Risk modellers warn of 'material impact' to specialty lines from Hurricane Ida
Catastrophe risk modeller RMS has revealed the total onshore and offshore insured loss estimates for recent Hurricane Ida in the Gulf of Mexico. Analysts expect "material impacts" to specialty lines, including significant business interruption losses, from this event.
The insured losses are expected to be between $25 and $35 billion. This includes losses to the National Flood Insurance Program (NFIP) in the four impacted Gulf Coast states (Alabama, Florida, Louisiana and Mississippi) in the range of $2.3 – $4 billion.
The estimates, however, excludes wind and inland flooding impacts in the Ohio Valley, Mid-Atlantic, and Northeast US regions, which RMS said, will be determined once the full extent of damage is known.
Losses reflect property damage and business interruption to residential, commercial, automobile, industrial, infrastructure, marine cargo and specie, watercraft, and other speciality lines of business, along with post-event loss amplification (PLA) and non-modeled sources of loss.
RMS expects insured wind losses in this event to be driven by residential lines, and insured water-related losses to be dominated by commercial and industrial lines. Additionally, RMS estimates insured losses to offshore platforms, rigs, and pipelines in the Gulf of Mexico to be between US$0.7–$1.5 billion from wind and wave-driven damages.
Ida made landfall near Port Fourchon, Louisiana, on Sunday, August 29. It was near Category 5 intensity at its landfall and remained for six hours at Category 4 intensity moving inland. Its strong hurricane wind intensity caused major damage to power plants, as well as transmission and distribution lines.
"We expect material impacts to specialty lines from this event," warned RMS. "Southern Louisiana has a high concentration of petrochemical plants, refineries, marine cargo and port exposures, power plants and other high-value industrial facilities that were impacted by Ida."
Mohsen Rahnama, chief risk modeling officer of RMS, stated that "with prolonged anticipated recovery times, we expect material business interruption losses to these lines on top of varying degrees of infrastructure damage they sustained.”
Rajkiran Vojjala, vice president of model development at RMS, added: “Ida damaged many offshore platform-related hubs and staging facilities in coastal Louisiana, including Port Fourchon. As a result, more than 90 percent of the Gulf of Mexico oil and gas production is still shut-in, representing approximately 15 to 20 percent of the U.S. total fuel supply. Offshore damage surveys to date, reviewed by the RMS Geospatial Analysis team, indicate wind and wave-driven damage to several high-valued platforms. Inspections and damage assessments are still ongoing, so, it’s likely we won’t know the full extent of loss to this sector for several weeks. However, as Ida tracked quickly through the Gulf, the lower than expected wave heights are expected to limit physical damage to rigs and platforms.”
“Ida was truly a multi-faceted event in terms of hazard and loss impacts," said Jeff Waters, senior product manager of RMS North Atlantic Hurricane Models. "Many areas impacted by Ida’s winds were also impacted by storm surge, precipitation-induced flooding, and the hurricane events of 2020. In these instances, loss attribution and differentiation may become more complex, leading to longer claims settlement periods.”
Hurricane Ida was the ninth named storm of the 2021 North Atlantic hurricane season, the fourth hurricane, and the fifth named storm to make landfall in the US this season. Ida was also the fourth hurricane to make landfall in Louisiana since 2020, following Hurricanes’ Laura, Delta, and Zeta. Over two months still remain in the 2021 North Atlantic hurricane season, officially ending on November 30.
RMS industry loss estimates for landfalling US hurricanes reflect modeled and non-modeled impacts from all major drivers of damage, including wind, storm surge, and inland flooding.
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