A risk and coverage research conducted by catastrophe risk modeler, Karen Clark & Company (KCC), has estimated that the insurance and reinsurance industry loss from Hurricane Ida will near $18 billion, the large majority of which is attributable to wind and storm surge losses in the U.S.
According to the research firm, the estimated industry loss is estimated to include privately insured damage to residential, commercial, and industrial properties and automobiles, but does not include boats, offshore properties, or National Flood Insurance Program (NFIP) losses.
Hurricane Ida had on August 27th made its first landfall near La Columba, Cuba, with maximum sustained winds of 80mph and two days later made another landfall near Port Fourchon, Louisiana, as a Category 4 hurricane with maximum sustained winds of 150mph.
KCC, in its findings noted that impacts from Ida in Cuba and the Cayman Islands had been limited to non-structural damage, fallen trees, and power outages while estimating that insured losses in the Caribbean may just be about $40 million of the close to $18 billion industry’s total.
The risk modeler stated that the rest of the total derived from wind and storm surge losses in the U.S., as Ida’s strength at landfall ties it with the Last Island Hurricane in 1856 and Hurricane Laura in 2020 for the strongest maximum sustained winds at landfall in the state of Louisiana.
An online insurance and reinsurance platform – Reinsurance News- stated that early indications from modelling data suggested that Hurricane Ida would drive an insurance and reinsurance industry loss of between $15 billion to $25 billion. While KCC’s estimate is towards the lower end of this range, it does exclude any NFIP losses, damages to boats, and offshore properties.
This is just as it had been reported that Ida could drive additional major losses in energy accounts, although the extent of these will depend on the ability of offshore oil rigs to withstand the impacts of the storm.
According to the online medium, analysts have said that while the event is expected to drive significant economic and re/insured losses, some of which will flow to the insurance-linked securities (ILS) space, it’s likely to be an earnings event rather than a capital event.
Furthermore, analysts also suggest that more of the industry loss could shift to reinsurers as the elevated catastrophe load in H1 2021 saw some primary carriers significantly erode their catastrophe budgets for the year.
Meanwhile, the U.S. Securities and Exchange Commission (SEC) Chair, Gary Gensler, has directed the staff to carefully monitor developments as a result of Hurricane Ida catastrophe.
The commission assured that “the safety of local residents is our highest priority. We invite inquiries from any person with obligations under the federal securities laws that may be affected by Hurricane Ida. The staff will evaluate the appropriateness of providing regulatory relief for those affected by the storm.”
