For the last 48 hours, all the forecasts have been consistent in indicating that Hurricane Irma will have a significant impact in Florida, most likely making landfall in the state. The latest RMS HWind forecast shows it tracking more westerly than before, and this reduces the potential for loss because of the relative concentrations of exposure in the southern end of the Florida peninsula.
Based on today’s long-range forecast, RMS calculates there is still a 10 percent chance of wind losses from Irma exceeding US$85 billion. This assumes a U.S. landfall, with the scenarios in RMS modeling showing almost all of that insurance loss to be in Florida.
But the loss range in this preliminary analysis could easily move higher or lower depending on shifts in the storm track and its intensity. Irma’s anticipated direction of travel has been changing continually through the week, oscillating between both coasts of Florida. It is likely that this changeability will continue, and so the modeling uncertainties remain significant.
RMS will continue to update its analysis of potential insurance losses as Hurricane Irma moves closer to the U.S. coast.
Michael Kozar, senior modeler – Model Development, RMS
The RMS HWind team based in Tallahassee have released their latest track probability analysis of the current model forecasts. This analysis, based on forecast models initialized at 12:00 UTC today Thursday, shows that Irma’s projected path has shifted further south and west than the previous forecasts. The highest probabilities now run through southeastern Florida (as shown by the shaded data), with Miami having a nearly 60 percent chance of the storm passing within 50 nautical miles of the city.
Paul Wilson, vice president – Model Development, RMS
This morning, the RMS Event Response team has started to assess major damage in the Caribbean caused by Hurricane Irma, which has become the strongest Atlantic hurricane on record.
Our preliminary modeling for the Caribbean provides insights into the potential range of damage outcomes for each island that we understand to be impacted, including Antigua and Barbuda, British Virgin Islands, Anguilla, Saint Maarten and Saint Martin. It is already clear that damage ratios are high, particularly in Barbuda.
In the days leading up to landfall for a major hurricane such as Irma, you will find RMS employees and clients glued to their devices. We are all reading weather blogs, studying RMS HWind snapshots, monitoring Twitter, and sharing each other’s projections and observations on LinkedIn. This is all to get the latest view on a dynamic system – what is the maximum sustained wind? What is the Rmax? Central pressure? What is the integrated kinetic energy?
In such a dynamic situation, it is important to also consider what is static: the concentration of exposure within the hurricane uncertainty cone. In the most general sense, the industry insured loss for such an event is a function of the physical characteristics of the storm and the scale of exposure that is impacted. As has been stated elsewhere on the RMS blog, loss scenarios will vary significantly depending on the concentrations of exposure underlying the event footprint. For hurricanes, a few miles can be the difference between a footnote on a quarterly earnings statement or front page headlines. This was the story last year with Hurricane Matthew after it “wobbled” to the east and spared much of southeast Florida.
Hot on the heels of Hurricane Harvey, Irma looks like it could be the second major landfall in the U.S. this season, as it currently moves towards the Caribbean as a category 5 hurricane, with sustained winds around 185 miles per hour (297 kilometers per hour).
As always, the RMS Event Response starts early in the life of tropical storms, to provide the latest commentary, following up with RMS HWind footprints as data becomes available and providing initial sets of stochastic event selections around 48 hours before landfall. RMS Event Response practices have been designed to best serve our clients and the industry as a whole, and speculation of industry losses whilst such uncertainty remains can be counterproductive. Clients can see full information on the RMS Event Response processes by reading the following document available on RMS Owl.
With Irma moving swiftly through the Caribbean as a Category 5 hurricane, currently producing sustained winds around 185 miles per hour (297 kilometres per hour), concern is building as to the potential impacts of another major hurricane landfalling in the U.S. Although Irma’s actual path as it approaches Florida is very uncertain, there are analytical techniques available to help gain insight into the range of potential damage.
The RMS Cat in a Box (CIAB) application is designed for the assessment of parametric contracts, and can evaluate the probability of storms intersecting a specific geographic region whilst having certain severity characteristics. The application will output the list of events which intersect these areas and produce the associated Exceedance Probability (EP) curve.
Shortly after its landfall, my colleague, Ben Brookes, and I drew attention in the RMS live Harvey updates to the fact that the storm was “not a wind event.” Like Sandy, flood losses, we wrote, would quickly overtake wind losses.
We recalled how Dr. Robert Muir-Wood had insisted back in February 2014 that “water is the new wind.” Those with exposure in harm’s way, he argued, needed to “get to grips with the details of modeling and managing hurricane-driven flood risk.”
RMS continues to refine its estimate of the insured losses from Harvey. In the meantime, I think it’s worth looking in more detail at the potential exposure of the National Flood Insurance Program (NFIP) to this major hurricane.
Last Monday, Daniel wrote that it was likely that “Harvey will produce at least US$4 billion in flood claims, triggering the NFIP reinsurance program.” With NFIP up next month for reauthorization and reform, this is an important point — and not just for the 25 reinsurers underwriting over US$1 billion of NFIP’s claims.
As Hurricane Harvey barreled eastward from Houston, Port of Houston officials spoke of restarting operations by Labor Day (Monday, September 4) after its channels are checked for shoaling and obstructions. The eighth busiest container port in the U.S. reported no major damage to its terminals, warehouses or storage facilities, and traffic was diverted to other regional ports and processing facilities away from the storm’s path. Maritime officials, it seems, have learned lessons from Superstorm Sandy, where cargo was hastily unstacked in anticipation of high winds before a devastating storm surge caused extensive damage to cargo, chassis, and port warehouses.
Farhana Alarakhiya, vice president – Products, RMS
Hurricane Harvey continues to be top of mind at the RMS offices. On Wednesday, RMS hosted a client webinar where Mark Powell, Tom Sabbatelli and Pete Dailey discussed how we have applied our methodology developed for the RMS U.S. High Definition (HD) Flood Model to provide insights to the extent and severity of the flooding from Harvey, with Houston as our top priority. This effort has resulted in a high-fidelity hazard inundation map which is now available to all RMS clients.
For clients on the RMS(one)® platform who use Exposure Manager, this effort goes one step further. We automatically seed the Harvey hazard layer in the client tenant, to deliver instantaneous access to analytic insights from the U.S. Inland Flood HD Model. This models all sources of flooding across space and time, and can also be used to identify and differentiate locations at risk based on flood extent and severity.