Tropical storm keeps industry in suspense.

The insurance industry was watching tropical storm Fay this week as it made landfall south of Naples in the Everglades, Florida.

Neena Saith, catastrophe response manager at Risk Management Solutions (RMS), said: “After days of uncertainty around which way the storm was heading, it eventually crossed a sparsely populated region, causing minimal wind damage. Florida initially appeared to be in the firing line, with some models predicting a Category 1 hurricane hitting Tampa. If this had been the case, we could have been looking at losses up to $2bn, but Florida has had a lucky escape.

“The main risk now is from heavy rainfall over Florida, which could trigger flash flooding. There is also a lot of uncertainty as to what Fay will do over the next few days. Some models are taking Fay into the Atlantic where there is potential to intensify before making landfall on the east coast, while other models are re-curving Fay over Florida, with the possibility of emerging into the Gulf of Mexico. However, at this stage it’s highly unlikely we’re going to see the Category 3 hurricane that some models were suggesting.”

Tropical storm Fay is the sixth named storm of the 2008 Atlantic hurricane season. Two of the six reached hurricane status: Bertha and Dolly.