Storm losses could soar to £4bn, insurers warn
Hurricane Jeanne, the fourth hurricane to hit the US in just six weeks, is set to cost the insurance industry up to $7bn (£3.9bn) of losses, making this year's storm season the costliest on record.
Hurricane Jeanne, the fourth hurricane to hit the US in just six weeks, is set to cost the insurance industry up to $7bn (£3.9bn) of losses, making this year's storm season the costliest on record.
According to Eqecat, the US risk-management group, Jeanne, which hit the coast of Florida near Stuart on Saturday, is set to cause insurable damages of between $4bn and $7bn. The estimate was upped from original forecasts of between $2bn and $5bn after the hurricane increased in intensity as it came ashore at the weekend.
As it hit Haiti, the Dominican Republic and the Bahamas over the past fortnight, causing severe flooding that killed up to 2,000 people, Jeanne was classified only as a tropical storm. By Saturday, however, it had been upgraded to a grade three hurricane on the one-to-five Saffir Simpson scale of intensity.
Eqecat says the previous three hurricanes - Charley, Frances and Ivan - caused combined losses of between $15bn and $20bn for the insurance industry, with Jeanne set to push the total as high as $27bn.
Typhoon Songda, which this month became the seventh typhoon to hit Japan this season, also caused insurable losses of about $3bn. Last week, Swiss Re, one of the world's largest reinsurers, said its combined losses from hurricanes Charley, Frances and Ivan, and Typhoon Songda would be $590m.
Until this year, the worst hurricane season on record came in 1992, when Hurricane Andrew caused $20.5bn of losses, wiping many smaller insurers out of business. Hurricane Hugo, which hit Panama and the US in 1989, was the second largest until this year, generating losses of $6bn.
The UK's insurers, most of whom reported interim results this month, said the severity of this year's hurricane season would have a net positive effect on the industry, propping up rates. But the additional blow of Hurricane Jeanne will put a severe dent in many of the companies' second-half results.
It is estimated that Lloyd's of London insurers have already sustained more than £1bn of losses from the first three storms. Although the insurers' losses will be significant, analysts say the industry is better prepared than it was 12 years ago, with companies being more careful to take on sensible levels of reinsurance and write business more prudently.
Most insurers no longer offer cover to many of the homes and businesses on the east coast, leaving a state-subsidised operator to cover the greatest risks.
Hurricane Jeanne is predicted to head north through Georgia, North and South Carolina and Virginia.
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