Insurer Impact from Sally Expected to be Moderate; Losses Estimated at $1B to $3B

Insured losses from Hurricane Sally could reach as much as $3 billion, according to catastrophe modelers, but ratings agency Moody’s expects a moderate impact on property and casualty insurers and reinsurers.

“Because Sally appears to be primarily a flood event, we expect that the National Flood Insurance Program (NFIP) …will absorb significant losses,” Moody’s said in a circular to investors.

Moody’s analysts predict that P&C (re)insurers will face losses on commercial and some residential properties, though the full impact will take weeks to tally.

Karen Clark & Co. pinned insured losses to onshore properties from the Category 2 storm at around $2 billion, while AIR Worldwide estimates that losses to onshore property resulting from Hurricane Sally’s winds, storm surge, and inland flood will range from $1 billion to $3 billion, with wind being the majority of the losses.

KCC said estimates include the privately insured wind and storm surge damage to residential, commercial, and industrial properties and automobiles. The estimate does not include NFIP losses, losses to offshore assets, or any potential impacts on losses due to COVID-19.

AIR Worldwide included losses to onshore residential, commercial, and industrial properties and automobiles for their building, contents, and time element coverage in its estimates.

Hurricane Sally made landfall near Orange Beach, Ala., on Sept. 16, with maximum sustained wind speeds of 105 mph. KCC noted Sally was the first hurricane to make landfall in Alabama since 2004’s Ivan, which occurred 16 years earlier.

The storm intensified as it moved inland toward the Florida Panhandle with winds of 80 mph, then diminished to a tropical storm.

Significant storm surge flooding in downtown Pensacola, Fla., affected residential and commercial buildings.

Moody’s noted disputes in cases where it is not immediately clear if the damage was caused by wind versus flood could increase and prolong the cost of the claims settlement process and may lead to lawsuits and/or regulatory intervention.

Topics Carriers Profit Loss Flood Hurricane