Hurricane Dorian is slated to bring approximately $25 billion in damages, costing insurance companies. Analysts from UBS widened the country’s loss estimate and the storm’s impact on insurers in the area. From the initial $15 billion, UBS placed the amount at $25 billion.
Despite attaining a respectable reserve amount due to the remote occurrences of Hurricane Maria and Dorian, insurers who have saved around $30 billion suppose the amount will be wiped clean, reports Insider.
According to CNBC, Hurricane Dorian is the most powerful storm that hit the Atlantic coast. Besides the Atlantic, the storm is expected to power through the east coast of the United States, including Florida, Georgia, and South Carolina. Individuals living in these areas have been ordered to evacuate.
This estimate is reportedly calculated based on numerous factors. In a statement to FOX Business by Michael Barry, senior vice president of the Insurance Information Institute, “what risk modelers do is, they have some sense of where the storm is going to make landfall, and then they work back from that.”
Furthermore, Barry further clarified that the analysis may only be one of the predictions of the UBS, taking care to analyze the recent storms which occurred in the area. Apart from reviewing the state’s history with hurricanes and other similar disasters, analysts also factor in the population that may fall victim to the storm’s trajectory.
From an insurance perspective, analysts are looking at the types of homes, the number and types of businesses in the area, and the probable costs of rebuilding these establishments, says Barry.
In total, the UBS report cited by CNBC revealed that analysts expect that losses stemming from natural disasters could reach a whopping $70 billion for 2019 alone. As a result, this could affect the reserve capital of insurers. This could mean higher insurance prices and premiums in the following years for consumers to shoulder.
