As Harvey moved inland after making landfall over the Texas Gulf coast a week ago as a Category 4 hurricane, catastrophe modeling firms and analysts estimated insured losses of more than $15 billion.
But the losses for the most part will be absorbed by insurers and won’t lead to market-wide rate increases, one analyst said.
The storm will cause approximately $15.4 billion in insured losses, excluding claims filed through National Flood Insurance Program, Boston-based catastrophe modeling firm Karen Clark & Co. said Friday.
Morgan Stanley also pinned the insured loss at more than $15 billion but analysts the New York-based investment bank gave a much broader range of estimates.
A Thursday report from Aon Benfield’s Impact Forecasting unit said that as of Aug. 31, preliminary data showed that 2,881 businesses in Texas suffered “major damage.”
While the insured losses may help sustain existing rate hikes in the auto insurance sector, a market-wide hardening is unlikely, said analysts at Analysts at New York-based Keefe, Bruyette & Woods Inc. noted in a Friday research report.
“Although we’re broadly skeptical that Hurricane Harvey will drive industrywide rate increases in the mostly-soft insurance and reinsurance markets, we think it will prolong the momentum of already-ongoing personal and commercial auto rate increases,” the report said.
Historically, although Harvey will have caused the largest insured hurricane losses in Texas in current dollars, it is not a record breaker when factoring in population and property value growth, according to the Clark statement. The firm estimates that two historical Category 4 hurricanes, the 1900 and 1915 Galveston storms, would each cause over $50 billion in insured losses if they occurred today.
Source: Business Insurance