Hurricane Milton insurance industry loss will be close to $36bn: KCC

The insurance industry loss from hurricane Milton in the US from wind, storm surge, and inland flooding has been estimated at close to $36 billion by Karen Clark & Company (KCC), although this excludes insured damage to boats, offshore properties, and losses to the National Flood Insurance Program (NFIP).

KCC’s privately insured loss estimate for hurricane Milton, the fifth US landfalling hurricane of the season and third in Florida, is based on the high-resolution KCC US Hurricane Reference Model.

The close to $36 billion figure includes the privately insured damage to residential, commercial, and industrial properties, as well as automobiles and business interruption.

Milton struck near Sarasota, Florida, on October 9th as a Category 3 storm with winds of 120 mph and made landfall soon after hurricane Helene touched down in the Big Bend region of the Florida coast, impacting many of the same regions.

KCC notes that, in contrast to Helene, the majority of the damage driven by Milton was from wind, which means that a higher proportion of Milton losses will be covered by insurance.

“As Milton interacted with a surface frontal boundary and strong vertical wind shear from the west, strong surface winds were pushed to the north side of the track. While typically the highest wind speeds are observed to the right side of a hurricane relative to its movement, Hurricane Milton generated surface winds just as strong on the left side of the track. In some areas—particularly in eastern Florida where Milton exited the state—observed winds were higher on the left side of the track than on the right side,” explains KCC.

Milton’s strongest winds were felt at the landfall area including Sarasota, Bradenton, and St. Petersburg, while hurricane-force winds also reached Tampa, Orlando, and Daytona Beach.

“Both to the north and south of the track, Hurricane Milton brought tropical storm winds to an extensive region including the entire Florida Peninsula and extending north along the coastline into Georgia.

“Storm surge heights in Tampa Bay reached about one foot. Higher storm surge impacted areas further south along the coastline, especially in both Fort Myers and Naples, where storm surge heights of six feet were observed,” says KCC.

This estimate from KCC comes after Moody’s RMS Event Response pegged the combined insured loss from Helene and Milton at between $35 billion and $55 billion, the majority of which is expected to come from Milton.

As we discussed earlier, analysis from Milliman points to an insured loss of between $20 billion and $40 billion for Milton. But while Milton is expected to result in minor impacts to the insurance-linked securities (ILS) sector, and be a manageable event for reinsurers, the storm’s impact on Floridian insurers could be major.