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Hurricane Beryl's early start highlights changing risk environment

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Vehicles sit in floodwater in Houston, Texas, after the passage of Hurricane Beryl on July 8. Source: Brandon Bell/Getty Images for Getty Images

While US insurers can handle the losses from Hurricane Beryl, the record-breaking early appearance of a Category-5 storm signals an evolving and more unpredictable risk environment for the industry.

Beryl made landfall in the US on July 8 at Matagorda, 100 miles SSW of Houston, as a Category-1 hurricane bringing heavy winds and severe storm surges to the entire Texas Gulf Coast and southwest Louisiana. Acting Texas Gov. Dan Patrick put 121 counties under a disaster declaration related to the storm.

Overall losses for US insurers from the storm, which became the Atlantic Basin's earliest Category-5 hurricane ever, should be between $750 million and $1.2 billion, according to an estimate from BMS Group.

The early appearance of such a severe storm points to how the length of the hurricane season, which usually lasts from June 1 through Nov. 30, is changing, according to Loretta Worters of the Insurance Information Institute.

"We've seen the season going later than usual, but now we're seeing it start earlier," Worters said in an interview. "And we're seeing more frequent, more severe storms earlier in the season."

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Exposure

The top three carriers in terms of potential exposure to hurricane losses in Texas are State Farm Mutual Automobile Insurance Co. with $6.1 billion, The Allstate Corp. with $4.2 billion and The Progressive Corp. with $3.4 billion, while The Travelers Cos. Inc. has $1.9 billion in exposure, Janney analyst Robert Farnham said in a research note.

The storm is expected to bring 2-4 inches of rain as it travels northeastward into Michigan and northeast Ohio, but that amount could reach 4-8 inches in some areas.

The National Hurricane Center downgraded Beryl to a tropical depression from a tropical storm on July 9 and put flood watches in effect from eastern Oklahoma to southern Michigan.

Piper Sandler analyst Paul Newsome said in a note that a Category-1 storm hitting the US like Beryl is "unlikely to create insurance-covered damage sufficient to have a material impact on the insurance industry."

Impact

The surge over the Lone Star State came after Beryl plowed through the Caribbean and Mexico.

CoreLogic said the storm hit both Jamaica and the Cayman Islands on July 3 at Category-5, causing estimated insurable losses of $400 million and $700 million, respectively, then passed over Mexico's Yucatan Peninsula at Category-2 and left behind less than $1 billion in estimated insurable losses.

Hurricane Beryl evolved into the earliest Category-5 storm on record on July 2 after making landfall in the Grenadines. Before that, Hurricane Emily in 2005 was the earliest, developing into a Category-5 storm on July 16.

Beryl also became the strongest July Atlantic hurricane ever recorded, with winds of 165 mph. Emily's winds reached a max velocity of 160 mph.

This year's hurricane season is now expected to be more active than originally forecast. Colorado State University, in an update of its Forecast for 2024 Hurricane Activity, raised the number of predicted named storms to 25 from 23, and is now predicting six major hurricanes instead of five.