Catastrophe Risk Experts Estimate Up to $3B in U.S. Insured Losses from Delta

October 15, 2020

Two catastrophe risk and property data providers have estimated U.S. onshore insured losses from Hurricane Delta will come in at between $0.7 billion and $3 billion.

Global property information, analytics and data provider CoreLogic reported that insured wind losses for residential and commercial properties in Louisiana and Texas are estimated to be between $0.5 billion and $0.9 billion. Insured storm surge losses are estimated to be an additional $0.2 billion to $0.3 billion.

CoreLogic additionally estimated another $0.8 billion to $1.5 billion in damage to offshore structures

Catastrophe risk modeling firm AIR Worldwide has estimated that industry insured losses to onshore property resulting from Hurricane Delta’s winds and storm surge will range from $1 billion to $3 billion.

CoreLogic noted that Hurricane Delta made landfall near Creole, Louisiana, on Oct. 9, as a mid-Category 2 storm with a maximum sustained surface wind speed of 100 miles per hour. As Hurricane Delta approached the western Louisiana coast, the storm encountered an environment of high wind shear and weakened just before landfall in Cameron Parish, about 15 miles east of where Hurricane Laura devastated communities in late August.

According to AIR Worldwide, winds from both storms impacted areas in common, including mainly the coastal area of Cameron Parish and Lake Charles and environs, although Delta’s maximum winds were significantly weaker than Laura’s. AIR’s modeling approach assumes independence between these events, which is reflected in the published loss range.

However, before Delta made landfall, aerial imagery showed that many structures in these areas had blue tarps on their roofs; after Delta many of these structures still had blue tarps on their roofs, AIR noted. On the one hand, wind-driven rain and wind-borne debris impacts following Delta could have exacerbated the damage caused by Laura to these properties. Furthermore, structures that may have been weakened by Laura’s winds may have been further damaged by Delta, despite its moderate winds. On the other hand, it could be posited that structures that had the potential to be damaged were already damaged by the relatively-stronger Hurricane Laura, and therefore, not much was left to be damaged by Delta, according to AIR.

In 2009, Louisiana passed legislation mandating a single annual hurricane deductible for homeowners, according to CoreLogic. It is expected that most insured homes with damage from the two hurricanes in 2020 – Laura and Delta – will be subject to only a single hurricane deductible, unless a homeowner has changed insurance carriers between storms. Louisiana is one of many states in the U.S. with insurance policies that include hurricane deductibles larger than the standard deductible on the policy. In most states, deductibles are occurrence-based, and a policy holder will be obligated to potentially pay a second deductible for a second event in the same calendar year. Hurricane deductibles in Louisiana are activated when the National Hurricane Center (NHC) reports a tropical storm has reached hurricane strength at 74 miles per hour.

The CoreLogic post-landfall estimates are based on the Oct. 11, 8 p.m. Eastern Daylight NHC advisory of the storm. The analysis examines onshore losses for residential homes and commercial properties and incorporates contents and business interruption, but does not include broader economic loss from the storm. A separate analysis estimates the impact to offshore oil and gas facilities.

Included in AIR’s estimates are losses to onshore residential, commercial, and industrial properties and automobiles for their building, contents, and time element coverage.

The damage estimates from AIR and CoreLogic follow catastrophe modeling firm Karen Clark & Co.’s estimate of $950 million in U.S. insured losses from Delta.

Delta made landfall in Mexico before reentering the Gulf of Mexico and heading for the U.S. Gulf Coast.

Sources: CoreLogic, AIR Worldwide

Topics Catastrophe USA Trends Louisiana Profit Loss Hurricane

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