Hurricane Beryl made its U.S. landfall at Matagorda, Texas early Monday as a Category 1 hurricane.
The storm has reportedly knocked out power to 1 million homes and businesses, but the storm’s overall impact to the insurance industry is expected to be “manageable,” according to Morningstar DBRS, a credit rating business.
Considering Beryl’s landfall spot about 85 miles south of Houston and the forecasted rapid weakening of the storm as it makes its way through the state, Marcos Alvarez, managing director of global insurance ratings at Morningstar DBRS, said in a commentary issued this morning that the firm does “not foresee material insured losses despite some industries, like oil production and refining, being adversely affected for several days.”
Beryl entered the record book as the earliest Category 5 to ever form in the Atlantic, causing havoc in the Caribbean before striking Mexico’s Yucatan Peninsula.
John McGlynn, a senior financial analyst at insurance industry rating agency AM Best, said Beryl could “act as a warning sign for the industry as it braces for the rest of the hurricane season.”
“The largest impact to [financial] results in 2024 may end up being the cost associated with purchasing third- or fourth-event reinsurance reinstatement cover. Companies do not always purchase this cover, but a severe storm so early in the season may require protection from additional CAT events at what is likely to be premium prices,” McGlynn said.
Morningstar DBRS said the initial estimate of economic damage for effected Caribbean islands is up to $5 billion, but only a small fraction is insured, taking into account the low penetration rates of the region. A catastrophe bond for $150 million, sponsored by the World Bank to cover catastrophic risk in Jamaica “is not expected to have its parametric triggers breached, despite the hurricane causing significant damage to the island,” Morningstar DBRS said.
CoreLogic’s Hazard HQ Command Central on July 5 said it estimates total insurable losses across Jamaica and the Cayman Islands of between $400-$700 million. Insured losses for the Yucatan Peninsula are estimated ot be less than $1 billion.
According to Accuweather, Beryl brought damaging winds, extreme rainfall, and storm surge to Texas. Tornadoes were also reported in south-central states. Accuweather said the Beryl’s storm system could bring tornadoes as far away as Ohio, and flood-causing downpours as far north as Detroit.
Accuweather added this morning that Beryl’s high winds pushed several feet of storm surge into Texas coastal areas, flooding roads and blocking access to several communities. Standard homeowners policies do not cover flooding.
As of 11am EDT on July 8, Beryl weakened to a tropical storm. However, the National Hurricane Center said “there are still many life-threatening hazards associated with the storm.”
According to AM Best data, the top homeowners insurer in Texas is State Farm, with a nearly 19% market share. State Farm, Allstate and USAA companies together insure about 44% of homes in the Lone Star State.
*Story to be updated as additional information comes in.
Photo: A sign notifies motorists to prepare for Hurricane Beryl, Sunday, July 7, 2024, in Portland, Texas. (AP Photo/Eric Gay)
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