KCC warns $100 billion hurricane loss likely with US landfall locations 'lucky' in recent decades

By Navneeta Nandan

Aug 21 - (The Insurer) - A $100 billion hurricane insured loss is "not only possible, but likely", a white paper published on Wednesday by Karen Clark & Company has warned.

The KCC paper highlighted how landfall location is the critical determinant of insured losses from hurricanes, with the industry having been lucky that a major hurricane has not made landfall in a densely populated metropolitan area in recent decades.

The Florida Tri-County area, comprising Miami-Dade, Broward and Palm Beach counties, is the most likely area to see an insured hurricane event of more than $100 billion, the report said.

Since 1960, the only storm to have made landfall in this region that would cost more than $100 billion today is Hurricane Andrew.

In contrast, between 1926 and 1950, six major hurricanes made landfall in this region, all of which were Category 4 or 5 storms.

The Great Miami Hurricane of 1926, if occurred today, would impact more than $5 trillion in total property value and exceed $200 billion of insured loss despite the improvement of building codes and construction practices.

"Annual hurricane losses tend to be dominated by one major storm," the Boston-based firm said. "When viewed with current exposure, only the 2005 season – with five landfalling hurricanes – includes multiple landfalling hurricanes aggregating to more than $100 billion in losses."

"The US has been lucky over the past 25 years – there have been 16 landfalling major hurricanes but none of these storms made landfall directly within a major metropolitan area such as Miami or Houston. The Northeast US has not experienced a major hurricane for decades," the white paper added.