Hurricane Otis insured losses could hit almost $7 billion
Moody’s RMS estimates insured losses relating to Hurricane Otis to be between $US2.5 billion ($3.84 billion) and $US4.5 billion ($6.91 billion), after the “unprecedented” category five storm hit Mexico’s west coast.
Otis made landfall in Acapulco, Mexico, last month with winds of up to 165 mph (270 kph), the highest recorded in the country.
The hurricane caused significant damage to coastal residential and commercial properties, marking one of the costliest storms in economic and insured losses, despite “common themes” of underinsurance in the region.
“The strongest winds from the event caused damage to a large stretch of modern, high-rise exposure along Acapulco Bay, including apartment complexes, hotels, and resorts,” Moody’s RMS Model Development VP Rajkiran Vojjala said.
“Aerial imagery and reconnaissance to date show that Otis caused some of the most incredible wind damage to modern-day high-rise structures we have ever seen, as observed winds well-exceeded prevalent design wind speeds for the region.
“Recovery and reconstruction efforts could take years. During this time, we expect a high number of total constructive losses given the damage severity and complexity of repairs.”
Moody’s marks wind damage as the primary driver of losses, with storm surges and rain-induced flooding also contributing.
Moody’s North Atlantic Hurricane Models Staff Product Manager Jeff Waters says the hurricane experienced an “unexpected period of rapid intensification” in the 24 hours before it made landfall.
“Observational windspeed data – while limited – suggests a broad swath of exposure and population was affected by major hurricane-level wind gusts,” Mr Waters said.
“Prior to Otis, this region of Mexico had never experienced a category five hurricane landfall, underscoring the importance of using catastrophe models to fill in gaps associated with the historical record, understand the events that haven’t happened yet but could, and the potential impacts on present-day exposure at-risk.”