U.S. insured losses from Hurricane Issac’s wind and surge impacts on the U.S. Gulf Coast will fall between USD$1−2 billion, excluding rainfall driven flood losses and all National Flood Insurance Program losses, estimates catastrophe modeler Risk Management Solutions (RMS).
This estimate includes the possibility of a small amount of loss stemming from so-called coverage leakage, i.e., losses caused by surge inadvertently paid out by wind-only policies.
“We’ve formulated our estimate using a blend of modeling tools, combined with our assessment of key areas of uncertainty and non-modeled losses — excluding flood,” said Dr. Christine Ziehmann, director of Model Product Management at RMS. “The width of the range reflects some remaining uncertainties, including the variability and uncertainty around loss at very low wind speeds—mostly tropical storm strength—and, in particular, the uncertainty around coverage leakage of surge related losses into wind-only loss payments.”
Hurricane Isaac made landfall in Louisiana on Tuesday, August 28 as a Category 1 strength hurricane, near the mouth of Lake Mississippi, then made a second landfall of the same intensity near Port Fourchon, Louisiana on Wednesday, August 29. The storm then continued to move northwest very slowly across Louisiana, was downgraded to a tropical storm later that day, and finally dissipated on Saturday, September 1, in Missouri.
A wide swath of strong winds, storm surge, and inland flooding were associated with Isaac, most notably across Louisiana and Mississippi, with further wind and rain damage affecting Arkansas. Inland flooding caused by heavy rainfall was one of the major concerns from Isaac due to the storm being large in size and moving extremely slowly. Louisiana in particular was hit hard by rain from Isaac, though Alabama and Missouri also experienced heavy rainfall.
“From a wind-damage perspective, Isaac made landfall in the same area where Katrina and also Gustav made landfall in 2005 and 2008, respectively,” Dr. Ziehmann said. “Both these previous events impacted the building stock and eradicated a large portion of very low-quality roofs and buildings, which could mean that the wind losses fall into the lower end of the modeled range.”
Another modeling firm, AIR Worldwide, in late August estimated insured losses from Hurricane Isaac to onshore properties in the U.S. would be between $700 million and $2 billion.
Source: Risk Management Solutions
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