The pictures on the news are devastating. As Irma enters its final phase, footage from across the Caribbean, Cuba and Florida shows storm surges, flooding and communities torn apart by the most intense Atlantic hurricane in more than a decade.

The North Eastern Caribbean suffered the most catastrophic damage and the death toll continues to rise. There was some small comfort in the fact that, as the storm weakened, the West Coast of America was spared a cataclysmic impact. As the city’s mayor Philip Levine told CNN, “Miami Beach didn’t dodge a bullet, we dodged a cannon”.

The true cost of Hurricane Irma

Now thoughts are turning to the price of the damage, and how it will be paid for. On Monday, forecasts for the cost of Irma to insurers were dramatically revised down thanks to the changing direction of the storm and its category downgrading. While initial predictions of the total cost of damages for the industry were more than $100 billion, the lack of a direct hit on Miami means that the bill has been significantly reduced.

According to modelling firm AIR Worldwide, the insurance losses are likely to be between $20 and $40 billion. These are still substantial sums but, as the report stated, “Irma’s forward motion should prevent the kind of accumulations and resulting flooding seen two weeks ago in Texas from Hurricane Harvey”. Some insurance analysts say the cost could be even lower, perhaps around $10 billion.

Nevertheless, JPMorgan believes that Hurricane Irma will still rank as one of the priciest storms in history. CNBC reported that, in a note to clients, JPMorgan analyst Sarah DeWitt, wrote: “We think Hurricane Irma could be a top five most costly hurricane in the US, although the losses could be in-line-to-lower than market expectations.”

The cut in forecasts propelled insurance shares higher on both sides of the Pond at the start of the week. Shares in companies likely to be exposed to losses (including Beazley, Hiscox, Lancashire, Munich Re and Renaissance Re) all went up on Monday.

The Financial Times reported comments by Robert Muir-Wood, chief research officer at modelling firm RMS. He estimates that around 60% of losses will be retained by primary insurers and the rest will be passed on to reinsurers - and the industry will be able to deal with it. He said: “I don’t think the loss is of the magnitude that anyone will be surprised by it. It is a known exposure and a modelled exposure.”

Meanwhile, Ian King, a business journalist at Sky News, posted that insurers might benefit from the hurricane. Writing on Sky’s website, King said that the disaster may have longer-term ramifications for the insurance sector, in particular as far as catastrophe or “cat” bonds are concerned. Issuance of such bonds hit a record high in the second quarter of 2017.

He wrote: “Investors in a lot of those catastrophe bonds may be about to lose their money. Getting on for three-quarters of all catastrophe bonds are reckoned to be exposed to US hurricanes…While it has helped reinsurers build up their capital cushions, the inflow of money into the sector during recent years has also depressed reinsurance premiums.”

Finally, Panmure’s insurance analyst Barrie Cornes had this to say:

“In our view the net insured losses won’t be big enough to reduce underwriting capacity to a level that sees insurance rates finally (after 10 years) start to improve.”