Hurricane Debby’s wind & flood losses to be manageable at $1-2bn: Gallagher Re

As per a new report from Gallagher Re, Hurricane Debby will remain a “very manageable” event for the re/insurance industry, with combined wind and water-related insured losses from the private insurance market and National Flood Insurance Program (NFIP) likely to fall in the range of $1-2 billion.

Debby first made landfall as a Category 1 hurricane in Florida’s Big Bend region on August 5, with maximum wind speeds reaching 80 mph. After weakening, Debby made its final landfall near Bulls Bay, South Carolina, on August 8 as a tropical storm with wind speeds of 50 mph.

According to Gallagher Re, preliminary surveys indicate that wind impacts were less severe than initially anticipated.

Instead, storm surge and significant inland flooding were the main contributors to the losses.

Citing historical loss data, Gallagher Re observed that a landfalling Category 1 hurricane in Florida’s northern Gulf Coast region has led to wind-related insured losses near or below $1 billion.

“The unknown remains the ongoing flooding in the Southeast and Debby’s future track across the Mid-Atlantic and Northeast,” the reinsurer added.

Thus, Gallagher Re anticipates Debby’s combined wind and water-related insured losses to likely fall in the range of $1 billion to $2 billion for the private insurance market and public entities such as the NFIP or the USDA’s RMA crop insurance program.

Gallagher Re concluded, “The overall expectation is that Debby will remain a very manageable event for the re/insurance industry.

“Any financial loss projections are considered preliminary and subject to change. The long-duration rain and flood event across the Southeast remains ongoing, and complexity exists around the final extent and severity of hydrological impacts.

“The overall economic losses were likely to be far higher. While coastal counties in Florida, Georgia, and the Carolinas have NFIP take-up ranging from 10% to 50%, the percentage of active policies drops dramatically once inland.

“With further flood potential extending into the Mid-Atlantic and Northeast, where NFIP take-up is also quite low, this means a sizeable portion of flood damage is likely to be uninsured. There may also be a notable impact on the agricultural sector.”

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