Hurricane Milton, a tropical cyclone that swept across Florida last week, has left insurers facing a
massive storm bill. Risk modeling firm Karen Clark & Co. estimates
that the storm could result in $36 billion in claims, BNN Bloomberg reported.
While the damage wasn’t as severe as early predictions
suggested, Milton has reportedly impacted the insurance sector, coming just
weeks after Hurricane Helene brought similar devastation. The damages were
caused by high winds, storm surges, and inland flooding,
Impact on the Insurance Industry
Hurricane Milton was reportedly one of the most severe
Atlantic hurricanes, with winds reaching 120 mph. It swept through central
Florida, leaving a trail of destruction and millions without power.
According to Moody’s, the combined insured losses from
both Milton and Helene could be as high as $55 billion, the Financial Times
reported. Private insurers and reinsurers will reportedly bear most of the
losses caused by Hurricane Milton.
Early estimates put the damage from Hurricane Milton in the tens of billions of dollars. It’s the latest example of how climate change is making large parts of the planet too expensive to protect https://t.co/Rd1VD2a3MH
— Bloomberg Markets (@markets) October 14, 2024
The recent storms have raised concerns about the
broader economic impacts on the insurance industry. With property catastrophe
reinsurance prices likely to increase during the critical January renewals, the
cost of maintaining insurance coverage in high-risk areas like Florida could
skyrocket. According to weather forecasters cited by BBC, the storms could continue in the eastern parts of the state.
Hurricane Milton’s Claims
Karen Clark & Co.’s estimate for Hurricane
Milton’s claims remains lower than Hurricane Ian, which led to $62 billion in
payments in 2022, or Hurricane Katrina, whose damage adjusted for inflation
totaled $102 billion in 2005.
However, Hurricane Milton’s $36 billion in payouts is
part of a larger trend as climate change continues to drive more severe storms.
According to a group of scientists, Milton’s intensity worsened because of
human-caused climate change.
Besides the impact of Hurricane Milton, the US financial market is facing uncertainty ahead of the upcoming presidential elections. According to a report by Finance Magnates, history shows that US elections have never led to anything extraordinary in terms of financial markets’ performance.
The report showed that some research highlights a
correlation between the party in power and economic performance. Data from the
post-World War II reportedly highlight that the US economy has grown faster
under Democratic presidents than Republican presidents.
This article was written by Jared Kirui at www.financemagnates.com.
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