The resilient Hurricane Matthew could prompt significant losses for commercial and personal insurance carriers if it continues on its course to strike the coast of the Southeastern US, industry officials are warning.
The Category 4 storm headed north toward Cuba and eastern Florida early Tuesday after roaring into Haiti, where it threatened a largely rural and impoverished area of the island.
US officials are on high alert, with governors in Florida and North Carolina declaring states of emergency. Evacuations could also be possible in South Florida as early as Tuesday evening, as Governor Rick Scott said the state “cannot rule out a direct hit” by the most powerful Atlantic storm in nearly a decade.
If Matthew does continue on its current course for the US, insurance companies could be in for serious losses, says Howard Mills, global insurance regulatory leader at Deloitte.
“Matthew is a very powerful, very large storm,” Mills told
Insurance Business America. “Even if the storm track changes and physical damage is not terribly bad, if evacuations are ordered, you’re looking at business interruption claims that could cause major losses.”
While Hurricane Hermine in September met most homeowners uninsured for flood and other damage caused by storm surge, this commercial factor could drive up claims for Matthew.
And if the storm hits, the losses will certainly be much, much greater than $500 million estimated to have been caused by Hermine.
Still, the industry is very well positioned for the event, says Mills.
“Insurers are very well capitalized and have been for a long time,” he said. “If the US does take a hit, they’ll soon be out in the field, taking claims, and ready to pay out.”
More than anything, Matthew should send a message to Southeastern US residents to reconsider flood and other coverage they may have dropped during the region’s long “dry spell” from significant hurricane damage.
Particularly following so closely on the heels of Hermine, Matthew is a good warning of what’s to come during the remainder of the 2016 hurricane season.
“This is a good opportunity to remind the public to be prepared. Water temperatures are very, very warm, and hurricane season could go on right to the end of the traditional time frame,” Mills said. “Agents should be checking their clients’ coverage, urging them to take the precaution of an inventory of their property, and making sure they understand what they do and do not have insurance for.”
Meteorologists predict that Matthew will remain a Category 3 or 4 hurricane by the time it nears Florida, likely on Thursday, and could be a Category 2 or 3 when it hits Georgia and North Carolina Friday.
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