Hurricane Isaac: Onshore Insured Losses Could Reach $2 Billion
Catastrophe modeler AIR Worldwide says onshore insured losses from Hurricane Isaac could reach $2 billion.
The storm is now well-inland and has been downgraded to a tropical depression with winds of 35 mph as its rain begins to sop Arkansas and Missouri before the storm turns east.
AIR says the estimate of between $700 million and $2 billion includes insured losses from damage to residential, auto, commercial and industrial properties and contents, as well as additional living expenses and business interruption-related losses. It also takes into account demand surge.
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Competitor Eqecat previously released an insured loss estimate of between $500 million and $1.5 billion onshore. It adds estimated economic losses of between $500 million to $1 billion for offshore energy assets. AIR says it does not expect significant phyical damage to offshore oil rigs and platforms.
Much of the damages caused by Isaac is due to flooding—a peril not covered by a standard homeowners’ insurance policy whether flooding is caused by rain or storm surge.
Up to 25 inches of rain fell in some spots in Louisiana, where Isaac made landfall twice as a Category 1 hurricane and the modelers agree Isaac's storm surge levels, which eclipsed some floodwalls, were high for a storm of Category 1 strength.
The AIR estimate assumes a 10 percent take-up rate for commercial flood policies.
Additionally, “Isaac’s slow forward speed and refusal to dissipate will exacerbate wind damage,” says Tim Doggett, principal scientist at AIR.
Due to all the rain saturating the ground, trees can fall at lower wind speeds, he says. Roofs can become “fatigued and overloaded, causing additional damage,” as the wind persists, he adds.
Reported wind damage includes downed power lines and trees as well as some structures and items such as awnings, signage and trailers, AIR says.
More than half a million customers are still without power, according to reports from the local electric provider, Entergy.
Tornadoes spawned by the storm system remain a threat. Eqecat says nine tornadoes were reported in southern Mississippi and Alabama on August 29 and more were reported on Aug. 30.
The article was originally posted at PropertyCasualty360.com, a sister site of Credit Union Times.