Hurricane Florence has weakened to a Category 2 as it nears the Carolina coastline with “life-threatening” storm surge and rainfall forecast to generate billions of dollars of market losses.

According to the National Hurricane Center, Florence is barrelling Northwest across the Atlantic generating wind speeds of over 95 mph and is expected to make landfall in southern North Carolina within the next 36 hours.

Catastrophe risk modeler RMS said yesterday that based on historical comparisons losses could reach $15bn-$20bn, projecting that Florence will be the strongest hurricane to make landfall over North Carolina since Hurricane Hazel in 1954.

The NHC predicts “a life-threatening storm surge is now highly likely along portions of the coastlines of South Carolina and North Carolina.”

The NHC also forecasts life-threatening, catastrophic flash flooding and prolonged significant river flooding over portions of the Carolinas and the southern and central Appalachians late this week into early next week.

The potential for extensive flood- and storm surge- related damage has drawn early comparisons with Hurricane Harvey, which produced a historic level of rainfall along the Texas coast in August 2017

Analysis from AIR Worldwide expects Florence to slow significantly, however it will still bring significant storm surge and inland flooding losses.

“Storm surge heights are expected to be as high as 9-to-13 feet, and Florence’s slow motion just offshore will mean several high tide cycles could occur as Florence is making landfall, exacerbating the storm surge hazard threat,” said Peter Sousounis, vice president and director of meteorology, AIR Worldwide.

“The slow motion is expected to produce severe inland flooding from rainfall amounts that could total as much as 20 to 30 inches, with some local areas forecast to receive up to 40 inches across South Carolina and western and northern North Carolina.”

Forecasting from Fitch Ratings said Florence could have a meaningful impact on the commercial property and business interruption markets in the region but the extent of losses would increase significantly if the storm tracks through a major metropolitan area as Harvey did in Houston.

The ratings firm expects insured losses to largely fall to the National Flood Insurance Programme, which had a combined 532,489 policies in force in North and South Carolina, Georgia and Virginia as of August 2018.

The NFIP recovered its entire $1.1bn layer of coverage in 2017, largely as a result of losses from Harvey and has been able to secure coverage of $1.5bn from a panel of 28 private reinsurance markets for flood losses in 2018.

The NFIP entered the ILS market and sponsored its first catastrophe bond in August 2018, providing the organization with $500mn of collateralised limit.

State Farm is the largest homeowners insurer in the Carolinas, controlling around a fifth of the market across the two states, according to data from AM Best.

North Carolina FB Mutual and Allstate Indemnity also have a meaningful share of the region’s homeowner premium with 12.5 percent and 4.8 percent of market share respectively.

Erie Insurance has the highest share of in-force premiums for multi-peril commercial in North Carolina with 7.5 percent of the market and North Carolina’s Cincinnati Insurance Company and Nationwide Mutual are also major players with 5.9 percent and 3.6 percent of market, respectively.

State Farm, Owners Insurance and Ohio Security are the dominant commercial insurance players south of the border.