US private market insured losses from Francine to be under $2bn: Moody’s RMS

Moody’s RMS Event Response has disclosed an estimate for US private market insured losses from Hurricane Francine, which made landfall in Terrebonne Parish, Louisiana, on September 11th, 2024, of less than $2 billion.

This estimate includes onshore insured losses driven by wind, storm surge, and precipitation-induced flooding, and insured offshore energy losses from wind and wave impacts and associated business interruption.

The estimated losses to the NFIP from Francine will likely be less than $200 million, according to Moody’s RMS.

The risk modeller expects the vast majority of the total private market and NFIP-insured losses to occur in Louisiana and to be driven by wind.

Earlier this month, Moody’s analysis had also disclosed that property and casualty (P&C) insurers were expected to absorb most of the losses from Francine.

Jeff Waters, Director, North Atlantic Hurricane Models, Moody’s, said: “We expect Hurricane Francine to be another manageable event for the (re)insurance market this hurricane season. Fortunately, the storm encountered strong wind shear just prior to landfall, which limited its potential to strengthen further and helped it to weaken quickly post-landfall.

“It was also aided by low tide conditions at the time of landfall, which counteracted chances for particularly damaging storm surge. Still, a combination of saturated antecedent conditions and heavy rainfall – particularly within Orleans Parish – contributed to precipitation-induced flooding in many areas.

“Including Francine, Louisiana has now experienced six landfalling U.S. hurricanes since 2019. While some structures have been lost entirely, many of those that remain have been repaired and brought up to more stringent building codes and design standards adopted by the state, thereby improving their resiliency to damaging wind and water. We expect these instances to be more common following Francine, to the benefit of both policyholders and the (re)insurance market at large.”

To recap, Hurricane Francine was a Category 2 storm with winds reaching 100 miles per hour, and caused significant damage with strong winds, storm surge, and flash flooding across Louisiana, Mississippi, and neighbouring states. It is also the sixth named storm and fourth hurricane of the 2024 Atlantic hurricane season.

The wind and storm estimate is based on an analysis of ensemble footprints in Moody’s RMS Version 23 North Atlantic Hurricane Models. Private market loss estimates were based on Moody’s RMS U.S. Hurricane, U.S. Private Flood, and Offshore Platform industry exposure databases, while exposure for the NFIP loss estimate was based on Moody’s view of NFIP policy-in-force data published by FEMA.

Estimated onshore insured losses reflect property damage and business interruption to residential, commercial, industrial, and automobile lines of business, and consider sources of non-modelled loss.

Both KCC and CoreLogic have initially placed privately insured losses close to $1.5 billion. Along with RBC and AM Best agreeing that losses from Francine will mostly likely be manageable, with primary insurers taking most of the hit.

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