Katrina at T + 5

The latest wind-only loss estimates (as of Friday PM, September 2) are:

• EQE $9Bn – $17Bn


• AIR $12Bn – $26Bn


• RMS $20Bn – $35Bn

These are all on the low side, because of non-modeled exposures. They likely exclude LAE, insured Flood losses, most marine losses (except RMS is including rigs), at least EQE is only speaking about the second landfall. There are no estimates yet from PCS or Sigma, and they will be informative.

But even with this detail, the degree of damage will be fairly difficult to gauge. Here are some considerations:

• The models do not measure flood except at the coastline. Homes are insured by the Federal plan, not the market, but there is Flood coverage for Personal and Commercial auto, Contractors and Farm equipment, PAF’s, Cargo, MOP and many commercial property policies (although usually sublimited.)


• Further inland, tree limb damage is not modeled outside of the areas with sustained winds over 50 or so mph. There will be losses inland that are not modeled.


• The tornados in Georgia can be modeled, but they could not be in these estimates at this date.


• The marine loss will be substantial. RMS notes that this is likely the largest rig storm loss ever, and Ivan was a sizeable loss. There is also a great deal of damage to docks, marinas and yachts.


• There has been some notable fires and looting.


• Mold.


• Existing and compounding damage from Ivan and Dennis in the Mobile to Pennsacola areas.


• Time element coverage will be extended because of the continuing evacuation orders and because of the need to clean up from flooding before residents can safely return.

We should also expect a higher than expected degree of demand surge, both because of the remaining inflations from the 2004 situation, and because of significant resources devoted to Fed Flood and other uninsured losses.

Katrina vs. Ivan
Population Density

Holborn Observations