Counting the cost of Hurricane Laura
CoreLogic estimates covered insurance losses from the storm to fall between $8 and $12 billion.
The strongest hurricane to hit the northwestern Gulf Coast in over 160 years swept through parts of Louisiana and Texas on Thursday (Aug. 27), knocking out power to hundreds of thousands of residents and creating fears of what government officials described as an ‘unsurvivable’ storm surge. Hurricane Laura thundered onto the coast as a Category 4 storm and traveled inland, decimating the town of Lake Charles, where it blew down buildings, bent trees in half like they were twigs, and caused a fire at a chemical plant. It then continued its trip inland, where it left extensive wind damage and flooding in its wake. So far, six deaths have been attributed to the storm.
Hurricane Laura comes as the country is still dealing with the effects of the coronavirus. Social distancing, isolating and face masks have become the norm for many, but in the wake of a major hurricane, finding shelter, food and managing daily tasks becomes even more challenging.
Adjusters traveling to the area will also have to take additional precautions to protect themselves and their insureds. “Our adjusters are instructed to follow our guidelines for pre-screening claims to reduce the risk of exposure and coordinate with their team leads or management on local PPE requirements,” said Ken Tolson, U.S. president, Crawford Claim Solutions, in an email to PropertyCasualty360.com.
The company is taking extra steps to mitigate any risk of spreading the virus. “We provide PPE equipment and require adjusters to wear the PPE (masks), maintain social distancing (no handshakes or close contact), and use hand sanitizer regularly before, during and after each case visit/site visit to reduce the risk both to our employees and the policyholders that we are servicing. Furthermore, we are escalating our use of remote adjusting tools for lower severity claims to reduce the need to have adjusters physically inspect property when possible,” added Tolson.
Assessing the damage
CoreLogic, a property information and analytics provider, places preliminary damage estimates for insured losses from storm surge and wind in the rage of $8 to $12 billion for residential and commercial properties. The company also found that the two areas that sustained significant damage from the storm have higher than normal delinquency rates for mortgage loan payments. Beaumont, Texas (9.3%), and Lake Charles, La. (9.5%), were above the standard 7.3% according to the CoreLogic Loan Performance Insights Report.
The losses from a storm of this magnitude could have been much higher, but the path it traveled was through a relatively sparsely populated area. “There is never a good place for a hurricane to make landfall. But this was the best possible outcome because it spared the major population centers of Houston and New Orleans,” said Curtis McDonald, meteorologist and senior product manager of CoreLogic, in a press release.
Residents of the areas in the path of the storm were warned to evacuate earlier this week in anticipation of a 20-foot storm surge. Fortunately, those predictions were not realized, and the majority of the damage was caused by high winds.
Fitch Ratings finds that the damage from losses and the economic impact created by the storm are unlikely to trigger any sort of rating downgrades for property & casualty insurers and reinsurers. The pandemic is expected to have some effect on how quickly damages from the storm can be assessed.
Fitch says the top five companies that represent 56% of the direct premium written (DWP) in the homeowners insurance market in the areas affected are State Farm, Allstate, USAA, Farmers and Liberty Mutual. On the commercial side, the five largest insurers, CNA, Liberty Mutual, Travelers, CHUBB and AIG, only represent 24% of the DWP.
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