Estimates for U.S. onshore and offshore insured losses from Hurricane Ike have risen to $13-21 billion, of which $10-15 billion is estimated for wind and storm surge in Texas and Louisiana.
The new estimate, made by Risk Management Solutions (RMS), includes $2-3 billion from inland wind and flood losses and $1-3 billion in offshore losses, but does not include losses covered by the National Flood Insurance Program.
RMS published a preliminary loss estimate of $7-12 billion on September 17 shortly after Hurricane Ike made landfall over Galveston Island, Texas. The revised loss estimate is based on a new post-event modeling methodology that captures the uncertainty in Ike's wind and storm surge footprint, due to the lack of observations, using an ensemble of 300 varying simulations of this footprint.
The updated industry loss estimate also includes an additional $2-3 billion of inland wind and flood losses that were not included in the previous RMS estimate. Most of these losses in the Midwestern U.S. resulted from wind damage caused by an unusual combination of the remnants of Ike with another meteorological system.
While the new modeling methodology better represents the losses expected from Hurricane Ike, the range of $13-21 billion reflects the significant uncertainty that still remains in assessing insured losses. One of the greatest sources of uncertainty in the range is the amount of storm surge losses that will be insured across the broad coastal areas of Texas and Louisiana impacted by Ike. In addition to the customary challenges of differentiating wind and storm surge damage after a hurricane and uncertainties in the percentage of properties with flood insurance, the final insured losses for Ike are also expected to be affected by the extended evacuations of Galveston and other coastal areas. Offshore platform losses are another source of uncertainty, due to a wide range of practices within the offshore energy industry on insuring both physical platform damage as well as business interruption caused by loss of production.
The updated range of insured losses makes Ike the third most costly U.S. hurricane after Katrina and Andrew.
RMS will continue to monitor the impacts of Ike and may provide further estimates if significant new information arises.
Interested in more catastrophe news and in-depth articles? Head over to Claims' catastrophe channel for more information.
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