Hurricane Isaac could reach $1.5 billion in insured damages

After coming ashore in southeastern Louisiana late Aug. 28, Hurricane Isaac has dropped substantial rain and brought maximum sustained winds of 80 mph to the region.

Catastrophe modelling firm Eqecat has made the first initial disaster estimate of insured losses for the storm. For onshore property – personal, commercial and industrial, including time element – the insured loss estimate is expected to be $500 million to $1.5 billion, Eqecat states in an update on Hurricane Isaac. “Economic losses to offshore energy assets (platforms, pipelines and shut-in production) are expected to range from $500 million to $1 billion from this event.”

The Category 1 hurricane is a slow-moving storm with projected accumulations of as much as 17 inches of rain in Louisiana, Mississippi and Alabama as it tracks northwest, Eqecat notes. More than 644,000 people were without power in these states, according to reports from utility companies.

One of the biggest risks from Isaac is storm surges and flooding in major cities, such as New Orleans, Louisiana and Mobile, Alabama.

“Storm surge heights of between 6 to 12 feet have been observed along the southeastern Louisiana and Mississippi coast and in combination with waves, coastal portions of the area have generated localized coastal flooding,” Eqecat reports. “A floodwall was overtopped in Plaquemines Parish, south of New Orleans, but the fortified areas of New Orleans have withstood the event so far.”

The storm, which spans 200 miles and is moving at 10 mph, is less powerful than Katrina, which packed winds of 125 mph when it hit New Orleans seven years ago to the day. Some reports are comparing Isaac to Hurricane Gustav, a 2008 Category 2 storm that followed a similar path and caused $2 billion in insured damages.

“The size of Isaac is comparable (but slightly smaller) to Hurricane Gustav in 2008,” states risk modelling firm RMS. “Compared to Gustav, Isaac is less intense, most notably on the approach to Louisiana and through the offshore platforms. However, Isaac is still of hurricane strength, is a large storm, and perhaps more crucially, is slow-moving, providing ample opportunity to build up high accumulations of rainfall.”