Estimated insured losses from Hurricane Katrina's direct impact have increased to $20-$35 billion, as announced late last week by Risk Management Solutions.
On the day of Katrina's landfall on the Gulf Coast, RMS released a preliminary estimate of $10-25 billion for insured losses. Last week's increased estimate is based on more detailed information from aerial and ground reconnaissance on wind and storm surge damage, as well as updated reports on damage to offshore platforms that sustained Category 5 winds as Katrina passed through the Gulf of Mexico.
Hurricane Katrina can be viewed as two loss events: the direct impact from the wind and storm surge, and the subsequent flooding that occurred in New Orleans as a result of the levee breaks starting on Tuesday, August 30. RMS is continuing to assess the estimated loss associated with the New Orleans flood, and expects the insured loss estimate to increase as the extent and duration of flooding are better defined.
RMS expects total economic losses from both events to exceed $100 billion, including both insured and uninsured components of loss. In major catastrophes, the uninsured component of loss often equals or surpasses the insured component.
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