Insured losses from Hurricane Maria will be between US$15bn and US$30bn, according to the latest estimate from RMS, the vast majority of which will be driven by wind damage, and also includes storm surge and inland flood damage across the Caribbean, with Puerto Rico and Dominica suffering the most widespread destruction.

The estimate includes property damage and business interruption to residential, commercial and industrial lines of business, with the vast majority of losses caused by wind damage. The analysis also reflects post-event loss amplification.

“The Caribbean was hit hard by Maria, but Puerto Rico bore the brunt of insured damage,” said Michael Young, RMS head of product management for US climate models. “It may have avoided the worst impacts of Hurricane Irma at the start of September, which only glanced the island. However, with Maria, Puerto Rico suffered a direct and costly hit. But although there is over $500 billion of exposure on Puerto Rico, significant amounts of property damage will not be insured, and this will limit industry losses.”

Hurricane Maria severely impacted power supplies, with outages that will last months. Fuel for electricity generators is running short. As well as being a humanitarian concern, this will have implications for Puerto Rico’s economy with significant business interruption, including to the island’s important pharmaceutical industry. Flooding has also washed away roads and bridges.

“RMS clients are reporting that structural damage on Puerto Rico of key industrial complexes is relatively limited,” said Young. “But the electricity shortages, significant infrastructure disruption, and possible labour shortages, are expected to amplify direct losses by almost 50%, which is reflected in our estimate.”

The risk modelling firm also predicts shortages of claims adjustors and reconstruction workers, following the dual impact of earlier Hurricanes Irma and Harvey on the Caribbean and the US mainland. Along with the significant interruption of transmission and distribution systems this may lead to a unique Super Cat situation.

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