Financial Impact of Ian Expected to be $63 Billion

Our hearts go out to all that have been impacted by Hurricane Ian. Just when it appeared we had escaped a hurricane season on the Florida peninsula without incident, the second largest storm in history changed all that.

Five years before Hurricane Andrew, in 1987, economist Karen Clark had founded the first catastrophe modeling company: Applied Insurance Research (a Verisk company now). Clark started the company after realizing the usefulness of modeling tropical storms using computers — a technique that was predominately used in academia at the time to study storms' behavior and evolution — to estimate damage and loss. Her model brought insurer exposure was on target with Andrew and it was off to the races to invent, refine and analyze property catastrophe models. Loyds thought it would cost $6 billion, her models said $13 billion and as they say, the rest is history (and why we live in the day of “the spaghetti model”.

Very cool interview with Ms. Clarke just this past summer can be found here for our friends at Insurance Journal –

https://www.insurancejournal.com/magazines/mag-features/2022/06/20/672206.htm

So back to Ian. At present, it is billed per Ms. Clarke’s firm to be the second highest payout in history, only behind Katrina. This number of $63 billion contemplates both insured and non-insured losses. Unfortunately, a larger percentage of loss than normal will be uninsured based on unusual flooding/lack of flood insurance and heavy wind deductibles.

We will continue to monitor the issues surrounding Ian, most importantly the people involved, and how to get them back to some semblance of normality.

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