Hurricane Debby private market insured losses will not exceed $US1.5 billion ($2.3 billion), Moody’s RMS has estimated, while Hurricane Ernesto, which formed last week, has remained well away from the US coastline.

Debby was the second hurricane to hit the US coast this season, coming ashore in Florida earlier this month as a category 1 system and bringing heavy rainfall to southern states as it moved northwards.

Moody’s North Atlantic hurricane models director Jeff Waters says the storm reached the coast not far from where Hurricane Idalia made landfall at category 3 intensity last year.

“Recovery is still ongoing in some of those affected areas, but in many cases we expect the repaired roofs to fare better with Debby, as they now reflect more recent, stringent building codes,” he said.

Events such as Debby highlight the potential damage from water, especially storm surge and rain-induced flooding, and the need to model those dangers effectively when quantifying hurricane risk, Mr Waters says.

“The slow-moving nature of the storm caused excessive rainfall – in some cases beyond the 50-year return period – with subsequent widespread pluvial and fluvial flooding along the US east coast, especially Florida and the southeast.”

Moody’s RMS expects insured flood losses will be absorbed by the National Flood Insurance Program, especially along coastal areas of Florida, Georgia and the Carolinas, where take-up rates are higher, as well as the private market. A “sizable amount” of uninsured flood losses are expected, particularly in non-coastal areas where NFIP take-up is much lower.

A Gallagher Re research report says while coastal counties in Florida, Georgia and the Carolinas have NFIP take-up ranging from 10% to 50%, the proportion of active policies drops dramatically inland.

The expectation is that Debby will remain a manageable event for the (re)insurance industry, with combined wind and water-related insured losses from the private market and NFIP likely to reach $US1- $US2 billion ($1.5-$3 billion), Gallagher Re says.

Hurricane Ernesto reached Bermuda at the weekend, bringing category 1 winds and heavy rainfall and causing power outages as it weakened.

The storm system has since returned to hurricane strength, travelling northwards well away from the US coastline but causing life-threatening surf and rip conditions.

The US Hurricane Forecast Centre says the centre of Ernesto is expected to pass near southeast Newfoundland late on Monday into Tuesday morning (local time).

“In southeastern Newfoundland, large breaking waves could bring the possibility of coastal flooding, particularly along southwest-facing shorelines from Burin east to Avalon regions,” it said.