October 9, 2002 by Canadian Underwriter
With the downgrade of Hurricane Lili to Category 2 prior to landfall in Louisiana, it is now estimated that U.S. insurers will suffer less than US$500 million in property wind damage claims, says catastrophe management services company EQECAT.
While there is still a 20% chance losses could exceed US$600 million, EQECAT estimates the downgrade (Lili was originally a Category 4 hurricane), helped the insurance industry dodge a US$3 billion loss.
The damage and loss from Lili would have been much greater if the storm had remained a Category 4 event and made landfall nearer to Port Arthur (Louisiana) where there are higher population densities and very high value industrial facilities,” says Dr. Mahmoud Khater, EQECAT’s chief science officer. “In that event the loss could have been in the US$3 to $4 billion level.”
Earlier estimates of Lili damage from AIR Worldwide Corp. pegged losses at potentially US$600 million. But similarly, prior to the downgrade in the storm’s intensity, AIR was predicting losses in the billions.
Lili made landfall in Louisiana last Thursday, in the sparsely populated region of western Vermillion Bay. The hurricane has cut a swath through the Caribbean prior to hitting the U.S., killing eight people on the islands of Jamaica and St. Vincent.
Florida is now bracing for the arrival of Tropical Storm Kyle later this week. This makes 12 tropical storms, four hurricanes and two major hurricanes so far during this Atlantic hurricane season.