Hurricane Beryl loss estimates in U.S. inch up to $4.5 billion
Most insured losses will be retained by primary insurers while economic losses may trigger parametric coverages.
One the heels of Karen Clark & Co.’s preliminary estimate that insured losses from Hurricane Beryl would be around $2.7 billion in the United States, Moody’s RMS™ Event Response has determined that figure could be as high as $4.5 billion, which represents costs from wind, storm-surge and precipitation-induced damage.
Related: A closer look at Hurricane Beryl damage, recovery efforts
“Hurricane Beryl was yet another complex and impactful event across multiple fronts and regions,” Jeff Waters, director of North Atlantic Hurricane Models at Moody’s, said in a prepared statement. “Parts of the Caribbean sustained catastrophic damage that will unfortunately take a long time to fully recover.”
Moody’s analysts anticipate most insured losses from Beryl will be retained by primary insurers while some economic losses (particularly in the Caribbean) will trigger parametric policies.
“Hurricane Beryl seemingly sets the tone for an expected active and potentially impactful North Atlantic Hurricane season,” said Julie Serakos, managing director of Product Management at Moody’s. “All (re)insurance value chain market segments need to prepare to monitor and respond to unfolding events, with the latest Moody’s RMS modeling tools and exposure datasets reflecting the most current and complete views of the hurricane risk landscape.”
Tech-enabled modeling
KCC turned to its high-resolution U.S. Hurricane Reference Model to determine that privately insured loss from Hurricane Beryl will be close to $510 million in the Caribbean and $90 million in Mexico.
KCC’s U.S. estimate includes the privately insured damage to residential, commercial, and industrial properties and automobiles, as well as business interruption, the company said in a statement. It does not include boats, offshore properties, or NFIP losses. The estimates in the Caribbean and Mexico do not include automobiles or business interruption.
Here are some of the storm’s notable characteristics, according to KCC:
- During early development, Beryl rapidly intensified from a tropical depression to a Category 3 hurricane in just 42 hours.
- On July 2, 2024, Hurricane Beryl became the earliest Category 5 hurricane on record surpassing the previous record of Hurricane Emily by over two weeks. Beryl was also the strongest July Atlantic hurricane on record.
- The path of Hurricane Beryl stretched from the Windward Islands in the Caribbean all the way to the Texas Gulf Coast. The storm made three separate landfalls: Carrico Island, Grenada on July 1; Tulum, Mexico on July 5; and finally Matagorda, Texas on July 8.
- The storm re-intensified in the Gulf of Mexico, going from a tropical storm to a Category 1 just before making landfall in Texas.
- Hurricane Beryl generated accumulated cyclone energy (ACE) of over 35 (x 104 kt2), more than 25% of the average season ACE, and bringing the 2024 Atlantic Hurricane Season ACE to a level that is typical of late August and early September.
Spotlight on resiliency
Moody’s analysis indicated building codes in Texas may have helped limit storm damage.
“Texas building codes — while not as stringent as other states — should allow most structures to withstand the winds reported from Beryl, but with the region’s high exposure density, significant amounts of expected minor/moderate damage will contribute to the overall total insured losses,” Waters said. “Estimated losses reflect property damage and business interruption to residential, commercial, industrial, watercraft, and automobile lines of business, and consider sources of post-event loss amplification (PLA) and non-modeled sources of loss.”
Moody’s also noted the secondary losses associated with the storm.
“In addition to wind and water modeled impacts from Beryl, numerous treefall-related damages, infrastructure washouts to roads and railways, and tornado-related damages were reported,” said Raj Vojjala, managing director of Model Development with Moody’s. “Together with significant power outages (over two million at peak), all could exacerbate damage, prolong repairs and business interruption, and cause pockets of claims inflation.”
Vojjala also pointed out that conditions could be ripe for coverage lawsuits.
“After Hurricane Harvey in 2017, South Texas witnessed notable coverage leakage from inland flood on wind policies and litigation-related impacts,” he said. “To a much lesser degree, Beryl may also produce similar effects.”
Lessons from the storm
Nick Samuels, senior vice president for Moody’s Ratings, said the storm’s impact highlighted how vulnerable certain locations are to extreme weather events and the need for proactive regulatory measures.
“Hurricane Beryl’s effect on the Texas Gulf Coast underlines the area’s susceptibility to economic repercussions from hurricane-related surge, flooding, and wind damage,” Samuels said in a statement. “These risks necessitate climate adaptation investments by state and local authorities.”
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