Hurricane Dorian is now lashing the Florida coast after devastating the Bahamas and is expected to inflict “significant” losses on the insurance industry.
Now downgraded from a maximum category 5 hurricane to a category 2 storm, Dorian is at present about 160km off Florida’s east coast and packing maximum sustained winds of 177 kmh, according to the latest update from the National Hurricane Centre.
“On this track, the core of Hurricane Dorian will move dangerously close to the Florida east coast and the Georgia coast through Wednesday night,” the hurricane centre says.
Dorian is expected to move north up the warm Gulfstream current towards South and North Carolina, threatening the coasts of the two states later this week.
Current projections call for life-threatening storm surge and dangerous winds along portions of the Florida east coast and coasts of Georgia and the Carolinas.
S&P says the magnitude of insured losses “could be significant” if the storm makes landfall as a category 4 hurricane in the densely populated areas of the Florida peninsula.
The intensity of Dorian has far exceeded that of Irma, which made landfall as a category 3 hurricane in Florida in 2017 and left insurers with losses of $US30 billion ($44.3 billion).
“Florida is the largest property & catastrophe market in the world, and is a peak risk zone for many einsurers,” S&P says.
“Reinsurers won’t remain unscathed from Hurricane Dorian’s impact, considering that the Florida property market is largely covered by small to midsize mono-state or regional primary insurers that rely heavily on reinsurance.”
Risk modeller RMS says a small deviation to the west in the north-heading path of Dorian could bring the storm closer to the Florida coastline. Before Dorian, Hurricane Andrew in 1992 was the only category 5 hurricane to hit the Bahamas, RMS says.
Dorian stalled over the Bahamas for more than 24 hours, unleashing a wave of destruction in Abaco Island and Grand Bahama. About 45% of homes in the two affected areas are either severely damaged or destroyed, according to the Red Cross.
At least seven deaths have been reported, and the toll is expected to rise as rescue work continues.