Idalia forecast to be “extremely dangerous major hurricane” for Florida

Idalia has now become a hurricane, running a little behind the forecast schedule as it meandered around Cuba, but now moving into the far southern Gulf of Mexico, the NHC warns hurricane Idalia will be an “extremely dangerous major hurricane” for Florida.

Hurricane Idalia is set to rapidly intensify right the way up to landfall, according to the NHC.

In fact, the latest forecast advisory now sees a major hurricane Idalia with sustained winds of 120 mph reaching the Gulf Coast of Florida, while gusts are expected to be approaching 150 mph as landfall nears.

The hurricane Idalia intensity forecasts from the NHC have eventually converged with what the main hurricane forecast models had been saying a few days ago, that the storm is likely to be Category 3 at least when it approaches the Panhandle region of the Florida Gulf Coast.

That’s a really significant storm, with the potential for significant property damage and loss of lives, as well as commensurate impacts to insurance, reinsurance and perhaps catastrophe bond or insurance-linked securities (ILS) interests.

You can see the latest location for Idalia below, using Tomer Burg’s excellent map which shows wind speed forecasts in increments and sea surface temperatures as well, using the NHC data:

As we’ve said in all our updates on hurricane Idalia, the landfall location and where on the Florida coast experiences the strongest winds and highest storm surge, will be critical to defining the insurance and reinsurance market loss.

We’ve seen some early modelled loss projections, based on stochastic catalogue and analogue storms, which suggest anything in a range from $5 billion to as much as $25 billion, so far, depending on the exact landfall location. Some of those would require a pretty significant track-shift to take Idalia to a higher value coastal region, so we believe the market is largely working off a sub-$20bn estimate at this time.

But there are storms in modellers catalogues that have higher industry losses than that as well, we’re told.

However, at this stage there remains some uncertainty over just how high any industry loss could be, given the landfall location which is critical, as well as whether hurricane Idalia intensifies right up to landfall, or if land interaction can slow the storm at all as it nears the Florida coast.

Another determinant, in how large an insurance and reinsurance market loss hurricane Idalia could cause, comes down to inland impacts and the track across Florida, into Georgia and South or North Carolina.

Right now, the latest forecast data from the NHC shows hurricane Idalia still with 80 mph sustained winds as it enters the state of Georgia, so the inland impacts could be quite severe with this storm.

South Carolina is set for strong tropical storm effects, while North Carolina could still experience strong tropical storm winds along its coastline as hurricane Idalia curves out into the Atlantic.

It’s still a bit too early for any projections of loss to the reinsurance, ILS and catastrophe bond market specifically.

With the changes to attachments and terms, the primary insurers are expected to retain the lions share of any catastrophe industry loss event that falls in single figures, with the reinsurance, ILS and catastrophe bond market likely to see more significant effects as an industry loss rises into double-digits and beyond.

But, remember, at just below $50 billion still, last year’s hurricane Ian has not caused particularly significant cat bond and ILS market losses, with much of the mark-to-market decline recovered.