While it may take several months before the full economic impact of Hurricane Harvey can be accurately assessed, many are already considering the disaster to be the most expensive in US history. Analysts estimate $190 billion in economic losses (business, infrastructure, etc.). Houston, one of the country’s economic powerhouses, was the most severely hit, with its oil and gas industry taking the heaviest toll.
Harvey struck at the heart of America’s oil and gas industry, affecting nearly a third of the US production. Inevitably, refineries around the Gulf Coast were closed down and pipelines used to transport oil to other markets were shut—all of which contributed to oil price’s spike. Companies, including those outside the fuel industry, are still figuring out how they can resume operations. Along with revenue losses, the catastrophe may also lead a significant number of jobless claims.
Although Harvey’s impact on the local level is apparently overwhelming, it is not expected to make a huge dent in the national economy. Thousands of homes and other infrastructure have been destroyed, but rebuilding efforts in the future could offset challenges elsewhere. However, depending on how recovery takes, the GDP for third quarter is expected to slow down a little.
The storm will likely impact primary insurers, traditional reinsurers—including those based in offshore financial centers like Bermuda—and the National Flood Insurance Program with the potential to also affect collateralized reinsurers and insurance-linked securities markets. The storm’s most significant impact, however, is on families who do not have sufficient financial bedrock as well as property or life insurance. In fact, according to the Federal Emergency Management Agency (FEMA), around 350,000 people have registered for assistance from the federal government.
Hurricanes are among the most destructive forms of natural disasters, with the top 10 most devastating storms to hit the US making a total financial loss of nearly $450 billion. Harvey and other massive weather-related catastrophes are part of a continuing, costly trend.