Katrina damage estimates range from $9 to $26 billion

Estimates for property damages incurred as a result of Hurricane Katrina range from $9 billion to $26 billion, according to three separate sources.Estimates of insured losses on the Gulf Coast could range from $9 to $16 billion, according to Oakland, CA-based EQUECAT Inc. Then extreme risk modeling company based its estimates on current post-landfall information provided by the National Hurricane Center. The drop in insured loss value reflects the storm weakening to Category 4 and landing further east than forecasts. Risk Management Solutions (RMS), a provider of products and services for the management of catastrophe risk, estimates total insured loses will range from $10 to $25 billion. These figures account for losses related to the effects of wind and storm surge in Florida and the Gulf Coast, as well as offshore oil and gas impacts.AIR Worldwide estimates that Katrina may cost the insurance industry between $12 and $26 billion. These insured losses, according to AIR, will likely make Katrina one of the two worst natural catastrophes in U.S. history. "In addition to the severe wind impacts, our (RMS) view on insurance loss from this event considers the potential for significant physical damage and loss of production to the offshore oil and gas industry, as well as storm surge flooding in key regions like New Orleans and Mobile," Kyle Beatty, RMS meteorologist, says. "With its passage over the offshore platform field in the Mississippi Delta region as a Cat 5, this could be the largest hurricane loss the offshore energy market has ever sustained.””Once wind speeds exceed approximately 110 mph, damage increases exponentially," Dr. Jayanta Guin, AIR’s vice president of research and modeling, says. "While much of the damage from lower intensity hurricanes is limited to the roof covering, we expect structural damage and even catastrophic building damage from Katrina." Katrina’s most damaging winds narrowly missed New Orleans, but did impact densely populated areas. Of the more than $500 billion of insured value in the State of Louisiana, over 35% are in coastal counties impacted by Katrina. Over 10% of the total insured value of properties in Mississippi and Alabama are in coastal counties.”Building standards in the Gulf coast region are not as stringent as other hurricane-prone regions such as southern Florida,” Guin adds. “This combination is likely to result in increased wind damage to properties.”The magnitude of Katrina’s insured loss can be attributed to three primary factors: intensity, location and size.