Hurricane Ike Loss Estimates Range From $6 Billion to $16 Billion

Hurricane Ike, which made landfall on Galveston Island, Texas, as a strong Category 2 storm, will cause insured losses of between $6 billion and $16 billion 4.2 billion to 11.2 billion euros), according to a preliminary estimate from catastrophe modeler Risk Management Solutions.

RMS said its estimate was based on the latest available damage information, includes both onshore and offshore losses resulting from strong winds and storm surge. RMS said the estimate does not include losses from inland flooding or losses covered under flood policies issued by the National Flood Insurance Program.

Losses to high-rise buildings in downtown Houston as a result of roof and window damage may also contribute significantly to the total loss.

“High-rise office buildings in downtown Houston have been subject to winds around 30 miles per hour higher than at ground level, potentially aggravated by debris from the proximity of these buildings in the downtown area,” said Christine Ziehmann, director of model management at RMS, in a statement. “Damage that has been observed so far to windows and facades is similar to that experienced in southeast Florida from Hurricane Wilma in 2005.”

Losses to offshore oil and gas platforms are expected to contribute a relatively small proportion of the total insured losses for Ike, since winds and waves offshore were generally within the design levels for the platforms.

AIR Worldwide Corporation’s own estimate of losses from Ike comes to between $8 billion and $12 billion, with an expected loss of $10 billion.

“As expected, Houston's high-rise buildings are reported to have sustained major damage to glazing, much like the damage caused by 1983's Hurricane Alicia,” said Peter Dailey, director of atmospheric science at AIR, in a statement. “Hurricane Ike, which was an extremely large storm at landfall, has been weakening only slowly and has maintained a wide swath of damaging winds. AIR expects wind damage to be widespread, not only along the coast, but also extending well over 200 miles inland from Galveston.”

AIR estimates insured losses to offshore assets in the Gulf of Mexico will be between $600 million and $1.5 billion with an expected mean of $1.0 billion.

(By Marc Jones, London news editor: [email protected])