Hurricane Katrina losses updated

Private-sector insured losses resulting from Hurricane Katrina are now expected to reach US$40-$60 billion with total economic losses exceeding US$125 billion, while losses to the offshore oil and gas industry, private automobiles and marine insurance, as well as commercially insured flood damages are expected to range from US$11and $19 billion, according to risk modeling companies Risk Management Solutions (RMS) and EQECAT Inc.

RMS basis its loss estimate of US$40-$60 billion on detailed modeling and analysis of wind damage, coastal surge and flooding in Louisiana, Mississippi, Alabama, Florida, as well as losses to the offshore oil and gas industry. Katrina’s loss estimated developed by RMS accounts for: first landfall ranges from US$1-$2 billion; second landfall from US$20-$25 billion; New Orleans flood from US$15-$25 billion; offshore energy from US$2-$5 billion; and additional sources of loss from US$2-$3 billion.

Looking at losses to the commercial arena, EQECAT estimates commercially insured flood damage losses are between US$5 and $9 billion, while it estimates losses to the offshore oil and gas industry range from US$5 to $8 billion.

EQECAT estimated the insured losses by using “a special extensive analysis of credible, currently available information received from various sources and internal modeling capabilities, along with on-the-ground assessment by EQECAT representatives.”

The estimated range RMS reached integrated the Company’s existing catastrophe models and exposure databases with remote sensing data and a customized model to assess flooding in New Orleans.

The variable range in loss estimates reflects the uncertainty that exists in many aspects of the localized damage as well as the insurance loss adjustment process, which has only just begun.