September 23, 2003 by Canadian Underwriter
Risk modeling by Risk Management Solutions (RMS) supports the early loss estimate for Hurricane Isabel of up to US$1 billion for U.S. insurers. The Insurance Information Institute (III) said the total could reach that mark last Friday.
RMS says wind-related claims should be about US$600 million, but flood claims could push the total up higher. There is still some question as to how much flood damage will be covered by private insurance in light of the widespread use of government flood coverage.
The US$600 million figure includes property damage from wind, as well as business interruption claims, RMS confirms.
“This storm had a very broad windfield with a large area of low level damage,” says Michael Drayton, head of climate hazards at RMS. “Storm surge was also a distinguishing characteristic of Isabel. The strongest surge occurred to the right of the landfall location in North Carolina as we anticipated, but Isabel’s track and winds after landfall continued to push a strong surge up Chesapeake Bay.”
Waves as high as 15-20 feet above sea level were recorded in North Carolina’s Outer Banks, which combined with intense rainfall to produce flood conditions that could equal the total windstorm damage estimates. RMS notes that private insurance is generally used to provide excess flood coverage to commercial properties, above that provided by government flood insurance.