AIR Says Hurricane Ida Insurance Losses Could Reach $30 Billion

Modeling firm AIR Worldwide has updated its insured loss estimates for Hurricane Ida and now projects that Ida’s insured industry losses will range from $20 billion to $30 billion.

The estimate includes inland flood impacts across the entirety of Ida’s track, including the Northeast.

AIR estimates that wind and storm surge losses will range from $17 to $25 billion, and private-market insured losses from inland flooding will range from $2.5 billion to $5 billion.

Before including inland flooding and Northeast losses, AIR had estimated total insured losses from Hurricane Ida at $17-$25 billion.

The Verisk subsidiary’s estimates also account for increased material and other repair costs in the current construction market.

The estimates include insured physical damage to residential and commercial property and autos; they do not include National Flood Insurance Program losses.

Most insured losses will be in homeowners and commercial property lines of business in Louisiana and the Northeast including in New York and New Jersey.

According to Moody’s, reinsurers will absorb some of the losses, potentially including those from NFIP’s flood reinsurance program. The NFIP’s current reinsurance program provides coverage when flood losses exceed $4 billion up to $10 billion with various participation rates for different reinsurance layers. FEMA paid a total premium of $195.8 million for $1.1 billion in coverage. In addition, FEMA has $1.2 billion of total catastrophe bonds placed with capital market investors.

Moody’s noted that commercial property/casualty reinsurance prices have been increasing in recent years and the current hurricane season will have a significant effect on results. Moody’s added that it believes its rated property casualty (re)insurers are “well capitalized and able to absorb losses from Hurricane Ida.”

The Category 4 storm made landfall in Louisiana on August 29, bringing heavy rains and dangerous storm surge.

Ida then moved Northeast and caused flooding damage and disruption across the region. Flooding was reported from Pennsylvania to Massachusetts, with New York, New Jersey, and Pennsylvania bearing the brunt of the impact. In addition, several states reported damage die to tornadoes.

State officials have reported more than 80 deaths due to Ida.

Hurricane Katrina that hit in 2005 remains the most costly hurricane in terms of insured damage at $88 billion. With an estimated $30 billion in insurance losses, Ida is in the range of Hurricanes Andrew, Maria and Harvey.

Photo: Homes, businesses and roads are flooded in the aftermath of Hurricane Ida in LaPlace, La., Tuesday, Aug. 31, 2021. (AP Photo/Gerald Herbert)