AIR Says Hurricane Ida Insurance Losses Could Reach 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)