Earl’s Impact: AIR Worldwide Estimates $50 to $150 million in Insured Losses in Virgin Islands, Puerto Rico, St. Maarten, and St. Martin

With Hurricane Earl drawing closer to the United States Middle Atlantic coastline, AIR Worldwide (Boston) estimated that insured losses from its passage near the northern Leeward Islands earlier this week are between $50 million and $150 million. The estimate includes wind damage to insured onshore properties in the Virgin Islands, St. Maarten, St. Martin and Puerto Rico. Nearly half of the total is attributed to St. Maarten, AIR reported, where high winds downed trees and power lines, and peeled off roofs and signage.

As of Wednesday evening, Earl was expected to make its closest approach to North Carolina on Friday morning, at Category 3 strength. According to the National Hurricane Center’s most likely track as of the September 1 11:00 am advisory, the center of Earl will bypass the tip of Cape Hatteras about 75 miles to the east. “Even without making direct landfall, coastal areas of the Outer Banks are likely to feel Earl’s impact, including tropical storm force winds and high waves,” said Dr. Peter Dailey, director of atmospheric science at AIR Worldwide, in a press release. “If Earl tracks further west, storm surge could pose a real threat. Results of AIR’s analysis show that for the left-most NHC track, the greatest surge risk will be along the Outer Banks of North Carolina. The risk diminishes substantially if Earl tracks along the central portion of the NHC cone of uncertainty.”

According to AIR Worldwide, the last major hurricane to make landfall in North Carolina was Hurricane Floyd in 1999. Floyd caused estimated insured losses of $2 billion in 1999 dollars and was the state's deadliest hurricane.

According to AIR Worldwide, despite the fact that Earl will start to decay as it turns toward the northeast and moves beyond the Outer Banks, it is still expected to pack winds of up to 100 mph as it moves off the coast of Cape Cod—and it may still be at hurricane intensity when it finally comes onshore in Nova Scotia. According to the NHC’s current most likely track, Earl will pass about 70 miles to the east of Cape Cod and 60 miles from Nantucket.

Earlier this week, Earl’s heavy rain and wind caused damage in some of the northern Leeward Islands, blowing roofs off homes, flooding low-lying areas, and disrupting electricity. Earl’s largest impact in many of the northern Leeward Islands was flooding; Antigua received seven inches of rain and 10-foot waves came ashore on its coast. The majority of the northernmost Leeward Islands reported some localized flooding. In Anguilla, winds of 80 to 90 miles per hour blew the roofs off buildings and caused damage to many utility poles. Homes were also damaged in Antigua, St. Maarten, and Barbuda. The closest island to Earl’s center was Anegada, in the British Virgin Islands; its marina sustained significant damage, AIR Worldwide reported. AIR stresses that its insured loss estimates for this region are for modeled countries only; these are Puerto Rico, St. Maarten, St. Martin and the US Virgin Islands. AIR estimates that 40 to 50 percent of losses are from St. Maarten.

AIR’s insured loss estimates for the Caribbean reflect insured wind damage to onshore property (residential, commercial/ industrial, auto), both structures and their contents. They do not reflect: business interruption losses; losses to uninsured properties; losses to infrastructure; losses from non-modeled secondary perils, including coastal and inland flood; or other non-modeled sources of loss, including loss adjustment expenses, clean-up of debris and hazardous waste materials.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio