Hurricane Ida could cost insurers almost $18BN

Ida pummeled Louisiana with some of the strongest winds to ever hit the United States’ Gulf Coast, damaging homes, schools and hospitals.

A shrimper works to salvage a shrimp boat that was partially submerged by Hurricane Ida in Golden Meadow, Louisiana, which was hit this week by 240km/h (150mph) winds [File: Luke Sharrett/Bloomberg]
A shrimper works to salvage a shrimp boat that was partially submerged by Hurricane Ida in Golden Meadow, Louisiana, which was hit this week by 240km/h (150mph) winds [File: Luke Sharrett/Bloomberg]

Hurricane Ida, which swept through Louisiana with some of the strongest winds ever to hit the state, knocking out power to millions of homes and businesses, is estimated to have caused almost $18 billion in damage that’ll be covered by insurers, according to one risk-modeling firm.

Karen Clark & Co. estimates that the bulk of the insured losses occurred in the U.S., with just $40 million of covered damage in the Caribbean. The estimate includes privately insured damage to vehicles, houses and commercial and industrial properties, but does not include boats, offshore properties or National Flood Insurance Program losses.

Ida pummeled Louisiana with maximum sustained winds of 150 miles per hour (240 kilometers per hour) when it made landfall in the U.S. near Port Fourchon, Louisiana, according to Karen Clark & Co. Those winds took down trees and power lines and damaged schools, hospitals and other buildings, including complete roof and wall collapses in some cases. Analysts had said earlier they expected insured damages to range from $15 billion to $20 billion.

Clean-up may become even more costly, with insurance ratings firm A.M. Best warning that a surge in demand could increase losses “meaningfully.” While expenses normally climb after a hurricane, insurers will also be contending with higher costs broadly, with the consumer price index climbing.

The housing market is still booming, with elevated home prices signaling that there could be high demand for materials needed to help repair homes, and companies are still trying to navigate Covid-19 protocols, all of which could impact the costs to repair buildings damaged by Ida, according to Sridhar Manyem, director of industry research and analytics at A.M. Best.

“Given the flooding and all the other impacts and the transportation and the costs of the materials being transported here, that could exacerbate costs,” Manyem said in an interview.

Source: Bloomberg

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