Hurricane Maria: More damage with each passing day

Hurricane Maria caused exceptional damage on Puerto Rico and other islands in the Caribbean and was the most destructive natural disaster in history for Dominica. On many islands it took several weeks before the infrastructure for electricity and water supply was operating reasonably efficiently again. Loss estimates proved extremely difficult to arrive at.


The storm system developed on 16 September some 800 km east of Barbados. Within 24 hours it had become a Category 1 hurricane moving westwards. In the space of 15 hours over the course of 18 September, the system strengthened to a Category 5 storm with wind speeds above 250 km/h, shortly before the eye passed directly over Dominica, leaving catastrophic damage in its wake.

Hurricane Maria caused exceptional damage on Puerto Rico and other islands in the Caribbean and was the most destructive natural disaster in history for Dominica.
Losses from Hurricane Irma

Compact system with extreme winds

In contrast to the enormous Hurricane Irma which had devastated the Lesser Antilles islands somewhat further north only two weeks earlier, Maria was a relatively small, but extremely intense, system. The highest wind speeds occurred in a ten-kilometre radius around the eye. During its rapid crossing of Dominica, Maria weakened to a Category 4 storm. On its continued path, the system touched the south-west regions of Guadeloupe. As the eye of the storm found itself over water again, Maria rapidly developed to a storm of the highest category. On 20 September, as it passed close to St. Croix, the most southerly of the three largest US Virgin Islands and home to roughly 50% of the population, gusts are estimated to have peaked at around 300 km/h. After Irma had struck the islands of St. Thomas and St. John in the northern part of the US Virgin Islands, the last island in the group was now exposed to severe squalls. 

At this point, the storm system was already undergoing what is known as an “eyewall replacement cycle”, where a new ring of convective airflow forms outside the centre. This cuts off the inner ring with the highest wind speed from its supply of energy, causing it to dissipate. As a result, the intensity of the system is reduced – for some time at least – while the radius of the highest wind speeds expands. Maria then struck Puerto Rico as a Category 4 hurricane on 20 September. The wind field was now large enough to cover almost the entire island. 

Maria took less than 12 hours to traverse the island, weakening in the process to a Category 2 storm before undergoing renewed intensification over water to Category 3. The remnants of the storm caused damage in the Dominican Republic, on the Turks and Caicos Islands, and on some sparsely populated islands in the Bahamas. The storm next tracked over the Atlantic in a north-easterly direction.

Hurricane Maria caused exceptional damage on Puerto Rico and other islands in the Caribbean and was the most destructive natural disaster in history for Dominica.
Wind speeds of Hurricane Irma

High level of uncertainty in estimating losses

At between US$ 15bn and US$ 85bn for the entire event, there were significant variations in the estimates for insured market losses that were published in the first few weeks after Maria. This wide range stems from a series of uncertainty factors. A major role is played in this context by the extent and estimation of the wind field and the storm surge area derived from it. Local floods cannot be determined through simulations alone because rain data is much too coarse in terms of spatial and temporal resolution. There is also generally no information on the degree of the soil’s saturation. The already soaked soil from Irma’s precipitation certainly played a role in the flooding during Maria. Similarly, the terrain models are too coarse for locally differentiated estimates. And lastly, there is little information on where, and to what extent, protective structures such as dykes have failed.

Pharmaceutical industry highly concentrated in Puerto Rico

A further source of uncertainties in loss simulations lies in the vulnerability curves used. For example, the storm reached wind speeds on Puerto Rico that were above the ranges validated with loss data. In addition, Puerto Rico in particular, involves pharmaceutical industry risks for which there is little loss experience. A large number of American and international pharmaceutical companies relocated their production facilities to Puerto Rico to take advantage of tax incentives. These ship their products from the island to the US mainland and abroad. In 2016, the island state, which is an unincorporated territory of the USA, exported pharmaceutical and medical products worth US$ 14.5bn, equivalent to more than 72% of Puerto Rico’s total exports. 

Furthermore, the final extent of Maria’s losses, but also with the other hurricanes of the season, was significantly influenced by what is known as post-loss amplification. For example, as the number of claims increases, so too does the demand for building materials and labour, and thus the costs for these services. This phenomenon is more pronounced in a year like 2017, when several severe hurricanes passed over the region. On the other hand the economic crisis and the high rate of unemployment on Puerto Rico may avoid a massive increase in labour costs.

Consequential losses from destroyed infrastructure

But the relatively sluggish aid efforts and the heavily damaged infrastructure had an adverse effect on loss development in Puerto Rico. More than a month after the event, roughly 80% of customers had still not been reconnected to the power grid. But the necessary infrastructure needs to be relatively intact before repairs can even begin. And the longer it takes to commence repairs, the higher the consequential losses that occur, for example from rainwater entering buildings. Not having an electricity supply also impacts the entire economy on the island, which can lead to massive losses in business interruption insurance. Put plainly, we can say that, months after Hurricane Maria hit, the loss development is still incomplete.

As late as the end of November, the loss amounts from Maria have not been finally determined. The estimate for overall losses is around US$ 63bn, with insured losses of around US$ 30bn. It will only be possible to make more precise loss estimates once we can predict how long reconstruction will take. For the future, the events of this hurricane season, and Hurricane Maria in particular, will provide new evidence of the degree to which post loss amplification can affect the loss amount.

In contrast to the long-lasting loss adjustment process, Hurricane Maria also showed the role insurance can play by financing emergency and recovery operations.

CRIFF SPC, an insurance pool that has been operating for the last ten years with the aim of providing Caribbean and Latin American states with prompt financial assistance after hurricanes and earthquakes, announced just days after the storm hit the island that it would pay US$ 19m to the government of Dominica.

Munich Re Experts
Peter Miesen
Peter Miesen
Senior Consultant Storm