Hurricane Isaac May Cost Insurers $2 Billion, AIR Says
Isaac, the storm drenching Arkansas after making landfall in Louisiana as a hurricane, may cost insurers as much as $2 billion in the U.S., risk-modeling firm AIR Worldwide said.
The industry’s claims costs, including wind and storm-surge damage to residential, commercial and industrial onshore properties, will be at least $700 million, the Boston-based firm said today in an e-mailed statement. The estimates are a fraction of the $41.1 billion cost for Hurricane Katrina, the 2005 storm that struck Louisiana and caused flooding in New Orleans. Hurricane Irene, which lashed the U.S. East Coast last year, cost $4.3 billion.
“As the winds persist, roof fasteners and connections can become fatigued and overloaded causing additional damage,” Tim Doggett, AIR’s principal scientist, said in the statement. “With soils heavily saturated by rain, trees can be downed by much lower wind speeds than would otherwise be necessary.”
Natural disasters including Irene and tornadoes in Alabama and Missouri last year pressured results at insurers including Travelers Cos. (TRV), Allstate Corp. (ALL) and Chubb Corp. (CB) The industry is able to withstand claims from Isaac, even as most losses will be borne by primary carriers rather than reinsurers, Fitch Ratings said in a note on Aug. 28, the day the storm made landfall.
Allstate, the largest publicly traded U.S. home and auto insurer, advanced 0.9 percent to $37.50 at 9:40 a.m. in New York. Warren, New Jersey-based Chubb climbed 0.8 percent to $74.07 and Travelers gained 1.2 percent.
Offshore oil rigs and gas platforms in the Gulf of Mexico probably didn’t suffer “significant physical damage” from Isaac, AIR said. Claims also may be lower from the energy industry because insurers are selling less business-interruption coverage after losses from Katrina and the explosion on the Deepwater Horizon drilling rig in 2010, the modeling firm said.
AIR’s prediction follows rival Eqecat’s Aug. 29 estimate of insured losses from Isaac of between $500 million and $1.5 billion for onshore property.
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