U.S. dollar banknotes (Photographer: Luke Sharrett/Bloomberg)

Insurers See Irma Victims on Florida's Gulf Coast as Unprepared

(Bloomberg) -- Hurricane Irma’s westward shift will probably inflict greater damage on people and businesses unable to adjust to its new path in time, while the storm fuels floods that many insurance policies don’t cover.

Along Florida’s west coast -- now in the direct path of the storm -- many residents thought they would avoid the worst of it, and then found themselves with too little time to fully prepare once that changed, according to Duncan Ellis, the U.S. property practice leader at Marsh & McLennan Cos.’ main brokerage unit.

Such was the scene near the waterfront in Tampa as the winds began to pick up. On Harbour Island late Saturday, condo resident Monty Gawel said he was only able to fill three sandbags, using dirt from a planter. While the 50-year-old intended to stay, a number of his neighbors were fleeing.

Nearby, some shops lining Garrison Channel were protected only by a single line of sandbags, just one sack high. Their glass windows and doors remained uncovered.

“Most people expected it to impact the east coast rather than the west coast,” said Ellis. “It took a turn to the left, and that’s caused a bit of a scramble in getting properties ready for the storm and evacuations.”

Total damage from Irma could reach about $49 billion, with $19 billion picked up by private insurers, according to Enki Research risk modeler Chuck Watson. That’s dramatically lower than earlier predictions after the storm’s harshest winds began to slow.

But within such broad figures, insurers are starting to sketch out damage trends with big implications for individual customers. Those will continue to unfold as Irma progresses.

Even after the westward shift, larger, commercial clients are typically well prepared, and even able to help those who aren’t, Ellis said. “If you’re a big-box store selling 2x4s, flashlights, plywood and all of that, you stay open as long as you can,” he said.

Aside from catching some people under prepared, the new trajectory is threatening to hit areas like Tampa with storm surge, which is particularly costly. Many policies cover rain, but not flooding from open water. That means affected policyholders may find themselves waiting for longer for checks as claims are evaluated, or ultimately paying out of pocket to make repairs.

“Tampa Bay is an area that insurance underwriters have been concerned about for a very long time,” said Rick Miller, the head of the U.S. property practice at Aon Plc. “There’s a lot in harm’s way, and it’s heavily exposed given it’s low-lying state.”