Hurricane Irma reached the United States on September 6 when it passed over Puerto Rico; however, it didn't make landfall on the continental U.S. until Saturday morning. Nevertheless, as the storm currently rolls over Florida, firms have begun to make early damage estimates regarding destruction and insurance claims.

For a nation still grappling with the scope of ongoing destruction in Houston, adding billions of dollars in rescue and relief for Florida and Puerto Rico will likely set the context for national finance over the coming months.

AIR Worldwide, a risk modeling firm, has made early estimates that the storm will cost between $20 billion and $65 billion in insured losses across the U.S. and the Caribbean. These losses, the company suggests, will be heightened by two major factors. First, as Nasdaq reported over the weekend, "in Florida, close to 80% of the total insured value is located in coastal cities." As property owners have clustered toward high-value waterfront locations, it has created a geographic risk corridor for insurers that almost perfectly matches the path of storms such as Irma.

Second, there is the sheer value of property at risk. According to an estimate by AIR Worldwide, up to $1.5 trillion in property values are at risk along the cost of western Florida's tri-county area.

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Meanwhile the AccuWeather service has issued its prediction that Hurricane Irma will cause $100 billion in total damages, beyond those for which people have insurance. Combined with the damage from Tropical Storm Harvey, the company estimates that the damage to America's south coast will cost approximately 1.5 percent of the nation's gross domestic product.

Scenes from Irma.
Scenes from Irma.

Other firms value this number far higher. Reporting in The Guardian has estimated losses as high as $300 billion according to analysts with the British investment firm Panmure Gordon. Many of these losses will come from, and depend on, the scope of damage to the state's agricultural industry.

Florida's economy is heavily linked to its production of citrus fruits (such as oranges), as well as other products such as strawberries, tomatoes and sugar cane. Damage assessments will depend on how much the storm damages individual crops, as well as on the damage to more permanent assets like fruit-bearing trees and bushes. As the French wine region of Bordeaux experienced earlier this year when a late frost decimated 90% of the grapes, a single extreme weather event can put entire farms out of business.

When a storm uproots trees that take years to grow, however, the damage can spread far beyond individual growers and have long-lasting effects on the entire marketplace.

With hurricanes and tropical storms, the majority of the damage comes from floodwaters. While wind and rain damage can be extensive, they account for a small fraction of the losses during storms like this. Indeed, as many analysts have noted over the years, Hurricane Katrina didn't truly become a catastrophe until the levees broke and let seawater into the city. The near-total nature of flood damage is one of the reasons why flood insurance remains both difficult and expensive to issue.

It also makes early damage estimates difficult. As Hurricane Irma continues its path of destruction over the Florida coast, where and how floodwaters move will determine much of the final outcomes for loss of property and life. After nearly two days of rain and winds, that toll will likely come to hundreds of billions of dollars.

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