Hurricane Ida insured losses shift more to reinsurers, warn analysts
While risk modellers are currently busy making an initial determination of what losses from the top-end category 4 Hurricane Ida will look like, analysts think the costs could shift more towards reinsurers.
Ida made landfall near Port Fourchon, the southernmost port of Louisiana, on Sunday, August 29th. It joins Hurricane Laura (2020) and the Last Island Hurricane (1856) as the strongest on record in Louisiana, tying for the fifth strongest to make landfall in the continental US.
Ida remained a category 4 for about six hours and was downgraded to a category 3 by 7:00 PM Eastern Time (ET). Port Fourchon, which sits near the Gulf of Mexico, suffered severe damage during the Hurricane.
Analysts believe damage to near and offshore energy infrastructure and Gulf oil platforms that transport through Port Fourchon will be a source of insured loss.
Ida is expected to become a tropical depression over Mississippi by late Monday.
Based on comparison to some prior Hurricanes in the region, analysts believe insured losses from Hurricane Ida would fall more on reinsurers than on primary carriers.
"With aggregate catastrophe covers eroded faster than normal due to significant losses in 1H21 (Winter Storm Uri), we think costs shift more to reinsurers," said analysts at Morgan Stanley.
They noted that the insurers directly affected by the losses will include Allstate and Progressive, which are said to be the top five insurers of homeowners, commercial multi-peril property, and personal auto physical damage in Louisiana and MS account for a combined 50 percent market share.
Insured losses from Hurricane Laura, which made a landfall last year as a Cat 4, were approximately $10 billion. While Katrina, which was a much larger storm and made a landfall on August 29 in 2005, triggered insured losses of around $54 billion (2020 $US, excluding amounts paid by the National Flood Insurance Program), becoming the costliest insured North Atlantic hurricane on record.
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