Hurricane Michael -- Ferocious and Focused, yet Finite

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Oct 19, 2018, 10:21 ET

COLUMBUS, Ohio, Oct. 19, 2018 /PRNewswire/ -- Hurricane Michael was the third-most intense Atlantic hurricane to make landfall in the United States, if measured by pressure. Only the 1935 Labor Day hurricane and Hurricane Camille in 1969 had higher pressure. Michael was also the strongest hurricane in terms of maximum sustained wind speed to strike since Andrew in 1992.

Michael was the strongest hurricane to hit the Florida Panhandle. It was the fourth-strongest hurricane to make landfall in the contiguous United States, by wind speed. Estimates of insured property damage, excluding flood losses, range up to $15 or $20 billion.

Despite the financial impact of Hurricane Irma in 2017, Demotech rated carriers impacted by Michael are positioned to respond to the needs of their policyholders. According to Joseph L. Petrelli, President and co-founder, Demotech, Inc., "In 1996, the State of Florida Office of Insurance Regulation and the state residual market mechanism initiated an effort to depopulate the residual market. The depopulation effort included legislation to permit the State to offer financial incentives to insurers. From that time, Demotech has reviewed and rated approximately 50 Florida domestic insurers each year. Our team of experienced, credentialed professionals requires a rigorous, horizontal and vertical reinsurance program as part of our review process."

Vice President and co-founder Sharon Romano, CPCU, AIAF, CCP, ARC notes "The estimates of insured damage caused by Michael are staggering. However, those estimates are applicable to the entire industry. We do not review all carriers impacted by Michael; however, the carriers reviewed and rated by Demotech purchased, in the aggregate, more than $28 billion of first event catastrophe coverage. Despite the devastation, as of this date, we believe that every carrier that Demotech reviews has the capital and the reinsurance necessary to respond to Hurricane Michael."

Petrelli noted "The carriers that we work with purchase reinsurance at unprecedented levels. We did not rate any of the insurers that failed due to Andrew; however, we studied the 20 liquidations that (then) Commissioner Gallagher had to address. The lesson learned was 'buy more reinsurance'. Our clients strive to serve Floridians. They know that requires a rigorous reinsurance program."

About Demotech, Inc.
Demotech, Inc. is a financial analysis firm specializing in evaluating the financial stability of regional and specialty insurers. Since 1985, Demotech's philosophy is to review and evaluate insurers based on their area of focus and the execution of their business model rather than solely on financial size. Visit www.demotech.com for more information.

SOURCE Demotech, Inc.