Hurricane Ida could cost insurers $18bn

London — Insurers are bracing for a hit of about $18bn from Hurricane Ida in the US and the Caribbean, catastrophe modelling company Karen Clark & Co (KCC) said on Wednesday.

The number, closer to the lower end of the initial estimates given by insurance analysts while the storm was still raging earlier this week, is the first from one of the industry’s risk-modelling experts.

KCC said $40m worth of the insured loss would be in the Caribbean and the rest from wind and storm surge losses in the US.

Hurricane Ida made landfall in the US on Sunday as a category 4 storm, after sweeping ashore from the Gulf of Mexico, flooding wide areas under heavy surf and torrential rains.

Insurance experts had earlier in the week estimated $15bn to $30bn in claims from Hurricane Ida, but cautioned the figure could be higher, in part because of pandemic pricing that has pushed up the cost of lumber and labour to rebuild.

The wide-ranging estimates, based on models that track the storm’s severity and path, are still likely to be far less than the $87bn in claims from Hurricane Katrina in 2005, when adjusted for inflation, according to experts.

Ratings agency Fitch said losses from Ida is likely to surpass those from winter storm Uri at $15bn and Hurricane Laura — the costliest insured catastrophe event of 2020 — at $10bn.

KCC said that its data showed Ida tied with the Last Island hurricane in 1856 and Hurricane Laura in 2020 for the strongest maximum sustained winds at landfall in Louisiana.

Its forecast includes damage to privately insured residential, commercial, and industrial properties and automobiles, and excludes boats, offshore properties or losses that come under the US national flood insurance programme.

Analysts from UBS said the fallout from Ida would hit Swiss Re and Lancashire’s earnings per share hardest, by 32% and 30% respectively, while Hannover Re and reinsurance industry leader Munich Re would be the least hit.

Reuters