Catastrophe risk modeller RMS has estimated that onshore and offshore U.S. insured losses from the impacts of Hurricane Ida in the Gulf of Mexico will be between USD 25 billion and USD 35 billion.
This estimate from RMS includes wind and storm surge losses of between USD 21 billion and USD 28 billion; inland flood (Gulf states only) losses of USD 1 billion to USD 1.5 billion; NFIP (Gulf states only) losses of USD 2.3 billion to USD 4 billion; and offshore energy losses of USD 700 million to USD 1.5 billion.
However, it excludes wind and inland flooding impacts in the Ohio Valley, Mid-Atlantic, and Northeast U.S. regions, suggesting that the top-end of this range from RMS could end up a fair bit higher than the current USD 35 billion.
The USD 25 billion to USD 35 billion insurance and reinsurance industry loss range is based on damages caused in Alabama, Florida, Louisiana, and Mississippi – the impacted Gulf states in the landfall region.
RMS intends to communicate potential industry losses from Ida’s impacts outside of these four states in the coming days once the extent of the damage is clearer.
Analysts have said that as damages further in the north start to be factored in, re/insured loss estimates for Ida are expected to rise to between USD 30 billion to USD 40 billion.
Jeff Waters, Senior Product Manager, RMS North Atlantic Hurricane Models, commented: “Ida was truly a multi-faceted event in terms of hazard and loss impacts. RMS virtual reconnaissance efforts and analysis of aerial imagery show widespread wind and water-related damage in Louisiana and neighboring Gulf Coast states, including many severe or total structural losses.
“From a wind perspective, this storm was a design level event, where observed wind speeds often exceeded speeds that buildings have been designed to withstand, particularly in the hardest hit areas in southern Louisiana. 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.”
The industry loss estimate by RMS reflects property damage and business interruption to residential, commercial, automobile, industrial, infrastructure, marine cargo and specie, watercraft, and other specialty lines of business, as well as post-event loss amplification and non-modelled sources of loss.
This estimate is based on analysis of RMS ensemble footprints in Version 21 of the RMS North Atlantic Hurricane Models and estimates from the RMS U.S. Inland Flood HD Model.
NFIP losses were calculated using RMS’ view of NFIP exposure based on 2019 policy in-force data published by FEMA, the Version 21 North Atlantic Hurricane Models, and the U.S. Inland Flood HD Model. Offshore losses are based on the August 2021 vintage of the RMS Offshore Platform Industry Exposure Database.
The catastrophe risk modeller says that it expects wind losses in Ida to be driven by residential lines, and insured water-related losses to be dominated by commercial and industrial lines.
“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,” said Rajkiran Vojjala, Vice President, Model Development, RMS.
Hurricane Ida was the fifth U.S. named storm to make landfall in the U.S. season, and the ninth named storm of the 2021 Atlantic hurricane season. Since 2020, Ida is the fourth hurricane to make landfall in the state of the Louisiana, after hurricanes’ Laura, Delta, and Zeta.
Tom Sabbatelli-Goodyer, Director, Event Response, RMS, said: “As expected, Ida underwent rapid intensification in the hours leading up to landfall as it moved over favorable oceanic and atmospheric conditions in the Gulf of Mexico. At landfall, the storm was most similar to that of Hurricanes’ Betsy (1965), Camille (1969), and Laura (2020) in terms of intensity and overall Integrated Kinetic Energy. Remarkably, the storm maintained its Category 4 intensity for six hours after landfall. Ida’s slow rate of decay was due to unique surface roughness conditions in that region, which limited the frictional weakening effects it could impose on the storm. That combined with an eastward shift in the track closer to areas of high exposure, such as the New Orleans metropolitan area, exacerbated wind and water-related impacts further inland.”