Irma cost could hit $125 billion — or double that if it stays at Category 5, Credit Suisse says

Key Points
  • Models suggest that should Hurricane Irma hit Miami as a Category 4 storm, the price tag would be $125 billion, according to Credit Suisse.
  • Should Irma continue as a Category 5, however, the cost could well double that, the bank said. A southwestern turn, conversely, would bring the cost down to less than $50 billion.
Difficult to track exact path of monster storm Irma

While how much damage Hurricane Irma will cause once it hits land is still very much in doubt, one scenario has emerged that puts the cost at record levels.

Historical models suggest that Irma's price tag could reach $125 billion should a Category 4 Hurricane strike Miami directly, according to a note from Credit Suisse. That would correspond with a 1-in-100-year event as Irma currently is projected to be.

Of course, there are scenarios where that could be considerably worse, or not as bad.

"Some very sizable insured loss events are within the subset of possible projected Irma paths," research analyst Ryan Tunis said. "The odds of [a Category 4 hitting Miami] event are clearly currently much greater than 1 in 100 given the path and size of the storm."

In its current form, Irma is actually a Category 5 storm and is the largest ever to hit the Atlantic outside of the Caribbean and Gulf of Mexico. The National Hurricane Center warned that the storm is "potentially catastrophic" and most recently was bearing down on the Virgin Islands and Puerto Rico.

What happens from there will determine the fate of Floridians.

"The chance of direct impacts from Irma beginning later this week and this weekend from wind, storm surge and rainfall continues to increase in the Florida Keys and portions of the Florida peninsula," the center said. "However, it is too soon to specify the timing and magnitude of these impacts."

Hurricane Irma, a record Category 5 storm, is seen in this NOAA National Weather Service National Hurricane Center image from GOES-16 satellite taken on September 5, 2017.
NOAA | Reuters

Should Irma hit the southwestern part of Florida, Credit Suisse estimates the damage could be less than $50 billion.

But if it stays a Category 5 and hits Miami, the $125 billion estimate could be doubled, making it by far the costliest storm ever. At $105.8 billion, Hurricane Katrina in 2005 is currently the leader, though Hurricane Harvey, which struck Houston two weeks ago, could well surpass that total.

From an insurance perspective, Credit Suisse said private reinsurers will be hit hardest as many standard private insurers have left Florida over the past 15 years.

Allstate shares actually rebounded in early trading Wednesday after falling nearly 5 percent over the past several days. Progressive shares also bounced back, gaining 1 percent early after a 10.6 percent drop from just before Harvey struck.

WATCH: How Floridians are preparing as Irma looms.

Florida hunkers down ahead of Hurricane Irma