For Immediate Release: AIR Estimates Insured Losses for Louisiana Floodsto Range Between USD 8.5 Billion and USD 11 Billion BOSTON, Sept. 19, 2016 - Catastrophe modeling firm AIR Worldwide estimates that industry ground-up insurable losses-which ...
For Immediate Release:
AIR Estimates Insured Losses for Louisiana Floods
to Range Between USD 8.5 Billion and USD 11 Billion
BOSTON, Sept. 19, 2016 - Catastrophe modeling firm AIR Worldwide estimates that industry ground-up insurable losses-which include exposures eligible for coverage (regardless of whether they are actually insured) without any application of deductibles or limits-from the flooding in Louisiana caused by excessive rainfall during August 2016 will be between USD 8.5 billion and USD 11 billion. AIR Worldwide is a Verisk Analytics (Nasdaq:VRSK) business.
"Extreme rainfall-induced flash flooding and river flooding on the floodplain have wreaked havoc in Louisiana, breaking records and damaging property throughout many parishes," said Dr. Boyko Dodov, vice president and director of flood modeling at AIR Worldwide. "Beginning around August 10, 2016, rainfall continued almost perpetually for approximately seven days, resulting in accumulations of around 7.1 trillion gallons in Baton Rouge and the surrounding suburbs, according to reports, reaching upwards of 30 inches in some areas."
August 2016 is now the wettest month on record for Baton Rouge since 1907. A NOAA rapid-response study indicates that a rainfall event such as this is expected to occur at least 40 percent more often than it was in our preindustrial past.
Historic crests at 12 real-time river gauging stations of the USGS in Louisiana were surpassed due to the rainfall event, including on the Amite, Comite, Tickfaw, and Tangipahoa rivers. A report from the Baton Rouge Area Chamber indicates more than 145,000 residences-housing upwards of 359,000 people-were in flood-affected areas; almost 12,000 businesses-which together employ more than 136,000 people-are in areas identified as flood-affected.
The federal government declared 20 parishes major disaster areas. FEMA issued USD 1 billion in Federal Disaster Assistance grants to those affected, including National Flood Insurance Program (NFIP) policy holders who have received more than USD 247 million to repair or rebuild damaged properties; more than 63,000 families have sought FEMA assistance for housing. The majority of homeowners impacted by the floods reportedly did not have flood insurance because their homes were not in flood zones, thus the financial burden of recovery is inhibiting progress; around 850 people are said to still be in shelters.
AIR's loss estimates explicitly capture residential, commercial, and automobile losses from inland flood both on and off the floodplain based on 100 simulated event scenarios that reflect uncertainty in precipitation observations and modeled levee failures. These loss estimates were derived based on AIR's high-resolution Industry Exposure Database (IED) for the United States and damage ratios estimated from reported flood inundation. The U.S. IED vintage is December 2015.
The range in AIR's loss estimates also reflects uncertainty in the payment of additional living expenses resulting from relocation, time spent in secondary housing, lost wages, loss of electricity, and damage to contents. Please note that total economic losses are expected to be higher than industry insurable loss estimates.
The modeled hazard intensities reflect the maximum estimated river flows and maximum excess runoff intensities during the event from August 8-19, 2016. Note that many reinsurance contracts are subject to an hours clause (typically 168 hours for flood events). Given the duration of this event, AIR expects the flood to be treated as a single occurrence in Louisiana.
AIR's insurable loss estimates reflect:
- Insurable physical damage to property (residential, commercial), both structures and their contents, and auto
- Direct business interruption losses
The loss estimates do not reflect:
- Losses to land
- Losses to infrastructure
- Losses to CAR/EAR, Marine Hull, or Marine Cargo lines of business
- Indirect business interruption losses
- Loss adjustment expenses
- Demand surge-the increase in costs of materials, services, and labor due to increased demand following a catastrophic event. Demand surge can be applied by AIR software users who want to account for this variable.
About AIR Worldwide
AIR Worldwide (AIR) provides catastrophe risk modeling solutions that make individuals, businesses, and society more resilient. AIR founded the catastrophe modeling industry in 1987, and today models the risk from natural catastrophes, terrorism, and pandemics globally. Insurance, reinsurance, financial, corporate, and government clients rely on AIR's advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk Analytics (Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: AIR Worldwide via Globenewswire
Source(s) : AIR Worldwide
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