Hurricane Harvey damage to be among “top 10 most costly” for insurers, JPMorgan

hurricane harvey damage global insurance and reinsurance

The financial services company told its clients that the costs could be between $10 billion and $20 billion.

JPMorgan informed its clients that the Hurricane Harvey damage left behind in Texas could be as high as $10 billion to $20 billion. This would place it among the “10 most costly” hurricanes to make landfall in the United States, said the company.

The storm first struck Texas last weekend and was a Category 4 at the time, before being downgraded.

Gradually, it wound itself down to tropical storm status, though it continued to remain over the state for days. Although winds were a serious contributor to the Hurricane Harvey damage, it was the heavy rainfall that was most detrimental. The cities of Houston and Galveston, and the regions around them, experienced catastrophic flooding. Moreover, meteorologists expect that both this storm and other rain systems will continue to contribute to the flooding for a week after the storm started.

The Hurricane Harvey damage is the worst the state has seen in several years both in insured and uninsured losses.

hurricane harvey damage tropical cycloneBack in 2008, Hurricane Ike struck the state with a Category 2 storm. It left $13 billion in insurance losses behind. Insurance companies have been working with catastrophe modeling research firms to try to determine the size of the losses they should expect. Initially, it looked as though Harvey would cost low single-digit billions of dollars. However, these predictions were based exclusively on the losses from wind damage insurance.

Now, it is clear that it will be the flood insurance claims bringing the majority of the expense with them. Though standard homeowners insurance does not include flood coverage, that protection is sold by the government. However, commercial flood insurance does exist and it will likely lead to significant expenses for commercial insurance companies and reinsurers alike.

In Texas, the largest homeowners insurance and commercial property insurance companies are State Farm, Allstate and Farmers. As a result, those insurers will face the largest losses from Hurricane Harvey damage claims over coming weeks and months. At the moment, it is still too early to know precisely how costly the insured damages will be.

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