Hurricane Isaac, the storm that made landfall in Louisiana Aug. 28, may cost insurers as much as $2 billion in the U.S., risk-modeling firm AIR Worldwide said.
The industry’s claims costs, including wind and storm-surge damage to residential, commercial and industrial onshore properties, are estimated to be at least $700 million, the Boston-based firm said in an e-mailed statement. The estimates are a fraction of the $41.1 billion cost for Hurricane Katrina, the 2005 storm that struck Louisiana and caused flooding in New Orleans. Hurricane Irene, which lashed the U.S. East Coast last year, cost $4.3 billion.
“As the winds persist, roof fasteners and connections can become fatigued and overloaded causing additional damage,” Tim Doggett, AIR’s principal scientist, said in the statement. “With soils heavily saturated by rain, trees can be downed by much lower wind speeds than would otherwise be necessary.”
Natural disasters including Irene and tornadoes in Alabama and Missouri last year pressured results at insurers including Travelers Cos., Allstate Corp. and Chubb Corp. The industry is able to withstand claims from Isaac, even as most losses will be borne by primary carriers rather than reinsurers, Fitch Ratings said in an Aug. 28 note.
Offshore oil rigs and gas platforms in the Gulf of Mexico probably didn’t suffer “significant physical damage” from Isaac, AIR said. Claims also may be lower from the energy industry because business-interruption coverage is less common in the wake of Katrina and the explosion on the Deepwater Horizon drilling rig in 2010, the modeling firm said.
AIR’s prediction follows rival Eqecat’s Aug. 29 estimate of insured losses from Isaac of between $500 million and $1.5 billion for onshore property.
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