Hurricane Harvey’s death toll of at least 70 lives lost so far will be accompanied by tens of billions of dollars in property damage that AccuWeather estimates will be worse than any previous storm to hit the United States.
AccuWeather predicts that Hurricane Harvey, which has slammed Texas and flooded much of America’s fourth-largest city of Houston, could become the costliest natural disaster in U.S. history. The extent of the damage from winds and flooding also could hurt the U.S. economy sufficiently to delay the next interest rate hike by the Federal Reserve Bank, predicted Dr. Joel Myers, the founder, president and chairman of AccuWeather.
Specifically, AccuWeather expects the ultimate property damage of Hurricane Harvey to top the combined, inflation-adjusted toll of $70 billion from Hurricane Katrina in August 2005 and Superstorm Sandy in October 2012.
Top 10 Costliest Catastrophes in the United States
The costs include property losses only and excludes flood damage covered by the federally administered National Flood Insurance Program.
The adjusted numbers have been adjusted for inflation through 2016 by ISO using the GDP implicit price deflator.
Data Source: Property Claim Services® (PCS®), a Verisk Analytics® business.
Billions of dollars of insured losses will be borne by major property and casualty insurers that write a large portion of the auto policies in Texas. They include State Farm Mutual Automobile Insurance, Allstate Insurance (NYSE:ALL), Farmers Insurance Exchange, Geico affiliate National Indemnity Company, the Progressive Group (NYSE:PGR) and MetLife (NYSE:MET) unit Metropolitan Property and Casualty Insurance.
Kai Pan, an insurance equity analyst at Morgan Stanley, told The New York Times that insurance stocks generally decline immediately after a natural disaster due to the possibility of big losses, then recover three to six months later as losses “become more defined.”
AccuWeather raised its estimate of Hurricane Harvey’s impact to the nation’s gross national product (GDP), as of Aug. 31, to $190 billion, or a full one percent of GDP, which would far exceed the economic impact of the combined devastation of Hurricane Katrina and Superstorm Sandy. That estimate is based on a current U.S. GDP of $19 trillion and includes both insured and uninsured losses.
As a result, business leaders, the Federal Reserve, major banks, insurance companies and others should begin to factor in the negative impact Hurricane Harvey will wield on business, corporate earnings and employment, Dr. Myers said.
Parts of Houston will be uninhabitable for weeks and possibly months due to water damage, mold, disease-ridden water and all of the ill effects that will follow this “1,000-year flood,” Dr. Myers said.
Click here to read the rest of the article by Paul Dykewicz: Hurricane Harvey Could Cause Record Property Damage.