Gustav could cost between US$2 billion and US$10 billion

Insured losses caused by Hurricane Gustav could range from US$2 billion to US$10 billion according to initial estimates. Gustav came ashore near Cocodrie, Louisiana, about 70 miles southwest of New Orleans, on Sept. 1 as a relatively fast-moving Category 2 hurricane. Maximum sustained winds reached 110 mph and the central pressure registered at 957 mb, according to AIR Worldwide Corporation. AIR estimates insured losses to onshore properties in the United States as a result of Gustav is between US$2 billion and US$4.5 billion. These estimates do not take into account the flooding that may occur from the breach of defenses such as levees. Based on current assessment reports of damage caused by Gustav and additional post-landfall data regarding its characteristics, EQECAT, Inc. has estimated onshore insured losses at between US$3 billion and US$7 billion. Risk Management Solutions (RMS), estimates insured losses could range from US$4 billion to US$10 billion, including both on and offshore losses from wind and storm surge. The RMS estimate does not take account of any potential damage to the levees in New Orleans, or flooding from excessive rainfall that might occur in the next few days. “Hurricane Gustav not only failed to re-intensify during its passage through the Gulf of Mexico, it actually weakened slightly just before landfall,” Peter Dailey, director of atmospheric science at AIR Worldwide, said in a release. “For much of Gustav’s journey through the northern Gulf of Mexico, Gustav’s intensity was regulated by the ingestion of dry air from the west, limiting its ability to re-intensify. Heat content in the Gulf waters along the U.S. coastline is significantly cooler and shallower than in the central Gulf, which also prevented the storm from gaining strength.”The situation still remains precarious and a number of factors could push the estimate in either direction, RMS notes in its release. Levees in New Orleans are under pressure as the storm surge causes water to swell and overtop the flood defenses, RMS adds.