100 year hurricane could cause more than $250B losses in Florida

If a major hurricane with a 1-in-100 chance of occurring in a given year were to hit downtown Miami, it would cause more than $250 billion in insured losses, according to a new report that blames soaring property values in disaster-prone areas.

Since Hurricane Andrew struck south of Miami in 1992, coastal property values in Florida have risen from $870 billion to over $3.7 trillion—more than a fourfold increase, according to the report from disaster modeling experts Karen Clark & Co. Overall, US property values have increased more than nine percent since 2012.

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The Clark report notes that in most cases, the potential insured losses from major urban disasters are much larger than what most insurers have assumed their maximum losses could be.

A similar event on the Texas coastline would cause insurance industry losses above $100 billion, compared to the estimated Probable Maximum Loss (PML) of $40-50 billion, the report said.

The report concluded that estimates of potential maximum loss can give a false sense of security, since these are significantly below the expected losses for a 100-year hurricane event.

Although no major hurricane has struck a densely populated urban area in decades, if such a natural disaster makes a hit, the property damage and economic loss will far exceed the losses from Hurricane Katrina and the recent Superstorm Sandy, Clark wrote.

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