Hurricane Debby, the second hurricane of the Atlantic season, is forecast to cause significant flooding from storm surge along Florida's Gulf Coast and heavy rainfall across parts of Florida, Georgia, and South Carolina in the coming days.
James Eck, vice president and senior credit officer in the Financial Institutions Group at Moody's Ratings, offered an initial assessment of the expected impact on insurers.
"We anticipate that most insured losses from Hurricane Debby will fall within the primary insurers' retentions under their reinsurance coverages,” Eck said.
“In recent years, primary insurers have been retaining more risk, with attachment points—the threshold at which a policy begins to cover a loss—having increased. This trend has led to primary companies absorbing a greater share of losses from small to midsize catastrophe events.”.
Sarah Hartley, director of Moody’s RMS Event Response, added insights on the storm's potential impact.
“Debby is projected to slow down as it moves into northern Florida and the Southeast US, bringing the risk of excessive rainfall and flooding,” Hartley said. “Forecasts indicate up to 30 inches of rain, particularly in Georgia and South Carolina, which could surpass recent historical records. Debby's combination of hurricane-force winds, storm surge, heavy rainfall, and potential tornadoes underscores the complex risks associated with hurricanes for the insurance industry.”
According to Acrisure Re head of catastrophe modeling Ming Li, Hurricane Debby made landfall around 7:00 AM EDT near Steinhatchee, Florida, as a Category 1 hurricane, close to where Hurricane Idalia made landfall last year.
The storm is expected to weaken as its center remains over land, but some restrengthening is anticipated when it moves offshore late Tuesday. However, only modest intensification is forecast over the Atlantic.
The slow-moving nature of the storm is expected to result in extreme flooding across the southeastern United States, with heavy rainfall potentially causing historic, catastrophic flooding in southeast Georgia and the coastal plain of South Carolina through Saturday morning.
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