Hurricane Ida insured losses continue to mount, could hit $40bn

Cat risk modellers and property information and analytics providers have increased their loss estimates for Hurricane Ida, one of the strongest to make landfall in the continental US.

According to new data analysis by CoreLogic, the insured and uninsured losses from wind, storm surge and inland flooding damages to residential and commercial properties in Louisiana, Mississippi and Alabama are expected to be between $27 billion and $40 billion.

More than 90 percent of the losses are estimated to be in Louisiana, primarily in the nine parishes in the New Orleans-Metairie-Hammond metropolitan area and the Ascension, Lafourche, Livingston and Terrebonne parishes immediately to the west.

The global property data analytics provider expects wind damage across residential and commercial property to account for up to $12bn of damage, with the remainder due to flood.

Total insured flood loss for residential and commercial properties in Louisiana, Mississippi, and Alabama is estimated to be between $6 billion and $9 billion, which includes both storm surge and inland flooding.

Uninsured flood loss for this area is estimated to be between $8 billion and $12 billion.

Ida is the fourth and second major hurricane of 2021, which rapidly intensified into a Category 4 hurricane before making landfall near Port Fourchon on Sunday, August 29.

Analysts at CoreLogic warned that "with climate change affecting the ocean’s temperatures, we should expect to see more frequent and destructive tropical cyclone activity. Homeowners and regional public agency leaders should prepare for more resilient city infrastructure and financial protection from catastrophe."

Tom Larsen, principal of insurance solutions at the firm, highlighted that although only 40 to 50 percent of the flood damages from Hurricane Ida appears to be covered by insurance, this is actually an improvement from the uninsured flood damages seen from Hurricanes Harvey and Katrina. “The flood insurance gap is shrinking,” he said.

Meanwhile, risk modeller Karen Clark & Company (KCC) has also updated its initial estimates made as Ida approached. Based on its models, the company has calculated that the insured loss from Ida will be close to $18 billion. Of this, almost all will come from wind and storm surge losses in the US. Just $40 million is from the Caribbean, following Ida’s landfall with 80mph winds near La Columba, Cuba, on August 27, two days before it hit Port Fourchon, Louisiana, with maximum sustained winds of 150 mph.

In Cuba and the Cayman Islands, losses have been limited to non-structural damage, downed trees, and power outages, KCC reports. In the US, significant structural damage, downed trees and powerlines were reported throughout the region. Structural roof damage was widespread, and there were instances of collapsed buildings. Peak storm surge from Hurricane Ida exceeded eight feet along the Louisiana coast and lower levels from the central Louisiana coast to Mobile, Alabama. The New Orleans levee system kept most of the damage at bay, however, with some exceptions.

The estimate includes the privately insured damage to residential, commercial, and industrial properties and automobiles but does not include boats, offshore properties, or NFIP losses.

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