Advertisement
  1. Business

Economic impact of Hurricane Matthew may be a wash

Jacksonville Beach residents (L-R), Joel Thompson, Brandon Smith, Bernie Lucas and Christian Heaton walk through Hurricane Matthew's flood waters on Friday. Damage estimates from Matthew are climbing into the billions of dollars. [Getty Images]
Published Oct. 11, 2016

The economic toll for Hurricane Matthew's sideswipe on Florida's Atlantic coast and into the Carolinas will rise into the billions of dollars, with storm surge wreaking the most havoc and the tourism and agriculture industries hit hardest.

But with Florida spared a direct hit and power being restored quickly to many of those affected, Matthew never turned into the monster here that was feared — either in terms of derailing the state's economic recovery or hurting its still fragile property insurance industry.

In fact, any short-term hit on tourism and business interruption along Florida's northeastern coast could be offset by gains elsewhere, particularly as money pours in for reconstruction and beach renourishment.

"With tourism there will be a lot of missed activity and it will take time to recover, but with construction, I expect a surge in activity," said Mekael Teshome, an economist with PNC Financial Services who tracks Florida.

The yin and yang on the economy showed up in the hotel industry as Tampa Bay enjoyed an uptick in activity last week from evacuees.

"Occupancy was 90 to 100 percent in Hillsborough County on Thursday and Friday, and was also very strong through the weekend," said Santiago Corrada, CEO of Visit Tampa Bay.

As the storm approached, fears mounted that it would put a strain on the state's property insurance industry, particularly younger Florida-based insurers that have never been tested during a hurricane-free decade.

But as the worst winds stayed offshore, the event turned into a water disaster with most damage caused by storm surge and flooding. That type of damage is not covered in standard home­owners policies but rather by separate policies bought through the federal flood program.

Good news for property insurance companies, not so good for the already financially strapped federal flood program or in particular those who don't have flood coverage.

"This could be an advertisement for the National Flood Insurance Program," said Mark Vitner, senior economist with Wells Fargo Securities. "So from a consumer standpoint, this is very good. We won't see insurance rates skyrocket as a result of this storm. The folks in Jacksonville, though, might not feel so lucky."

"The losses are still likely to be fairly substantial, however, as property values have rebounded in recent years," he added, "and there was quite a bit of damage along the coast from Vero on up."

From heavy beach erosion to inland flooding, the northeast Florida strip including St. Augustine and Jacksonsville shouldered the brunt of damage. The last time a major storm swept through that area was 1964's Hurricane Dora.

The Florida Office of Insurance Regulation reported that, as of late Monday afternoon, 4,973 claims had been reported with estimated insured losses at $21 million. However, those are "very initial" numbers from the first two days and are likely to grow significantly, said William Stander, executive director of the Florida Property & Casualty Association, which represents 19 Florida-based insurers.

Teshome of PNC said about two-thirds of a hurricane's economic impact typically comes from physical damage and a third is tied to lost economic activity.

"The initial physical damage is not nearly as bad as it could have been with it not making landfall," he said. "The other good sign is that in terms of lost economic activity, it will be minimized with a lot getting their power back fairly quickly."

Last week, state officials warned of potentially 1.5 million losing power and many of them waiting weeks to see it restored. But that scenario didn't transpire. As of Tuesday afternoon, fewer than 170,000 utility customers were still without power, mainly in Duval and Volusia counties.

Real estate data firm CoreLogic estimated over the weekend that insured losses on residential and commercial properties would be between $4 billion and $6 billion, though the overall damage figure is expected to grow significantly once flooding damage and auto claims are added.

CoreLogic's initial figure would put Matthew on par with 2004's Hurricane Frances or 2005's Hurricane Rita — a strong blow but far shy of the likes of Superstorm Sandy or Hurricane Katrina, which incurred insured property losses up to $20 billion and $40 billion, respectively.

Times staff writer Justine Griffin contributed to this report. Contact Jeff Harrington at jharrington@tampabay.com. Follow @JeffMHarrington.

ALSO IN THIS SECTION

  1. This satellite image shows Hurricane Michael on Oct. 9, 2018, as it enters the Gulf of Mexico. It made landfall near Mexico Beach in the Panhandle as a Category 5 storm. [Photo courtesy of NOAA] NOAA
    Nearly a year after the storm, 18,000 claims are still open.
  2. Watermans Crossing apartments at 4515 N. Rome Avenue in Tampa. Westside Capital Group
    Jakub Hejl discovered the Tampa Bay area while studying at IMG Academy.
  3. The Tampa Bay Lightning has tapped Cigar City Brewing to bring its Jai Alai, Guayabera, and Florida Cracker beers to Amalie Arena as the team’s official craft beer partner. (Photo via Tampa Bay Lightning) Tampa Bay Lightning
    Cigar City also will move its popular annual Hunahpu’s Beer Festival to Amalie Arena starting next March.
  4. An administrative judge said a Pasco County ordinance allowing solar farms in agricultural districts did not violate the county's comprehensive land-use plan. Times
    An ordinance did not violate the county’s land-use plan that is supposed to protect rural Northeast Pasco, a judge said.
  5. Energy-efficient LED light bulbs. (Times | 2008) St. Petersburg Times
    Trump’s administration recently scrapped a rule that would have phased out incandescent light bulbs.
  6. For sale sign on a  Tampa Bay home. [SUSAN TAYLOR MARTIN | Times]
    It pays to shop around for the lowest rate, new study shows.
  7. President Donald Trump speaks at the 2019 House Republican Conference Member Retreat Dinner in Baltimore on Sept. 12. JOSE LUIS MAGANA  |  AP
    The country is moving in that direction, though.
  8. This Jan. 31, 2017 photo shows the entrance to SeaWorld in Orlando, Fla. JOHN RAOUX  |  AP
    Gustavo “Gus” Antorcha cited a “difference of approach.”
  9. Gas prices could surge over the coming days because of a sharp drop in Saudi Arabia’s oil production. Pictured is a man filling up his car. | [Times file photo]
    A weekend drone strike on an oil processing facility caused the kingdom to cut production in half.
  10. TECO Peoples Gas ranked highest among its peers in the South for J.D. Power customer satisfaction rankings. Pictured is the company's headquarters in Tampa in 2017. [CHRIS URSO   |   Times (2017)] URSO, CHRIS  |  Tampa Bay Times
    It ranked as the top utility for customer satisfaction among midsize utilities in the south.
Advertisement
Advertisement
Advertisement