InsuranceLinked and NASA's Tim Hall are following the latest developments of Hurricane Matthew. Over the next few days, we will be posting on the latest meteorological forecasts and the likely market impact.
Wrapping up this live blog: Neither Matthew nor Nicole were as severe as had been feared. AIR estimates that Matthew caused between $2.8bn and $8.8bn of insurance loss in the US and an additional $600m to $2.2bn in the Caribbean. The range is wide, but even at the top end, this would not be enough to have a big impact on the insurance industry.
Hurricane Nicole is now at category 4 and on course to be a direct hit on Bermuda later today. Flights have been cancelled and there is nowhere to evacuate to. Hunkering down is the only option. Good luck everyone.
Hurricane Nicole is now at category 4 and on course to be a direct hit on Bermuda later today. Flights have been cancelled and there is nowhere to evacuate to. Hunkering down is the only option. Good luck everyone.
Stocks of Florida-focused insurance companies recovered on Friday following sharp drops on Thursday.
This map from wunderground indicates that Matthew is now likely to head out to sea…
Mathew made a formal landfall just northeast of Charleston SC as a Cat-1 hurricane, the second US hurricane landfall this season. All told, Matthew’s US damage is likely to be mostly flood related. Here’s the time series of water height at NOAA’s Charleston SC tide station. The surge (water level minus predicted tide) peaked in advance of the storm around 8pm Oct 7 (3am Oct 8 LST) at 5+ ft. The surge coincided closely with local high tide local, and the water height was near 10 ft above MLLW (mean lower low water, the average daily low). The Fort Pulaski, GA, station near Savannah was even higher, about a 7 ft surge and 12 ft high water.
Matthew is raking the South Carolina coast. The center is currently (9pm EDT) about 15 mi off the coast of Charleston, and with an eye diameter of 45 mi, parts of the eye wall are over land. Winds are sustained at 85 mph (Cat1), and central pressure is 962mb (NHC advisory 41A). Storm surge above 6 ft is widespread through the region, with spots above 9ft. Here’e the 8am NOAA NowCoast analysis of the region:
AIR has also been highlighting the potential for flood damage:
Trading Risk have reported that the latest RMS estimate shows that there is more than a 90% chance that the losses will be less than $20m. Here is RMS’s latest wind field:
RMS have been suggesting that although the wind damage may not be as severe as feared there could be significant flood damage:
If Matthew ultimately turns out to be a flood-driven event, the insurance industry is more likely to be impacted by private commercial flood policies than residential flood, which is primarily covered by the National Flood Insurance Program (NFIP). Florida has the highest number of NFIP policies in-force (1.7 million), but there are only approximately 417,000 NFIP policies in-force combined for Georgia, South Carolina, and North Carolina. In residential areas where both wind and storm surge have occurred, we do expect some degree of what we call “coverage leakage,” a claim’s adjuster’s inability to distinguish whether damage was caused by wind or storm surge. This effect tends to increase wind policy losses, as the flood loss “leaks” into the wind payout.
RMS have been suggesting that although the wind damage may not be as severe as feared there could be significant flood damage:
If Matthew ultimately turns out to be a flood-driven event, the insurance industry is more likely to be impacted by private commercial flood policies than residential flood, which is primarily covered by the National Flood Insurance Program (NFIP). Florida has the highest number of NFIP policies in-force (1.7 million), but there are only approximately 417,000 NFIP policies in-force combined for Georgia, South Carolina, and North Carolina. In residential areas where both wind and storm surge have occurred, we do expect some degree of what we call “coverage leakage,” a claim’s adjuster’s inability to distinguish whether damage was caused by wind or storm surge. This effect tends to increase wind policy losses, as the flood loss “leaks” into the wind payout.
Here is the Matthew-driven storm surge observed through 2:18pm at Racy Point (mouth of the St. John River, near Matthew’s 2pm offshore position) from tidesandcurrents.noaa.gov. Looks to be cresting well above 4.5 ft.
11:00, EDT. Florida may have dodged a bullet. Or, better to say, it’s getting a grazing hit. Matthew’s path up the east coast has been slightly east of the best-estimate NHC forecast from last night, though well within the cone of uncertainty. It’s still a major hurricane (120mph, 947mb), but Matthew’s center has stayed far enough offshore to limit land exposure to the worst of its winds. The center passed about 25 mi east of Cape Canaveral. But hurricane force winds extend about 60 mi from the center, and the current NHC wind history (below) shows hurricane force winds overland have occurred south and north of Cape Canaveral.
11:00, EDT. Florida may have dodged a bullet. Or, better to say, it’s getting a grazing hit. Matthew’s path up the east coast has been slightly east of the best-estimate NHC forecast from last night, though well within the cone of uncertainty. It’s still a major hurricane (120mph, 947mb), but Matthew’s center has stayed far enough offshore to limit land exposure to the worst of its winds. The center passed about 25 mi east of Cape Canaveral. But hurricane force winds extend about 60 mi from the center, and the current NHC wind history (below) shows hurricane force winds overland have occurred south and north of Cape Canaveral.
11:00, EDT. Florida may have dodged a bullet. Or, better to say, it’s getting a grazing hit. Matthew’s path up the east coast has been slightly east of the best-estimate NHC forecast from last night, though well within the cone of uncertainty. It’s still a major hurricane (120mph, 947mb), but Matthew’s center has stayed far enough offshore to limit land exposure to the worst of its winds. The center passed about 25 mi east of Cape Canaveral. But hurricane force winds extend about 60 mi from the center, and the current NHC wind history (below) shows hurricane force winds overland to have occurred south and north of Cape Canaveral.
11:00, EDT. Florida may have dodged a bullet. Or, better to say, it’s getting a grazing hit. Matthew’s path up the east coast has been slightly east of the best-estimate NHC forecast from last night, though well within the cone of uncertainty. It’s still a major hurricane (120mph, 947mb), but Matthew’s center has stayed far enough offshore to limit land exposure to worst of its winds. The center passed about 25 mi east of Cape Canaveral. But hurricane force winds extend about 60 mi from the center, and the current NHC wind history (below) shows hurricane force winds overland to have occurred south and north of Cape Canaveral.
A chart from Tropical Storm Risk showing that the highest wind speeds have been offshore (for now).
Here are current NHC’s SLOSH model 10% probability surge exceedance levels: 9-11 feet of surge from Cape Canaveral through Georgia. (Actual high water marks will depend on tide.)
8pm EDT: The forecast track has been stable last few NHC
cycles: skirting up the Florida-Georgia coast, with intensity gradually diminishing
from 120 to 95 knots, and lots of on-land hurricane force wind. If Matthew
makes a literal landfall, Cape Canaveral is a good bet late tomorrow morning. After
leaving the Georgia coast, there’s a lot of model divergence, with some showing
a loop back around toward South Florida by Tuesday. It would below hurricane
status then, but it could hamper rescue and clean up operations.
Here is Guy Carpenter’s index of historical US $20bn wind ILW prices:
The Guy Carpenter ILW trading desk has reported an active week in the LiveCat market as insurers look to hedge their risk from Hurricane Matthew. Pricing has risen over the last few days as the threat from the storm has increased. The broker commented:
“This close to the storm making landfall, capacity providers are responding to Firm Orders rather than quoting terms. Please contact our ILW desk with enquiries”.
The team is run by Barry Law (barry.law@guycarp.com) and David Rothstein (david.rothstein@guycarp.com) in London.
The latest 45 hour hurricane probabilities from https://www.tropicalstormrisk.com/
Currently Hurricane Matthew is over Andros in the Bahamas, a solid Cat4, with 145 kt sustained winds and a 950mb central pressure. It’s moving NW at about 12 kt. The eye is tight–a diameter of 12 nm (22 km)–consistent with a well-formed intense hurricane. But hurricane force winds extend 30-50 nm (55-93 km) to the west. Matthew’s eye doesn’t have to pass over land to get hurricane force winds on the coast, merely a few 10s of km within land.
Cape Canaveral may be the worst hit, as it juts out into Matthew’s path. The NHC estimates a 70% chance of hurricane force winds there. Odds for big storm surge are high, too: NHC SLOSH model runs indicate a 50% probability of exceeding 7ft surge and 10% of exceeding 9ft over a swath of coast from Cape Canaveral to Daytona Beach. The actual high-water mark will depend on Matthew’s timing with tides.
http://www.nhc.noaa.gov/refresh/graphics_at4+shtml/154742.shtml?gm_psurgecontents
Cape Canaveral may be the worst hit, as it juts out into Matthew’s path. The NHC estimates a 70% chance of hurricane force winds there. Odds for big storm surge are high, too: NHC SLOSH model runs indicate a 50% probability of exceeding 7ft surge and 10% of exceeding 9ft over a swath of coast from Cape Canaveral to Daytona Beach. The actual high-water mark will depend on Matthew’s timing with tides.
http://www.nhc.noaa.gov/refresh/graphics_at4+shtml/154742.shtml?gm_psurgecontents
Hurricane Matthew has restrengthened to a Cat4, with maximum sustained winds of 120 knots (11am Oct 6 NHC advisory). The NHC’s best-estimate forecast has it skirting up a large swath of the eastern Florida coast through Friday, from West Pam Beach to Jacksonville, at major hurricane intensity. Whether or not Matthew makes literal “landfall”—-the eye crosses over land—-there is very likely to be hurricane force winds over a large section of Florida. In fact, staying over or close to water will help Matthew maintain intensity.
http://www.nhc.noaa.gov/graphics_at4.shtml?5-daynlcontents
Hurricane Matthew has restrengthened to a Cat4, with maximum sustained winds of 120 knots (11am Oct 6 NHC advisory). The NHC’s best-estimate forecast has it skirting up a large swath of the eastern Florida coast through Friday, from West Pam Beach to Jacksonville, at major hurricane intensity. Whether or not Matthew makes literal “landfall”—-the eye crosses over land—-there is very likely to be hurricane force winds over a large section of Florida. In fact, staying over or close to water will help Matthew maintain intensity.
http://www.nhc.noaa.gov/graphics_at4.shtml?5-daynlcontents
Posted: Monday, October 3rd, 2016
Wrapping up this live blog: Neither Matthew nor Nicole were as severe as had been feared. Although a huge swathe of coastline was affected, AIR estimates that Matthew caused between $2.8bn and $8.8bn of insurance loss in the US and an additional $600m to $2.2bn in the Caribbean. The range is wide, but even at the top end, this would not be enough to have a big impact on the insurance industry.