Reinsurance Analytics Update: Hurricanes, earthquakes and solar flares
Hurricane Irma continues its path of destruction. While it could still change course, the majority of Hurricane models predict Irma will make landfall in Florida, around Cape Sable on the south-western tip, early on Sunday morning. Hurricane Irma now looks set to traverse the length of Florida and reach Alabama and Georgia on Monday morning.
Irma has weakened to a category 4 but the radius of maximum winds has expanded. Even with the westward shift in its predicted path, Miami is still at great risk of high storm surges and high hurricane force winds. Coupled with significant lightning strikes, large quantities of rain and the propensity for tornadoes to spawn on the edges of large hurricanes, the next few days will be especially tough for all of Florida.
Hurricane Jose strengthened to a major category 3 hurricane last night. While it is currently south of the path Hurricane Irma took, Jose is expected to turn northwards and cross over Irma’s path. As hurricanes churn up the water behind them, the water is significantly cooler than the surroundings. This should limit Jose and hopefully weaken it as it progresses north. The Leeward Islands are likely to experience some effects from Jose, but nothing close to the impact of Irma.
With Mexico bracing itself for Hurricane Katia’s, now a category 2, arrival in the next day, the massive 8.1 magnitude earthquake off the south-west coast will have been a dramatic reminder of the unexpected and devastating power from earthquakes. The epicentre was nearly 100km away from the nearest town and 35km underground, however, due to the immense size of this quake, there will have been damage to unreinforced buildings all the way to Mexico City (960km away). There have already been reports of dozens of casualties, and the numerous aftershocks will likely cause already weakened buildings to collapse.
Despite the very prominent and well investigated fault lines, earthquake insurance penetration in Mexico and Central America is quite low. The 2010 Baja California earthquake (magnitude 7.2) caused around $0.95bn in economic losses in Mexico alone, yet insured losses were only in the region of $300m.
It’s likely to be at least a week before any accurate estimates of damage for this latest earthquake are calculated. Given the reports of town halls, churches and other large structures that have completely collapsed, this will be a significant loss for Mexico.
Solar Flare Activity
NASA has reported unusual sun-spot activity and significant solar flares. The Sun goes through 11-year solar cycles with the previous, relatively low, peak in 2014. The Sun should be heading into a period of low activity so these flares are surprising. The sheer quantity of solar material flung into space from these coronal mass ejections is likely to affect radio and satellites over the weekend. GPS satellites have a great deal of redundancy to cover these situations but there has already been a loss of signal in some regions.
By Ian Scott – Senior Risk Analyst