Insured losses from Hurricane Harvey are set to make it one of the top ten most costly hurricanes in US history.

At least seven people have died in Texas as a result of the storm, and it is expected 30,000 people will end up having to leave their homes.

It is record-breaking and catastrophic flooding rather than wind damage from the Category 4 hurricane that is set to push the insurance bill to between $10 billion and $20 billion. That was the estimate of JPMorgan in a note to its clients yesterday.

Insurance and reinsurance companies, many based in Bermuda, are bracing themselves to pick up some of the cost.

While the bulk of the flood insurance claims will be met by the US Government through its troubled National Flood Insurance Programme, private reinsurers are on the hook for around $1 billion of flood losses should the final total exceed $4 billion.

The future of the US Government flood insurance programme is in doubt. It is currently running a $25 billion deficit and has a borrowing limit of $30 billion, which is now in danger of being hit. The entire programme is set to expire at the end of September.

The final reckoning on total insured losses from Harvey will not be known until rains associated with the storm system end.

The hurricane has been downgraded to a tropical storm, but it continues to swirl off the coast of Texas, dumping rain on already saturated land, towns and notably Houston, the fourth-largest city in the US.

Harvey is predicted to remain in the area until Thursday.

Cat modelling firm RMS believes insured losses from wind damage caused by Harvey will be in the “low billions”.

The company said: “While these flood events were not as severe as Tropical Storm Allison in 2001, Houston’s resiliency against catastrophic flooding is now being tested for the third year in row.

“Hurricane Harvey is shaping up to be the toughest challenge yet, with massive amounts of rainfall as well as wind driven coastal flooding (storm surge), and the compounding impacts of multiple sources of flooding within the same region.”

RMS noted that Texas is “among a handful of states where private insurance companies have established some traction for a new line of flood insurance products”.

Meanwhile, AIR Worldwide, another risk modelling company, estimated the insurance industry faces losses of between $1.2 billion and $2.3 billion purely from damage caused by the storm’s winds and coastal storm surge.

But it is rainfall and consequent flooding that is likely to result in the costliest damage.

More than 24 inches of rainfall was recorded at Bush International Airport at Houston during the weekend, and the entire region is set to receive another 10 to 15 inches by Friday.

Sarah DeWitt, of JPMorgan, in a note to clients yesterday, wrote: “Our best guess at this point is Harvey could result in $10 billion to $20 billion of industry-insured losses, making it one of the top-10 most costly hurricanes to hit the United States.”

“Harvey appears to be more of a flood event and we think the loss estimates are misunderstood.

“While flooding is not covered under homeowner’s insurance (it is sold by the government), it is covered under commercial insurance and could result in meaningful losses for the commercial reinsurers and insurers.”

US-based State Farm, Allstate and Farmers are believed to have the largest market share of residential and commercial property insurance in Texas.

Senior insurance executives will be at the Rendez-Vous gathering in Monte Carlo early next month to strike deals on insurance and reinsurance renewals.

Reuters reported that Kai Pan, an insurance analyst at Morgan Stanley, wrote in a research note: “We think Harvey could help stabilise global reinsurance pricing, but do not expect a major turn in pricing to follow.”