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.