The onshore and offshore total of insurance and reinsurance market losses from recent hurricane Laura is estimated to be in the double-digit billions, between $10 billion and $15 billion by catastrophe risk modeller RMS.
Of this, $9 billion to $13 billion are from onshore losses, caused by wind and surge, as well as inland flood and including losses falling to the NFIP, the company said.
Another $1 billion to $2 billion is expected for offshore insured losses, to energy platforms and assets, RMS said.
RMS’ estimate compares to Karen Clark & Company’s estimate that total onshore losses from wind and surge would be to $9 billion, while AIR Worldwide has said up to $8 billion for onshore property losses only.
As a reminder, our market sources had been suggesting a total loss in a range from $8 billion to as high as $14 billion.
RMS has provided a breakdown of its estimate for hurricane Laura, attributing $8.5 billion to as much as $12 billion to onshore wind and surge insured losses. That compares more closely to other ranges discussed.
$100 million to $400 million of insured losses is estimated for private insurance market inland flood exposure, with another $400 million to $600 million expected to fall to the NFIP.
“Although Laura avoided major metropolitan areas like Houston and New Orleans, it was still an extremely impactful U.S. event. After making landfall as a powerful Category 4 storm, it maintained its intensity as it moved inland, causing widespread wind and water-driven damage well into interior portions of Louisiana. The extent and severity of these damages has been verified by our development teams via web and aerial-based reconnaissance efforts,” explained Jeff Waters, senior product manager, RMS North Atlantic Hurricane Models.
RMS’ estimate is based on wind, storm surge, and inland flood losses across impacted states, including Louisiana and Texas, with its models ensemble footprints capturing uncertainty related to observed hazard, including wind speeds, storm surge, and wave heights.
Included in the insured loss estimates are property damage and business interruption impacts to residential, commercial, industrial, and automobile lines of business, as well as post-event loss amplification and non-modeled sources of loss. Industrial losses include certain speciality lines, such as refineries and petrochemical plants, many of which lie along this part of the Gulf coastline, RMS said.
“Offshore assets have evolved significantly since the impactful hurricanes of Katrina and Rita in 2005 and Ike in 2008, but there is still a prevalence of platforms, rigs, and pipelines in the Gulf region. Many of these assets, including several high-value deep-water platforms, were exposed to the significant wind and wave impacts from Hurricane Laura. At landfall, Laura produced devastating sustained winds of 150 mph [240 km/h], according to both the National Hurricane Center and RMS HWind forecasting service. Our forecasts provided clients with estimates of Laura’s potential impacts in the critical days leading up to landfall,” Pete Dailey, Vice President, Model Development commented.
So all of the main catastrophe risk modelling firms have pegged hurricane Laura’s insurance and reinsurance market total losses in the high single-digit to low double-digit range.
At this level the impacts are not expected to be overly significant to insurance-linked securities (ILS) or collateralised reinsurance entities, as we explained earlier this week.