Insurance Industry Losses From Hurricane Harvey Could Reach $20 Bln, Janney Montgomery Scott Says

August 30, 2017

The insurance industry’s losses from hurricane Harvey are likely to be between $10 billion and $20 billion, Janney Montgomery Scott said in a note to clients on Tuesday.

“From an insurance perspective, rain and flooding are notoriously difficult loss events for the industry to get its hands around and at this point catastrophe modelers and companies haven’t really ventured an estimate as to what the combined wind and flood insured losses could amount to,” Janney analysts Larry Greenberg and Robert Glasspiegel said.

They see roughly one third of the losses coming from personal insurance and two-thirds from commercial.

The analysts noted that while their guess is for up to $20 billion, Insurance Insider has suggested there is some industry talk insured losses could be in the $8 billion area.

“While we incorporate hurricane exposures in our estimates and the 3Q usually carries the highest cat load for the year, we expect that the flood losses associated with hurricane Harvey will likely require downward 3Q17 estimate revisions. At a minimum, the cushion has been eroded should there be any other subsequent events in the quarter.”

Janney also said with five weeks left of the quarter, an area of low pressure is being monitored off the coast of the southeastern US for development into a tropical depression or storm and that the National Hurricane Center has given potential Tropical Cyclone 10 a high chance of formation into a tropical depression or storm within the next day or so. The next storm in the Atlantic would be named Irma.

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By Bryan Smith

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