Insured losses in the US could exceed $10bn if Hurricane Charley follows the track and severity estimates published from the National Hurricane Centres, warned Risk Management Solutions (RMS).
Hurricane Charley is currently classified as a force three (moderate) hurricane, and is due to make landfall along the western coast of Florida on Friday evening.
The latest forecast places the landfall position just north of the Tampa Bay/ St Petersburg area. RMS said insured property values in this area were approximately $250bn, representing over 10% of the property value of Florida.
“Financial losses are very sensitive to the exact landfall position, so while there is still a lot of uncertainty, the current forecast track is just about the worst-case position for a landfalling hurricane in western Florida,” said RMS meteorologist Kyle Beatty.
“The forecasted intensity at landfall for Hurricane Charley has also increased considerably since yesterday.
“Losses are also very sensitive to this factor. The latest forecasts show the storm reintensifying after passing over Cuba, and making landfall with wind speeds of approximately 120 mph.
“If this scenario plays out in terms of intensity and landfall position, losses could exceed $10bn.”
RMS said waves from a force three hurricane would be expected to reach 10–12 feet, raising concerns over flood damage.
The orientation of winds relative to Tampa Bay could amplify these surge levels, warned RMS, with depths reaching 15 feet within the Bay as water ‘piles up'.
This phenomenon of surge amplification in major bays was also observed around Chesapeake Bay during Hurricane Isabel last year, warned the company.
But RMS warned that its loss estimates for Hurricane Charley did not include additional losses expected in Jamaica, the Cayman Islands, and Cuba.
In 1992 Hurricane Andrew cost the Lloyd's market approximately £4bn.
