It is not the best of times in the United States as the Hurricane Irma starts ravaging the coastal states of Florida and Georgia. With Hurricanes come flooding, disaster, and destruction, and with destruction comes an increase in insurance claims. Hence, insurance companies should be ready to pay claims to the tune of billions. Hurricane Irma arrived Florida last week and it will sweep through states of Florida and Georgia. Hurricane Irma hit Marco Island in Florida on Saturday as a scary Category 3 storm with high winds traveling at 115 miles an hour.
Hurricane Irma Devastation
Manufactured Homes Susceptible to Hurricane Damage
Insurance agents are worried that manufactured homes are highly liable to damage from the Hurricane because they tend to be vulnerable to high winds. More so, their durability depends on age regulations under which they are made and installed.
Hurricane Irma destroys homes
Irma May Cause Combined Losses of up to $60 Billion
According to an analysis from Air worldwide, a risk modeling Software Company, Hurricane Irma will cost between $20 billion to $60 billion. The cost of the destruction includes estimates from the United States and some islands in the Caribbean.
In the US alone, the loss may be up to $50 billion as Air noted in its risk analysis report. This is coming as the final loss report for Hurricane Harvey is still being calculated. The more devastating and powerful Irma is tormenting Florida and it is expected to bring huge financial losses along with the human loss.
Will the Government Offset Some Losses?
With the massive losses set to be recorded by the insurance industry, market commentators expect the government to bear a large chunk of the claims. Private insurance companies won’t be left out as they can expect to foot up to $4 billion. According to Air Worldwide, “According to AIR, in Florida, close to 80 percent of the total insured value is located in coastal counties, where the amount and value of exposure have been growing significantly for decades,” the reporter observed.
The Miami region in the southeast is the most densely populated but is not expected to record much devastation because, since the time of Hurricane Andrew in 1992, the region has maintained a strict preparation future Hurricane attacks.
This Is Not a Good Time to Own Insurance Stocks
Therefore, insurers whose clients own manufactured homes can start counting their huge losses even before the Hurricane ends. It is expected that claims from such structures will be very high especially those, which are not designed to withstand hurricanes.
When you sum up the likely damage toll that Hurricane Irma will cause in Georgia and Florida, with the regular claims that will be paid; you’ll come to the stark realization that this might not be a great time to own investments in insurance firms. The U.S. insurance industry will see industry margins tank this year as a large chunk of their revenue and portfolio holdings go into claims payments.