Category five Hurricane Maria has this week ripped through a number of Caribbean Islands, hot on the heels of Hurricanes Harvey and Irma which also caused devastation in the region and the US mainland. This week has seen frantic efforts to clear the islands of debris so that Maria does not create “missiles flying at buildings”, according to the governor of the BVI, heaping misery on those who have suffered injury, lost power, born widespread property damage and sustained business interruption already.

In the wake of such devastation, it seems somewhat crass to turn to counting the cost but, of course, that is necessary, both for the insurance industry as a whole, and for those individuals and businesses notifying claims in large numbers seeking confirmation of cover for their losses.

Certain cover holders may be disappointed as their contracts of insurance will contain specific clauses, some of which may exclude cover for losses caused by particular perils (possibly act of God or flood) meaning that careful analysis of the individual terms and conditions of the relevant insurance policies will be required. Debates will take place on what caused the loss, whether the operative peril was wind damage, flood damage or damage caused by falling debris.

A proportion of those affected may not have any insurance on which to rely. Homeowners situated on the flood plain may have cover under the National Flood Insurance Program ("NFIP"). However, much of the cover that is available will be provided by local US insurance carriers, with an element of that reinsured into the Lloyd's market. It is anticipated that most policies involved will be governed by US state laws and insurance coverage lawyers in the United States will be busy advising policyholders and insurers respectively on the merits of claims and on their quantum. It is difficult to make any reliable predictions as to the total cost of these Hurricanes to the insurance industry; there have been, as there are after all significant natural disasters, wildly varying predictions that Hurricanes Harvey and Irma collectively could cost the Lloyd's insurance market somewhere in the region of £100 billion, which may not be a ludicrous estimate, with the cost of Hurricanes Jose and Maria, set to wreak more havoc this week, to be added.

In addition to the immediate and obvious claims for property damage will be claims for business interruption/ loss of profits, which are likely to be significant and come from a range of industries, including the Florida orange/citrus industry; the hotel and leisure industry; the sugarcane industry; and livestock and meat producers. These will require proof of turnover and profit in the months prior to the hurricanes and evidence of how the business was run, which some insureds may struggle to produce.

Ultimately, dealing with the aftermath of natural disasters, such as these powerful hurricanes, is part of Lloyd's of London's raison d'être and those counting the cost of the damage inflicted by this spate of hurricanes may take some comfort from Inga Beale, the CEO of Lloyd's, who has offered assurance that Lloyd's has sufficient reserves to deal with the present hurricane season's claims and losses.

The fear for homeowners and policyholders affected by these hurricanes is that insurers will take a tough line when adjusting their losses and push back on the scope of cover available where the policy language allows that. Conversely, the fear for insurers and reinsurers is that the frequency and severity of these occurrences appears to be increasing and with it the cost of claims. Looking forward, the market may harden, pushing premiums up and capacity down in the longer term.