BOSTON—A hurricane that hit Miami in 1926 would cause an estimated $101 billion insured damage today and be the No. 1 hurricane in insured losses, according to an analysis by a catastrophe modeler.
According to Boston-based AIR Worldwide Corp., a unit of Jersey City, N.J.-based Insurance Services Office Inc. that estimate is based on a modeled loss to property, contents and business interruption as well as additional living expenses for residential, mobile home, commercial and automobile exposures as of Dec. 31, 2008. Losses also include demand surge, AIR said in the analysis released Thursday.
That would make a repeat of the unnamed 1926 storm the costliest hurricane in U.S. history. As AIR noted in its analysis, “it is widely reported that seven of the top 10 historical hurricane losses in the United States occurred in 2004 and 2005, with Hurricane Ike in 2008 claiming its place among the top five. The rankings are based on reported insured losses at the time the events took place—not on losses trended to today’s dollars and today’s exposures.
“Thus, while these estimates are true from the narrow perspective of actual contemporaneous insured loss, they are quite misleading. The number and value of properties have increased dramatically in the past century, well beyond the rate of inflation,” AIR said.
Using such a yardstick, the only current-decade hurricane to make AIR’s list of the top 10 historic hurricanes based on current exposures is 2005’s Hurricane Katrina, which is No. 5 with an estimated $42 billion in insured losses.
AIR’s analysis also examined earthquakes, estimating that a repeat of the 1812 New Madrid, Mo.-centered quake would leave $100 billion in insured damages. No recent quake since the 1994 temblor that struck the Northridge section of Los Angeles makes AIR’s top 10 earthquake list.
The report is available online at http://www.air-worldwide.com/PublicationsItem.aspx?id=18484&e=pr_091112
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