Tropical storm Ida formed last night in the Caribbean and has now set a course for the Gulf Coast of the United States, with forecast models suggesting a mid to strong hurricane is likely to make landfall in Louisiana and the NHC’s forecast now showing a major Cat 3 or stronger storm close to the shore.
Update: Read our Sunday morning update on hurricane Ida’s intensification to a monster Category 4 storm with 140 mph winds and the importance of the landfall location in the eventual market impact from hurricane Ida.
Albeit already the ninth named tropical storm of the 2021 Atlantic hurricane season, tropical storm Ida, which forecast models agree will become hurricane Ida over the Gulf of Mexico, has the potential to be the first to cause a loss of note for the insurance, reinsurance and insurance-linked securities (ILS) market.
Forecast models are largely in agreement on the landfall of a hurricane Ida being along the central Louisiana coast area, with New Orleans in the right-hand side of the forecast cone.
On strength, there is more variation in the model runs, but in the main, a Category 2 or stronger hurricane Ida landfall is anticipated and some forecasts are predicting rapid intensification over the very warm waters of the Gulf of Mexico and a chance of a major hurricane landfall.
However, the NHC’s latest forecast cone (seen further down this article) now shows hurricane Ida reaching major Cat 3 or greater strength before its landfall.
Insurance and reinsurance broking group BMS’ Senior Meteorologist Andrew Siffert commented that, “the industry is now looking at its first major impact of the season.”
We’ve already seen five named storms make landfall in the US this year, but Siffert noted that total estimated losses across the five named storms are still expected to fall under $1 billion in insured losses.
Making a hurricane Ida landfall in Louisiana the first more significant storm threat of the 2021 season for insurers and their reinsurance or ILS capital partners.
Tropical storm Ida, as it is currently, has soaked the Cayman Islands and now heads for a brush with eastern Cuba before the open waters of the Gulf of Mexico lie ahead of it.
Currently sustained winds are seen as around 80 mph, with gusts higher at up to 95 mph having strengthened quite rapidly so far, and you can see the latest forecast track from the NHC below, still showing a possible major hurricane at landfall. Rapid intensification is now possible as hurricane Ida pulls away from Cuba into the Gulf of Mexico.
The latest forecast advisory data from the NHC suggests hurricane Ida could reach mid-Category 3 strength prior to landfall, with up to 130 mph winds seen as possible at landfall.
Update: We discussed the importance of landfall location to the eventual size of market impact for ILS interests in this follow-up article.
Once passed Cuba, which could weaken Ida a little, there is nothing in the storms path aside from very warm tropical waters right up to landfall, which meteorologists suggest could mean a strong hurricane nears the Louisiana coast by late Sunday or into Monday morning.
As well as very warm Gulf waters, plus warm coastal waters, there is little wind shear in the path of Ida to hinder intensification, while forecasters also say that the upper level outflow is also conducive to supporting a major hurricane.
Siffert of BMS commented, “Some of the warmest water in the Atlantic Basin is right along the northern Gulf Coast. Along with all the historical storms mentioned above that have intensified in the Gulf of Mexico, many recent storms intensified right up until landfall. Given that the warm waters range from 87 – 89 degrees F, there is a concern if any named storm enters these waters that rapid intensification can occur. ”
There remains some uncertainty though, albeit largely to do with the eventual landfall location and just how intense hurricane Ida can become.
If Ida intensifies particularly quickly in the Gulf it could result in a track further east and a quicker path to landfall, which some suggest may be a little weaker than a more westerly track.
If Ida intensifies more steadily meteorologists suggest the path could be slightly more west, as steering features take longer to pick the storm up, allowing for a longer-time for intensification to occur and potentially a stronger landfall further west, with even Texas seen as possible in this scenario.
It is important to note that the forecast cone is quite wide at this time, with the entire Louisiana coast within it, a shift east or west can bring Texas or Alabama to Florida into the edges of the cone and exactly how Ida intensifies over the next day may be critical in deciding the eventual path of hurricane Ida over this weekend.
That said, the models are largely in agreement right now and all eyes are on a Louisiana landfalling hurricane, at mid to major strength, Sunday night into Monday morning.
No matter how the track adjusts, the NHC warns that, “Ida could be near major hurricane strength when it approaches the northern Gulf coast.”
Modelled intensity guidance from Tropical Tidbits can be seen below, which continues to show that there are some models which anticipate storm hurricane Ida being a major hurricane in the Gulf of Mexico as it heads towards the coast.
As we explained in our update yesterday, in which we provided some excellent modelled analysis from Richard Dixon of Inigo Insurance, we also explained that the rainfall potential of hurricane Ida will be particularly high.
On rainfall the NHC states, “As Ida approaches the central Gulf Coast Sunday afternoon, total rainfall accumulations of 8 to 16 inches with isolated maximum amounts of 20 inches are possible across southeast Louisiana and southern Mississippi through Monday. This is likely to result in considerable flash and riverine flooding impacts.
“Ida is forecast to turn northeast as it moves inland later Monday, with rainfall totals of 4 to 8 inches possible from northeastern Louisiana and central Mississippi into the Tennessee Valley. This is likely to result in flash and riverine flooding impacts.”
As well as early rainfall warnings, another factor that shows the NHC’s confidence in the forecasts of hurricane Ida impacting the US Gulf Coast is the fact that storm surge warnings are already significant.
In fact, the NHC is warning of the chance of storm surge heights of up to 15 feet above sea level for parts of the Louisiana coast at this time, which could be a significant and damaging impact.
Currently the storm surge forecasts span a wide area, with the NHC warning of as much as 15 foot of storm surge, with up to 7 feet across a wider area still.
The NHC warns of an “increasing risk of life-threatening storm surge” for the coast, as well as an “increasing risk of dangerous hurricane-force winds” from Sunday onwards, including for the New Orleans metropolitan area, which is now under a hurricane watch.
You can see the NHC’s peak storm surge map for huricane Ida below:
Of course, at this early stage, with tropical storm Ida yet to intensify into hurricane Ida, it’s impossible to forecast how notable a loss this could be for insurance, reinsurance and ILS market interests.
With Louisiana the target for landfall right now, there are a wide range of scenarios from the hundreds of millions, to the low billions to double-digits, sources have told us, with the precise landfall location and how intense hurricane Ida can become key in determining just how big an industry loss threat the storm presents.
Louisiana has shown us before that major hurricanes can result in smaller industry losses than expected if they strike a less populated, more rural part of the state, or close to the Texas border.
While a landfall further east can bring more insured value into focus and ultimately drive higher insurance and reinsurance market losses.
The threat is there though. Hurricane Ida is threatening the most notable loss of the 2021 storm season so far, according to the models at this time.
This is going to be a weekend where those in catastrophe modelling, or actively managing portfolios of risk such as in catastrophe bonds, or responsible for buying last-minute or live cat protection and hedges such as industry loss warranty (ILW) products, may find they need to stay glued to the tropics.
Insurance, reinsurance and ILS market interests can keep track of developing hurricane Ida over on our 2021 Atlantic hurricane season page and we’ll update you should a more significant threat develop.
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