Reinsurance News

Hurricane Delta insured losses seen at up to $3bn by AIR

14th October 2020 - Author: Luke Gallin

Catastrophe risk modeller, AIR Worldwide, has estimated that insurance and reinsurance industry losses to onshore properties as a result of Hurricane Delta’s winds and storm surge will range from $1 billion to $3 billion.

Hurricane Delta

(NASA via AP)

AIR’s estimates include losses to onshore residential, commercial, and industrial properties and automobiles, for their building, contents, and time element coverage.

This announcement from AIR follows CoreLogic’s insured loss estimate of up to $1.2 billion for wind and storm surge losses related to Delta, and KCC’s estimate of close to $1.25 billion.

After impacting Mexico’s Yucatan Peninsula on Wednesday October 7th, Hurricane Delta made landfall near Creole, Louisiana, on Friday, October 9th as a mid-Category 2 storm with a maximum sustained surface wind speed of 100 miles per hour.

In the U.S., the storm brought strong winds and storm surge to coastal communities, mainly in southwestern and south-central Louisiana, an area devastated by Hurricane Laura just six weeks prior. As noted by AIR, strong winds from both of these storms impacted the same areas, including mainly the coastal regions of Cameron Parish and Lake Charles, although Delta was packing significantly weaker maximum winds than Laura.

Tremor - The modern way to place reinsurance

“AIR’s modeling approach assumes independence between these events, which is reflected in the published loss range. Given that the two events affected the same area within a relatively short period of time, however, there are several aspects worth noting,” explains AIR.

The catastrophe risk modeller states that structures weakened by Laura might have been further damaged by Delta, while wind-driven rain and wind-borne debris impacts following Delta could have exacerbated the damage caused by Laura.

“It is important to note that two hurricanes impacting the same area within a short period of time is not a new phenomenon; in 2004 Hurricane Frances and Hurricane Jeanne both impacted virtually the same place on the east coast of Florida within six weeks of each other. There were reports of loss amplification at the time, particularly in Florida; given these back-to-back events, the same cannot be ruled out in Louisiana, despite the fact that they are different events and fall under different insurance conditions,” says AIR.

Print Friendly, PDF & Email

Recent Reinsurance News