Caribbean faces up to $30 billion in insured losses from María
SAN JUAN — The combined insured losses in the Caribbean from the passage of Hurricane María will range between $15 billion and $30 billion, California-based catastrophe modeling firm Risk Management Solutions, Inc. announced Thursday.
According to a Business Insurance report, this number includes property damage and operational interruptions to residential, commercial, and industrial businesses due to losses caused primarily by wind damage, as well as inland flooding.
While AIR Worldwide on Monday estimated insured losses between $40 billion and $85 billion, with Puerto Rico allegedly accounting for over 85 percent of the loss, RMS provided a substantially lower estimate after speaking with insurers in the U.S. territory because the areas with the worst reported catastrophic hits —mostly rural regions—may have low insurance coverage. Meanwhile, urban areas, which have higher insurance rates, faced lesser structural damage.
“The Caribbean was hit hard by Maria, but Puerto Rico bore the brunt of insured damage,” affirmed Michael Young, RMS chair of product management for U.S. climate models. “But although there is over $500 billion of exposure on Puerto Rico, significant amounts of property damage will not be insured, and this will limit industry losses,” he explained.
Puerto Rico electric utility sets up generators to power island quickly
Hurricane María made its passage through Puerto Rico and neighboring Caribbean islands last week, leaving much devastation on its path. In the case of Puerto Rico, which along with Dominica suffered the worst impact from the Category 4 storm, nearly the entire island was left in the dark, most customers—both individual and commercial—of the Aqueduct & Sewer Authority lost their water service, the telecommunications system went down, the majority of ATMs weren’t working, and there have been thousands of reported losses in public and private properties.
The lack of fuel and electricity service—which RMS deem “amplifying effects” on industry losses—have also resulted in significant business interruptions, which is a critical issue at a time when Puerto Rico is facing a multimillion-dollar public debt and a decade-long economic recession.
“RMS clients are reporting that structural damage on Puerto Rico of key industrial complexes is relatively limited […] But the electricity shortages, significant infrastructure disruption, and possible labor shortages are expected to amplify direct losses by almost 50%, which is reflected in our estimate,” Young explained.
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