Insurable losses could reach $11bn for Louisiana floods

The mass flooding in Louisiana caused by excessive rainfall during August 2016 is expected to reach insurable losses of between the range of $8.5 and $11 billion, according to catastrophe modelling firm AIR Worldwide.

This estimate includes exposures eligible for coverage – regardless of whether they are actually insured – without any application of deductibles or limits.

“Extreme rainfall-induced flash flooding and river flooding on the floodplain have wreaked havoc in Louisiana, breaking records and damaging property throughout many parishes,” said Boyko Dodov, vice president and director of flood modelling at AIR Worldwide.

“Beginning around August 10, 2016, rainfall continued almost perpetually for approximately seven days, resulting in accumulations of around 7.1 trillion gallons in Baton Rouge and the surrounding suburbs, according to reports, reaching upwards of 30 inches in some areas.”

August 2016 is now the wettest month on record for Baton Rouge since 1907.

More than 145,000 residences – housing upwards of 359,000 people – were in the flood-affected areas, and more than 12,000 business were also identified as affected, according to a report from the Baton Rouge Area Chamber.

In response. FEMA has issued $1 billion in Federal Disaster Assistance grants to those affected, including National Flood Insurance Program (NFIP) policy holders who have received more than $247 million to repair or rebuild damaged properties; more than 63,000 families have sought FEMA assistance for housing.

According to AIR, the majority of homeowners impacted by the floods reportedly did not have flood insurance because their homes were not in flood zones.

Furthermore, AIR said that many reinsurance contracts are subject to an hour’s clause (typically 168 hours for flood events). Given the duration of this event, AIR expects the flood to be treated as a single occurrence in Louisiana.