Hurricane Andrew, which devastated Florida’s Dade County 25 years ago, would cause insured losses of about $US56 billion ($70.9 billion) if it hit the same location today, AIR Worldwide estimates.

Category 5 Andrew was the US’ costliest natural disaster at the time, slamming into Elliot Key on August 24 1992, then making a second landfall near Homestead, south of Miami.

Losses today would be even higher if a similar-strength storm struck just 12km north of Andrew’s landfall. Total insured losses would top $US138 billion ($174 billion), with losses in Florida exceeding $US127 billion ($160 billion), the catastrophe modeller estimates.

A major hurricane striking Miami after reaching the coast between Palmetto Bay and Pinecrest would also cause activity in the insurance-linked securities marketplace.

AIR estimates 25 catastrophe bonds would be triggered, 47 tranches would take losses, 38 tranches would be exhausted and there would be a $US6.3 billion ($8 billion) loss to the catastrophe bond market principal.

Andrew, the third Category 5 hurricane to make US landfall since 1900, caused insured losses of $US15 billion in Florida, plus $US500 million in Louisiana after it entered the Gulf of Mexico and reintensified before making a third landfall. It led to the insolvency of 11 insurance companies.

Swiss Re Chief Economist for the Americas Thomas Holzheu says Andrew was the costliest insured natural disaster worldwide, causing $US27 billion ($34 billion) in losses, in today’s figures.

“Florida, the state most exposed to hurricanes, has since become a laboratory for disaster mitigation and disaster-risk financing,” he says.

“The global reinsurance market changed permanently in the wake of Andrew.”

He says Andrew led to a greater role for government in insuring coastal risks in the US, triggered the development of cat bonds and other alternative reinsurance, and led to a thriving catastrophe modelling sector.