A recent report by Karen Clark & Company (KCC) found that there have been 28 hurricanes in US history that, if they were to strike today, would cause $10 billion or more in insured losses.
KCC examined the nearly 180 hurricanes that have hit the United States since 1900 and determined that 28 of those storms would result in $10 billion or more in insured losses in 2012 given the greater number, size and cost of structures in their paths.
The report found that the US can expect a hurricane loss of $10 billion or greater once every four years on average. This equates to a 25% probability this year. A $50 billion hurricane loss has only a 5% probability this year.
“We conducted this study because our clients asked us to provide historical event information as another tool they can use to assess their catastrophe loss potential,” said Glen Daraskevich, Senior Vice President, KCC in a press release.
The study found that other loss estimates tend to underestimate what the insured losses of historical hurricanes would be today because they tend to ignore the impact of increasing population, larger structures and the fact that building square foot construction costs tend to rise faster than the general rate of inflation.
Developing robust estimates of the insured losses from historical hurricanes required multiple tools and data sources, including knowledge of current property values, the size and extent of the hurricane windfields, and historical loss information. For this study, KCC combined approaches, gathering and cross-referencing information, modifying that information as necessary to ensure reliability, and using it to estimate the losses for each hurricane.
KCC estimates the 1926 Great Miami Hurricane would result in a $125 billion loss today, making it the most expensive historical hurricane. The two deadliest hurricanes in US history, the 1928 Okeechobee Hurricane and the Galveston storm of 1900, are the next costliest at $65 billion and $50 billion, respectively. If 1992’s Hurricane Andrew hit today, KCC estimates it would cost $50 billion and 2005’s Hurricane Katrina would cost $40 billion.
