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Insured losses from Hurricane Maria will be between $15 billion and $30 billion, limited in part by low insurance penetration in Puerto Rico, Risk Management Solutions. Inc. said Thursday.
The estimate includes property damage and business interruption to residential, commercial and industrial lines of business, from wind, storm surge and inland flood across the Caribbean, with most losses caused by wind damage, the Newark, California-based catastrophe modeler said in a statement.
Puerto Rico and Dominica suffered the most widespread destruction, RMS said.
The figures are substantially lower than those provided earlier by AIR Worldwide, the catastrophe modeling unit of Verisk Analytics Inc. in Boston.
“The Caribbean was hit hard by Maria, but Puerto Rico bore the brunt of insured damage,” said Michael Young, RMS head of product management for U.S. climate models. “But although there is over $500 billion of exposure on Puerto Rico, significant amounts of property damage will not be insured, and this will limit industry losses.”
RMS also said it has had detailed discussions with insurers on the island, who report that in those urban areas with higher rates of insurance penetration, structural damage may be more limited, meaning the most catastrophic impacts may have been in areas with very low insurance coverage, one reason RMS expects insured losses from Hurricane Maria to be significantly lower than overall economic damages of $30 billion to $60 billion across the Caribbean.
The RMS estimates also factor in what the company terms “amplifying effects” on industry losses, including power outages combined with a lack of fuel for electricity generators, which will exacerbate problems for Puerto Rico’s economy with significant business interruption, including to the island’s important pharmaceutical industry.
The combined impacts of hurricanes Harvey and Irma together with Maria could lead to shortages of claims adjustors and reconstruction workers, RMS said, adding that flooding has also washed away roads and bridges.
“RMS clients are reporting that structural damage on Puerto Rico of key industrial complexes is relatively limited,” Mr. Young said. “But the electricity shortages, significant infrastructure disruption, and possible labor shortages are expected to amplify direct losses by almost 50%, which is reflected in our estimate.”
U.S.-based disaster modeling firm Enki Holdings L.L.C. said that hurricane Maria caused an estimated $30 billion worth of damage in Puerto Rico, Reuters reported. The hurricane, which hit the Caribbean island on Sep. 21, caused $20 billion in direct physical damage and $10 billion of economic losses. The storm downed nearly all power and communication lines on the island. Ricardo Rossello, Puerto Rico's governor, said that it could be months before electricity is restored to all customers.