The destruction caused by Hurricane Harvey is expected to cost insurers hundreds of millions of dollars, as recovery efforts continue.
HUD Secretary Ben Carson said on Wednesday that recovery from both Harvey and Irma will take years, which could mean even bigger losses for the insurance industry.
“What I’ve seen has really been a catastrophe, an unprecedented amount of damage from natural disasters which means we need an unprecedented response,” said Carson, speaking at the HUD headquarters. “Funding allocations are an overriding priority. We want to move the compensation into people’s hands as quickly as possible. But despite our best efforts, that of course will take some time.”
Allstate, one of the largest car and home insurers in Texas, expects losses from Hurricane Harvey alone to cost the company $593 million. The figure is three times the losses the company recorded in July, which came in at $181 million.
That estimate doesn’t include losses from Hurricane Irma.
Allstate says more than half of its losses stem from vehicle damage. About $53 million of the losses weren’t covered by auto protection contracts or reinsurance. The total losses may grow, the insurer has warned.
“Given the complexity of this event, we may experience a higher level of uncertainty in our estimates due to the inability of our customers to gain access to their homes and autos and submit claims,” Allstate said.
Other insurance companies have released preliminary estimates of the damages caused by the recent damaging storms.
Farmers Insurance estimates losses of $500 million on 40,000 claims. Claims are expected to rise to 60,000.
Progressive said 90% of its $254 million in losses last month was due to Harvey. The majority of that – $228 million – was from vehicles.
HUD will also have its hands full in the coming months and years. Over 700,000 people have registered for housing assistance in Florida and Texas. Inspectors have examined approximately 40% of the claims in Texas and just 6% in Florida.
Officials hope to start delivering aid by November, but Hurricane Maria’s destruction in Puerto Rico may delay the timeline.
Congress earlier this month approved $7.4 billion in government funding for a Community Development Block Grant to help meet the needs of: businesses that don’t qualify for SBA loans, low- to moderate-income families with no flood insurance, and infrastructure projects that local governments don’t have the budget to repair.
“We know that this is a recovery that’s going to take years – could be many years – and we’re prepared to be here for the long run,” said Carson.
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