and today models the risk from natural catastrophes, terrorism, pandemics, casualty catastrophes, and cyber attacks, globally. Insurance, reinsurance, financial, corporate, and government clients rely on AIR's advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk (Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.
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For more information, contact:
Kevin Long
AIR Worldwide
+1-617-267-6645
klong@air-worldwide.com