Moody’s RMS Event Response estimates total U.S. private market insured losses from the recent Hurricanes Helene and Milton will likely range between US$35 billion and US$55 billion. This estimate is for insured losses associated with wind, storm surge, and precipitation-induced flooding from these events. Last week, Moody’s RMS Event Response estimated insured losses for Hurricane Helene between US$8 billion and US$14 billion.
Moody’s RMS Event Response will issue its final industry-insured loss estimate for Hurricane Milton later this week.
Hurricane Milton was the thirteenth named storm of the 2024 North Atlantic hurricane season, and the fifth hurricane to make landfall in the U.S. Milton made landfall near Siesta Key, Florida on October 9 as a Category 3 hurricane with maximum sustained winds of 120 miles per hour (195 kilometers per hour). Hurricane Milton followed Hurricane Helene, which made landfall along the Big Bend region of Florida two weeks earlier, affecting many of the same areas with damaging wind, storm surge, and inland flooding.
Mohsen Rahnama, Chief Risk Modeling Officer, at Moody’s, commented: “This initial combined loss estimate is informed by Moody’s RMS Event Response’s rigorous approach to event insured loss estimation and includes a combination of observational data, detailed field reconnaissance so far spanning more than 2,000 miles, and aerial imagery analyses from both storms in the affected region. Our reconnaissance teams are in Florida right now, and continue to survey the impacted areas. Estimating losses in these events is challenging and it is important to consider all associated complexities and uncertainties, especially in the overlapping regions affected by both hurricanes.”
Some of these uncertainties include:
• Complex Hazard Patterns: Alongside the damaging wind, storm surge, and precipitation-induced inland flooding, the outer rainbands of Hurricane Milton also produced numerous damaging tornadoes in southern Florida. Additionally, the storm interacted with a mid-latitude jet over the Gulf of Mexico that resulted in dual swaths of strongest winds: one to the south of the storm associated with the tropical portion of Milton, and one that wrapped around the back of the system (i.e. to the north) associated with its interaction with the jet.
• Coverage Leakage Across Events: Preliminary reports indicate several instances where structures damaged in Helene that may have been uninsured or underinsured for flood, were also affected by high winds and wind-driven rain in Milton. It may be difficult to ascertain the proximate cause of loss in cases, which may lead to coverage leakage, i.e., some degree of non-covered losses could be covered under the insurance policy.
• Event Attribution: If a claim was opened after Helene and if there is additional damage in Hurricane Milton, it will likely result in a single payout, but there will be questions on which event the payout is assigned to, and the resulting impact on potential reinsurance recoveries.
• Annual Hurricane Deductibles: Most homeowner policies in Florida have an annual hurricane deductible. If the deductible was exhausted during Helene, it could mean higher losses for any damage covered by the insurer in Milton.
• Damageable Exposure: The overlap in high winds across the two storms makes it challenging to assess damage. Structures damaged by Helene are unlikely to have been repaired before Milton and may be prone to additional damage from Hurricane Milton. Conversely, much of the coastline affected by storm surge in Milton was also affected by Hurricane Ian in 2022. Thousands of properties that sustained high surge damage in Ian have not yet been rebuilt, which can reduce the potential exposure in Milton.
Each factor may influence and potentially prolong the claims settlement process for the two storms, Hurricanes Milton and Helene. Moody’s RMS Event Response will provide its Industry Loss Estimate for Hurricane Milton by the end of this week, including a comprehensive estimate of all sources of modeled and non-modeled losses.