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Storm Harvey : the insurance loss could reach 20 G$

by

Mathieu Carbasse

28 August, 2017 13:30

Photo : Texas Military Department

According to initial estimates by theInsurance Information Institute, damage caused by the flooding in Texas, related to the passage of the storm, Harvey, could be similar to those caused by hurricane Katrina in 2005, which remains to this day the natural disaster the most expensive in the history of the United States.

To recall, Katrina had resulted in insurance losses of more than $ 15 billion (G$) in Louisiana and Mississippi. This amount at the time had been supported by the National Flood Insurance Program (NFIP), a federal program that represents the only source of flood insurance for the majority of Americans.

Allstate, Berkshire Hathaway, Progressive, and Travelers

For JP Morgan, the insured losses related to the passage of hurricane Harvey could reach 10 to 20$ dollars, which would make it one of the 10 hurricanes are the most costly in the history of the United States. In addition, the analysts of the famous firm of Wall Street, who have considered the exposure in the region, estimates that nearly 50% of the insured losses should be covered by the reinsurance.

In its report, JP Morgan also notes that insurers are the most exposed in the region, on the insurance market in residential and commercial, are Allstate, Berkshire Hathaway, Progressive and Travelers. Among the reinsurers, Swiss Re and Munich Re has the highest exposure, around 10%, followed by Hannover Re (6%) and SCOR (4%).

A total cost greater than$ 40 billion

Overall, the first estimates on the total cost of hurricane Harvey, amounted to$ 40 billion, less than Katrina, and less than hurricane Sandy, which had ravaged in 2012 the coasts of New Jersey and New York, and which had cost nearly$50b.

However, in the case of Harvey, the entire areas are still inaccessible or submerged, and the governor of the State, Greg Abbott, has estimated that it was still too early to give a definitive assessment. The cost of the disaster is likely to be revised upwards.

As a reminder, hurricane Katrina, in 2005, had officially claimed 108 G$. But some unofficial estimates climb up to 250 G$. In 2012, hurricane Sandy, the second hurricane of the most expensive in history, had led to economic losses ranging between 50 and 70 G$.

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