RMS Estimates Insured Losses of Less Than $200 Million from Hurricane Felix

Newark, Calif. – September 4, 2007 – Insured losses from Hurricane Felix, which hit the border of Honduras and Nicaragua today, are likely to be minimal, at less than $200 million, according to Risk Management Solutions, the world’s leading provider of products and services for catastrophe risk management.  The storm reached Category five again after weakening slightly last night, and struck a scarcely populated area of Central America, having previously passed by Aruba and the Netherland Antilles as a much weaker hurricane.  Despite being a maximum-strength storm, the small population combined with relative poverty and low insurance penetration in the area means the economic loss will be low, though the humanitarian cost will be high.

Most of the destruction is expected to be from flooding and landslides as a result of the hurricane, rather than from the wind.  While the damage will be significant, it is not anticipated to be as great as that from Hurricane Mitch, which made landfall slightly farther north as a Category five storm in October 1998.  Unlike Felix, which is moving fairly quickly, Mitch stalled off the Honduras coast and led to six days of torrential rain. Due to the severe damage to agriculture and infrastructure, the economic losses from Mitch were around $5 billion, while insured losses were estimated to be no more than $300 million.

“Central America is an extremely hazardous region, at risk not just from hurricanes but also floods, landslides, and earthquakes, and has a very vulnerable population.  The low level of insurance or other effective risk management strategies means recovery from catastrophic events is often delayed, as was the case with Hurricane Mitch,” commented Claire Souch, senior director of model management at RMS.  “To increase the level of preparedness for events like Felix, there is a need for better risk assessment in this region.”

Felix’s track has been steered through the far southern Caribbean due to the effects of a southerly located Bermuda High pressure system, and is one of the closest storms to Aruba recorded.

RMS will continue to monitor the impact of Felix as it moves inland.