TOP STORIES OF THE WEEK
New Estimates: U.S. Insured Irene Losses
Up To $6.6B; NFIP Losses Under $1B
BY CHAD HEMENWAY AND PHIL GUSMAN
RECENT HURRICANE IRENE esti- mates put U.S. insured losses be- tween $1.6 billion and $6.6 billion.
Shortly after Hurricane Irene, Eqecat
released a U.S. insured-loss estimate of
between $1.5 billion and $2.8 billion,
while AIR Worldwide put the range of U.S.
insured losses at $3 billion to $6 billion.
Risk Management Solutions (RMS)
decided to hold off on an estimate
immediately after the storm, but the modeler
now reports that it expects U.S. losses to be
between $2 billion and $4.5 billion. Adding
in Caribbean losses, the estimate is between
$2.5 billion and $5.5 billion.
Aon Benfield’s catastrophe-model
development center, Impact Forecasting,
estimates U.S. insured losses from
Hurricane Irene of between $1.6 billion
and $6.6 billion.
For RMS, Michael Kistler, director of
model solutions, says, “Our estimate range
reflects some uncertainty, including the
definition of hurricane vs. non-hurricane
deductibles for individual states, and
the uncertainty surrounding losses from
damage caused by tropical-storm winds.
During Irene, a large swath of tropical-
force and low-hurricane-force winds swept
across a large area of exposure causing
widespread, low levels of damage.”
Meanwhile, Eqecat released more
information on how it arrived at its
estimate, and the firm offered estimated
losses for the National Flood Insurance
Program (NFIP). The modeler notes that
notes, “including the additional damaging
effects of an exceptionally wet event
and uncertainties around how flood and
wind and rain damages are separated for
Eqecat says most of the damage from
Irene was caused by extensive flooding,
and most of this is expected to be
uninsured. The largest flood insurer is the
NFIP, and Eqecat says U.S. historical trends
in NFIP data indicate that losses should
not approach the levels reached from
recent Gulf of Mexico hurricanes, and
likely will be less than $1 billion.
By contrast, Hurricane Katrina resulted
in $16 billion in flood-program losses;
Hurricane Ike resulted in $2.6 billion; and
Hurricane Ivan resulted in $1.6 billion.
More than 3. 4 million NFIP policies
are in the Gulf coastal states, while the
East Coast and Northeast have a lower
concentration of policies.
Eqecat says that, as of 2010, there were
136,000 flood policies in North Carolina,
230,000 in New Jersey, 160,000 in New
York, 40,000 in Connecticut, 15,000 in
Rhode Island, 25,000 in Delaware and
70,000 in Maryland.
Eqecat excludes potential insured losses
to the NFIP from its insured-loss estimate
for Irene. NU
U.S. Insured-Loss Estimate
Eqecat $1.5B - $2.8B
AIR Worldwide $3B - $6B
$2B - $4.5B
Impact Forecasting $1.6B - $6.6B
low-hurricane-force winds and heavy
rainfall “contribute significant uncertainty
to the ultimate levels of insurance
payouts; a five-knot increase in modeled
wind speeds would double the estimated
losses from this event and a five-knot
decrease would cut this estimate in half.
A 10 percent increase in damage rates to
properties from heavy rains would cause a
15 percent increase in the loss estimate.”
While Irene caused “significant billions
of dollars of damage from winds and rain,”
says Eqecat, the primary driver of damage
was from rainfall-induced flooding.
The heavy rains cause some uncertainties
in hurricane-damage estimation, Eqecat
Texas Wildfire Losses Could Reach $250 Million
BY MARK E. RUQUET
A beleaguered Texas continues to battle new outbreaks of wildfires across the state, and the Insurance Council of Texas says
losses could reach a quarter-billion dollars as the
number of homes lost rises to close to 2,000.
Mark Hanna of the Insurance Council of Texas
says in a statement that insured losses from the
fires in bastrop County, Texas, the hardest hit,
could cost the industry $150 million alone.
“This is our first estimate of the total insured
losses, and the number could vary as more
information come in,” says Hanna.
The Texas Forest service says the fires have
claimed 1,939 homes in central and east Texas.
The service says that in the past seven days
it has responded to 127 fires
covering 9,205 acres.
during a recent press
conference, Texas gov. rick
Perry said the wildfires covered
an area at that time equal to
the size of Connecticut, more
than 3. 6 million acres.
Moody’s rating service
says the blazes will have
a negative impact on insurers’ third-quarter
results when combined with other losses they’ve
experienced during the third quarter, but the fires
are not a major event by themselves.
Moody’s says, “The Texas
wildfires will not be a major
capital or credit event for
the P&C industry. However,
losses from the wildfires will
pressure 2011 earnings,
which have already been
weakened by high winter-spring storm and tornado
losses during the first half
of the year and Hurricane Irene in the third