Wind-related insurance losses from Hurricane Harvey are unlikely to exceed $6 billion and could end up being below $1 billion in some scenarios, risk-modelling firm RMS said on Friday.

The hurricane made landfall in Texas over the weekend as a Category 4 storm, the most powerful hurricane to hit the state in more than 50 years.

“Our selection of scenarios suggests something in the low single-digit billions is most likely from wind damage,” RMS said in an e-mail.

There was likely to be further damage from storm surges and inland flooding, which could be the “dominant drivers” for losses, RMS said.

Fitch Ratings said the giant storm will likely impact primary insurers, traditional reinsurers — many of which are based in Bermuda — and the National Flood Insurance Programme with the potential to also affect collateralised reinsurers and insurance-linked securities markets.

By yesterday afternoon, Harvey had dumped more than two feet of water on Houston. The system, downgraded yesterday to a tropical storm, was expected to hover over southern Texas for several days and drop around two feet of water.

While wind damage from hurricanes is covered by property insurers, flood damage generally is not.

Fitch said flood losses from storm surge and torrential rain may lead to a material event for the NFIP, which counts Texas as its second-largest exposure by policies in force.

Harvey will also represent “an earnings event for the private insurance industry”, the ratings agency added.

“Collateralised reinsurance and ILS markets also have exposure to Texas property risk but losses would be limited in a less severe insured loss event,” Fitch said.

Commercial lines of business that are exposed to the impact of a hurricane landfall include allied lines, fire, commercial multi-peril: non-liability and inland marine.

“Oil and gas production facilities in this region will be impacted and insurers with business interruption exposure could face losses as offshore operations have been shut down for multiple days as the storm approached the coast,” Fitch added.

Although many areas of Texas were suffering severe flooding yesterday, with more torrential rain expected, this aspect would be borne primarily by the public-sector programme, Fitch added.

“Flood losses can be a significant contributor to overall losses from a hurricane as storm surge and heavy rainfall often greatly affect coastal areas,” Fitch said.

“Flood risk in the US is almost entirely assumed by the NFIP with the private market for flood limited to a handful of surplus lines writers, admitted companies, and Lloyd’s of London syndicates.”

In 2008, Hurricane Ike hit Texas, generating $2.7 billion of paid losses for the NFIP in 2008.

But the Insurance Information Institute yesterday said flood damage losses from Harvey in Texas could match those of Katrina in 2005, which cost the NFIP $15 billion in Louisiana and Mississippi.

The NFIP is already deeply in debt and a taxpayer-funded bailout is likely to be needed to cover the bill for Harvey’s flood losses.