Ivan loss estimates lower than first thought

Insured loss estimates from Hurricane Ivan have been downgraded by risk modeling agency Risk Management Solutions (RMS) to US$3-$6 billion. This is on top of an estimated US$1-$2 billion in insured losses in the Caribbean, with the majority in the Cayman Islands.More than half of the damages occurred in Florida, notes an RMS release, and comes on top of US$9-US14 billion in damages in that state arising from Hurricanes Charley and Frances. “Losses from previous storms have led to an increase in regional building supply costs and labor shortages,” the release states, adding that estimates factor in this effect.Commenting on Ivan, Mohsen Rahnama, vice president of vulnerability modeling at RMS says: “We are seeing much higher levels of surge damage in this hurricane than in previous storms this season. The aerial reconnaissance has revealed both residential and commercial building collapses due to coastal surge and wave action. Of particular interest are several multi-story commercial structures that have collapsed due to failure of the building foundation.”RMS says Ivan produced storm surge of 10 to 16 feet above normal tides and rainfall of 10 to 15 inches in areas. While flooding due to coastal surge is covered under the National Flood Insurance Program (NFIP), the private insurance industry does have some exposure for coverage in excess of NFIP limits. Sorting out exposure will also be difficult given the combination of wind, rain and flood damage experienced in many areas. RMS also notes there will be significant claims paid out by specialty insurers to the energy sector as a result of damage to offshore oil and gas platforms in the Gulf of Mexico. Several energy companies have already released statements relative to the extent of damage experienced as a result of Ivan.