Wednesday, October 12, 2016

Phew – That Was Close(?)

As the saying goes, “close only counts in horseshoes and hand grenades.”  And maybe hurricanes?  Was Hurricane Matthew a bullet that was dodged, or a bullet that hit the mark?  That depends on who you are and where you were. 

There was a moment there when it looked like the State of Florida was staring down the proverbial barrel of a colossal disaster.  Hurricane Matthew, then a category 4 Hurricane, had devastated Haiti and was making way for South Florida.  The predicted track had  Matthew making landfall somewhere along Florida’s Atlantic Coast, tearing along the eastern border for hours and hours, and then pummeling Georgia and South Carolina before making a bizarre eastward/southward loop and slamming back into Florida a second time.  (What kind of hurricane does that?  It almost looked personal.)

But in the merciful end, two important things did not happen.  Matthew did not make landfall in Florida – which kept the most powerful winds off-shore and away from homes and businesses – and it never made the arcing loop that would have carried it back to the Florida coast for a second round of damage.  But Matthew was nonetheless a powerful storm that did its share of harm, including multiple fatalities in the U.S. and an astounding death toll in Haiti.  How you view Matthew, then, is largely dependent on who you are and what you were expecting.  Were you a Miami homeowner hoping for the best, and the storm spun east and did most of its damage north of you?  Are you a Jacksonville shop owner whose business was flooded and ruined?  Are you an insurer with concentrated exposures along the coastline?  Did you dodge a bullet, or do you feel like you took a direct hit?  It depends, but the early estimates suggest there is plenty of damage to go around thanks to Matthew – billions of dollars, in fact, on top of the human toll.

CoreLogic reports that the total insured losses for residential and commercial properties hit by Matthew will ultimately range from $4 billion to $6 billion, exclusive of business interruption losses or contents damages.  CoreLogic estimates that 90% of those losses will be “related to wind” and 10% to storm surge – numbers that seem surprising based on the storm’s track and other news reports of heavy flood damage and relatively less catastrophic wind impacts.  At $4 billion to $6 billion in insured property loss, Matthew would be dwarfed by Hurricane Katrina and Super Storm Sandy, but would still rank among the most devastating property damage storms in U.S. history.

Lucky or unlucky?  It’s in the eyes of the beholder.

Posted by Dan Millea