Hurricane Milton likely to be at least a $20bn insurance loss event: BMS

While too early to pinpoint an accurate insurance loss range, BMS Group’s Senior Meteorologist Andrew Siffert has noted it is safe to say that Hurricane Milton will likely be at least a $20 billion insurance market event.

Hurricane Milton remains a powerful Category 5 storm with wind speeds of around 160 mph, according to the National Hurricane Center.

As Reinsurance News understands, Milton is forecast to weaken back to around Category 3 before landfall but is also expected to expand in size which will make the impacts over a wider area and also drive a higher storm surge.

“The worst-case scenario would involve Milton making landfall as a major hurricane along the Pinellas Peninsula, bringing the worst possible storm surge flooding into Tampa,” Siffert explained.

The report continued, “It is important to highlight that Tampa is highly vulnerable to storm surges due to its expansive, gently sloping basin. This characteristic, coupled with the strong onshore winds of a major hurricane, can lead to devastating outcomes.

“The last time this happened was the 1921 Tampa Bay hurricane, which made landfall as a Category 3 hurricane and brought 10-12 feet of storm surge flooding to the city.

“As we have pointed out in past tropical updates, if landfall is south of Tampa, it would likely result in a significantly reduced storm surge threat for the Bay – instead of water rushing in, the water would rush out of the bay.”

According to Siffert, while it is still entirely too early to pinpoint an accurate insurance loss range, a storm making landfall in Tampa Bay would be a “historic loss” for the insurance industry and likely change the insurance market for years.

Meanwhile, a landfall along Sarasota would reportedly be much more manageable for the industry and similar to Hurricane Ian.

Siffert observed that the $20 billion estimate is solely based on a review of the low end of the catastrophic modeling guidance and some of the historical analogues like the 1921 Tarpon Spring / Tampa Bay Hurricane that today would cause over $25 billion in insurance industry losses.

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