Insured losses from Hurricane Isaac US$1-2 billion from wind and surge: RMS estimate

Risk Management Solutions (RMS) estimates that U.S. insured losses from Hurricane Isaac’s wind and surge impacts on the U.S. Gulf Coast will be between US$1 billion and US$2 billion.

Those figures exclude rainfall-driven flood losses and all National Flood Insurance Program losses.

The estimate does include the possibility of a small amount of loss from so-called coverage leakage, or losses causes by surge inadvertently paid out by wind-only policies.

“We’ve formulated our estimate using a blend of modeling tools, combined with our assessment of key areas of uncertainty and non-modeled losses – excluding flood,” Christine Ziehmann, director of Model Product Management at RMS, explained in a statement. “The width of the range reflects some remaining uncertainties, including the variability and uncertainty around loss at very low wind speeds—mostly tropical storm strength—and, in particular, the uncertainty around coverage leakage of surge related losses into wind-only loss payments.”

Hurricane Isaac made landfall on Louisiana in late August as a Category 1 strength hurricane. The storm then moved northwest slowly and was later downgraded to a tropical storm. It dissipated a few days later in Missouri.

The storm created strong winds, storm surge and inland flooding in Louisiana and Mississippi, and further wind and rain damage in Arkansas.

As of Sept. 13, the 2012 Atlantic hurricane season had seen 14 tropical storms, with seven strengthening to hurricane status, according to RMS.