Insurers Breathe Sigh of Relief Over Irma

09.20.2017


By Liz Carey

Tallahassee, FL (WorkersCompensation.com) – With the worst of Hurricane Irma over, insurers are breathing a sigh of relief that damage estimates have spiraled downward since last week. 

According to Financial Times, damage estimates in Florida from modelling firm AIR have been set between $20 and $40 billion, down from an estimated $100 billion during last week’s lead up to the storm.

Hurricane Irma hit Florida over the weekend, striking the Florida Keys first, before heading up the western coast of the state. By Monday mid-morning, the storm had been downgraded to a tropical storm as it headed into Georgia.

More than 6 million people in Florida, and another 300,000 people in Georgia, were without power as of noon on Monday.

According to AIR, properties on the southwest coast of Florida are worth $11 trillion in total, but those on the southeast coast, which includes Miami and the Keys, are worth $1.5 trillion.

“It is not as bad as people were expecting last week,” Robert DeRose, a senior director at rating agency AM Best, told Financial Times. He characterized it as “a material loss.”

Most of the losses, he said, would be taken on by primary insurers, with the rest passed to the reinsurance industry. The losses, he said, are not unexpected.

“I don’t think the loss is from the magnitude that anyone will be surprised by it,” he told Financial Times. “It is a known exposure and a modelled exposure.”

But the state braced for the storm surge on Monday, expected to be as deep as 10 to 15 feet in some places.

Once the storm surge retreats, construction will begin on the damaged properties.

Peter Rousmaniere, an industry expert and WorkersCompensation.com columnist, said the construction costs of Irma could top $504 million.

Rousmaniere said construction labor costs would amount to approximately 30 percent of all damages estimates. And labor costs, he estimated in a weekend memo to WorkersCompensation.com, included workers’ compensation premium costs, which would be about $9 billion. He estimated that total work injury losses would be $504 million.

But one of the problems facing the state may not be worker injury, but just finding workers in the first place.

Frank Pennachio, co-founder of Oceanus Partners, said the biggest challenge in Florida is going to be finding workers to do the construction.

“Before Irma, the economy was okay, not great, but okay,” Pennachio said in an interview with WorkersCompensation.com. “I think the question is how many construction workers are we going to be able to find to do the work. Even before the storm, people were having difficulty finding construction workers. I don’t know where we’re going to find the people.”

Clean up after Irma had already begun in some parts of Florida on Monday afternoon. In areas like Jacksonville, record flooding left scores in need of rescue. John Ward, director of emergency services, told WVTM that between 400 and 500 houses in that area had received severe damage, but there had been no deaths or injuries.

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