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If a storm equivalent to 1926's Great Miami Hurricane struck the same area today, the insured losses would be $125 billion, according to a report released on Tuesday by Boston-based Karen Clark & Co.
The report, “Historical Hurricanes that Would Cause $10 Billion or More of Insured Losses Today,” used modern modeling technologies to re-examine the nearly 180 hurricanes that have hit the United States since 1900. Of those storms, 28 likely would cause $10 billion or more in inflation-adjusted insured losses were they to strike again today, the report finds.
Behind the Great Miami Hurricane, the 1928 Okeechobee Hurricane and the Galveston storm of 1900 would be the next-costliest events at $65 billion and $50 billion, respectively.
“It's clear many hurricanes that struck the United States in the earlier part of the 20th century would cause orders of magnitude more damage today,” Karen Clark, president and CEO of KCC, said in a statement. “This is due not only to an increased density of structures in coastal regions, but also to changes in construction practices that have resulted in larger and more expensive buildings. Even a storm as recent as Hurricane Andrew, which struck 20 years ago this month, would be three times as costly today.”
Glen Daraskevich, senior vice president of KCC, said the company conducted the study at the behest of clients and should afford them another tool they can use to assess their catastrophe loss potential.
“Researching the various data sources, we found incomplete and conflicting information, which led us to compile and thoroughly evaluate all of the sources,” Mr. Daraskevich said. “Our methodology built on previous work, which we extended and enhanced to develop a credible and reliable estimate for each historical storm.”
Going forward, the report predicts that the United States can expect a hurricane loss of $10 billion or greater once every four years on average, and a $50 billion hurricane loss every 20 years.
“As this and our previous studies have shown, large hurricane losses are possible along the entire Gulf and East coasts,” Ms. Clark added. “Because catastrophe losses now dominate many of the property lines, the more credible scientific information that can be brought to bear on risk management decisions, the better.”