September 3rd, 2010

Update: Hurricane Earl

Posted at 9:03 AM ET

earl-fri-small1Earl has weakened into a category 2 hurricane, with the center of the storm presently located around 85 miles (135 kilometers) east of Cape Hatteras in North Carolina and 465 miles (750 kilometers) south-southwest of Nantucket in Massachusetts, according to the National Hurricane Center (NHC). Earl is currently packing sustained winds of 105 mph (165 kmph) and is moving in a north-northeast direction at around 18 mph (30 kmph). A turn to the northeast with an increase in forward speed is expected in the next 12 to 24 hours. On this forecast track, the NHC says Earl will move away from the North Carolina Outer Banks today and approach southeastern New England tonight as it tracks parallel to the U.S. East Coast. Hurricane-force winds currently extend up to 70 miles (110 kilometers) from the center of the storm while tropical storm winds extend up to 205 miles (335 kilometers).

A hurricane warning remains in place for parts of the North Carolina coast (from Cape Lookout to the North Carolina/Virginia border). Parts of Massachusetts have also been issued with a hurricane warning, from Westport eastward around Cape Cod to Hull, including Martha’s Vineyard and Nantucket Island. In Canada, a hurricane watch is in place for Nova Scotia from Medway Harbour to Digby. A dangerous storm surge is still expected, which will raise water levels by as much as 2 to 4 feet (0.6 to 1.2 meters) within the hurricane warning area in North Carolina and Massachusetts. Forecasters also warn that up to 5 inches (130 millimeters) of rainfall is expected over parts of eastern North Carolina, including the Outer Banks, and southeast New England.

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Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or Instrat® representative for assistance or go to www.i-axs.info for further information.

Earl has weakened to a category 2 hurricane over the last 24 hours, according to the NHC. Further weakening is expected over the next 24 hours as the storm tracks parallel to the U.S. East Coast. Earl remains a large hurricane and the NHC said its effects will be widely felt. Although the latest NHC forecast shows that Earl’s track has shifted slightly to the east and away from the United States, there is still significant uncertainty over how much of the coastline will be hit by hurricane-force winds or whether there will be a direct hit. Tropical storm-force winds are currently occurring along the North Carolina coast within the warning area and hurricane conditions are possible in the Outer Banks during the next few hours. The NHC expects tropical-storm force winds to reach the Virginia and Massachusetts coastline later today and spread into coastal areas of Maine tonight. The NHC added that hurricane conditions could hit the warning area in Massachusetts tonight and tomorrow morning ( September 4).

The NHC said Earl passed about 85 miles (135 kilometers) east of Cape Hatteras. It is important to note that Earl’s strongest winds are located to the east of the storm’s eye, while the onshore property exposure is located to the west, keeping the most damaging winds offshore. EQECAT said losses will depend on what wind speeds are recorded in North Carolina and Virginia, but currently expects losses in both states to range from USD200 million to USD700 million.

While Earl’s eastward shift has seen the storm move away from the North Carolina coast earlier than expected, the storm’s current forecast track takes the storm closer to the Massachusetts warning area that includes Cape Cod and Nantucket Island and Martha’s Vineyard. Forecasts show the centre of Earl could pass around 40 miles (65 kilometers) east of Cape Cod. The latest NHC forecast suggests Earl will be a category 1 hurricane as it passes New England. EQECAT again stresses the uncertainty in projecting Earl’s losses in Northeastern states but expects damage to total less than USD400 million if the hurricane follows its predicted track, while a westward shift could see losses exceed USD2 billion. Looking further ahead, Earl is expected to make a direct landfall over southern Nova Scotia in Canada tomorrow as a category 1 hurricane.

On the U.S. mainland, the governors of North Carolina, Virginia, Maryland, Massachusetts and Rhode Island have declared states of emergency. Reports said Earl could unleash powerful waves of up to 26 feet (8 meters) along the coast. At least 100,000 people were ordered to evacuate the Outer Banks as Earl approached and Massachusetts Governor Deval Patrick urged people living in low-lying areas in the state to consider leaving their homes. The U.S. Census Bureau estimated 26 million people in coastal counties from North Carolina to Maine could feel Earl’s effects over the next two days. Officials said heavy rain, flooding and high waves have hit coastal parts of North Carolina, including the Outer Banks. Although around 5,000 households have lost power, there were no immediate reports of major damage.

Sources: National Hurricane Center, WSI, Agence France Press, Associated Press, Reuters News, CNN News, BBC News, MarketWatch

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Guy Carpenter’s Instrat® department provides CAT-i reports for major natural catastrophes worldwide. These reports cover catastrophes including worldwide tropical cyclones, earthquakes, major UK and European floods and any other natural event that is likely to incur a significant loss to the (re)insurance industry. Please email CAT.i@guycarp.com if you wish to be added to the free email distribution list.

Instrat also provides RISK-i reports for major technological or man-made events worldwide. These reports cover risks to property, transport and life including explosions, fires, crashes, engineering disasters and terrorist attacks that are likely to incur a significant loss to the (re)insurance industry. Please email RISK.i@guycarp.com if you wish to be added to the free email distribution list.

Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or Instrat® representative for assistance or go to www.i-axs.info for further information.

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