Irma a potential $200 billion nightmare for Fla. insurers
(Bloomberg) -- Hurricane Irma strengthened ahead of an all-but-certain collision with southern Florida after devastating the Caribbean islands and threatening to become the most expensive storm in U.S. history.
With top winds of 155 miles (249 kilometers) an hour, the life-threatening storm grew in size, meaning most of Florida will face hurricane-force winds as it cuts a path through the peninsula into Georgia. Now a Category 4 system, Irma will maintain its strength until it strikes Florida Sunday, the U.S. National Hurricane Center said around 1:45 p.m. Eastern time. It has already left at least 21 people dead, thousands homeless across the Caribbean and threatens to rack up as much as $200 billion in damages.
“Much of Florida, especially the southern half, is in for a really long and horrible day on Sunday,” said Todd Crawford, lead meteorologist at The Weather Company in Andover, Massachusetts. Another example of “the power of nature on a heavily populated part of the U.S. coastline is imminent, and the costs will be great.”
Mandatory evacuations were issued for the Florida Keys and other areas. Around 650,000 people were told to leave Miami-Dade, the largest evacuation ever attempted in the county. President Donald Trump’s Mar-a-Lago estate was ordered to be evacuated along with the rest of Palm Beach following forecasts of catastrophic winds and a powerful storm surge.
“Prepare for the worst possible,” Trump said as he boarded Marine One, bound for Camp David. “We are prepared at the highest level.”
Irma is one of three hurricanes churning in the Atlantic Basin. Jose, the third major hurricane of the 2017 season with top winds of 150 miles per hour, is forecast to turn northeast and miss the U.S. In the Gulf of Mexico, Katia strengthened as it moved slowly toward Veracruz, Mexico, where it’s forecast to come ashore overnight Friday. The country was also struck by a powerful earthquake on Friday, shaking buildings in the capital and triggering a tsunami warning.
Irma’s hurricane-force winds now extend for 140 miles, creating a danger zone that would reach from West Palm Beach on the Atlantic coast to Fort Myers on the Gulf of Mexico. That’s creating an “insurance industry nightmare” as every county in the state could experience damaged roofs and power outages so vast it overwhelms utility repair efforts, said Chuck Watson, a Savannah, Georgia-based disaster modeler with Enki Research.
Damages could easily top $135 billion in Florida, with other economic losses pushing the price tag as high as $200 billion, Watson said. Preliminary estimates show losses across the Caribbean nearing $5 billion, Josh Darr, lead meteorologist with insurance broker JLT Re Ltd. wrote in his blog Friday.
Total losses from Katrina reached $160 billion in 2017 dollars after it slammed into New Orleans in 2005.
“Wind damage is totally going to throw a wrench into the insurance industry,” Watson said. “You are talking about companies failing.”
Insurers including XL Group Ltd. and Everest Re Group Ltd. recovered some ground after falling 5.1 percent and 6.8 percent respectively Thursday. About 9 million of Florida’s 20.6 million people may lose power, according to the state’s largest utility Florida Power & Light Co. Irma may curb natural gas demand in one of the largest U.S. markets and threaten $1.2 billion worth of crops.
Officials were taking steps to ensure adequate supplies of gasoline after residents filled up cars, boats and back-up generators ahead of the storm. “We’re bringing in as much supply of refined fuel as possible,” White House Homeland Security Adviser Tom Bossert said on Bloomberg Television.
Irma was 380 miles southeast of Miami and is forecast to approach the north coast of Cuba and the central Bahamas before striking southern Florida Sunday morning, the hurricane center said.
The hurricane comes just two weeks after Harvey smashed ashore in Texas, knocking offline almost a quarter of U.S. oil refining capacity and causing widespread power outages and flooding.