Hurricane Rita losses estimated

Catastrophic risk modeling company’s Risk Management Solutions (RMS) and AIR Worldwide Corporation estimate that insured losses resulting from Hurricane Rita range from $2.5 billion to $7 billion.

Based on current information on Rita’s landfall location and wind speeds, RMS estimates losses will range between $4 billion and $7 billion while AIR predicts a total loss of $2.5 and $5 billion.

RMS is basing its estimate on the figure of $3 to $5 billion in onshore damages resulting from wind, storm surge and rainfall-related flood hazards as well as expected demand surge effects, resulting from the inflation of material and labor costs in the region in the aftermath of Hurricanes Katrina and Rita. Also affecting its estimate is a subsequent $1 to $2 billion in damages to platform damage and resulting loss of production. Finally, RMS’s preliminary estimate excludes the New Orleans flooding situation.

“Hurricane Rita is comparable to last year’s Charley in that its damage is spread across a low population density region of agricultural and fishing-related industries,” RMS meteorologist Kyle Beatty says. “There is also notable damage to offshore platforms, refineries and by-products industries of petroleum manufacturing.”

AIR’s lower loss estimate is in part due to the fact that Port Arthur and Beaumont, where there is heavy commercial and industrial activity as well as a number of refineries, were not in the storm’s track meaning that significant structural damages are not expected.

Insured losses from Hurricane Rita, AIR says, would have been much worse if the storm had maintained its westerly track and hit the Houston/Galveston area.

“We expect insured losses from Hurricane Rita will be much lower than those caused by Hurricane Katrina,” Dr. Jayanta Guin, vice president of research and modeling at AIR, says. “While both reached Category 5 status in the warm waters of the Gulf, Katrina maintained much of that intensity at landfall, while Rita weakened significantly. In addition to being a smaller and less intense storm, Rita’s strongest winds impacted an area with far fewer insured properties than Katrina.”

Hurricane Rita made landfall between Sabine Pass and Johnson’s Bayou on the Louisiana coast as a Category 3 hurricane. At landfall, Rita had maximum sustained winds of 120 mph, which extended 85 miles from the center. An instrumented tower in Port Arthur run by the Florida Coastal Monitoring Program reported sustained winds of 91 mph with a gust to 116 mph as Rita came onshore. Hurricane Rita’s strongest winds tracked over the sparsely populated western Louisiana coast, resulting in relatively low insured losses for a storm of its intensity and size. Storm surges of 10 to 15 feet, with local heights of up to 20 feet in inlets and bays, will result in additional damage.

Just 48 hours before landfall, Hurricane Rita’s central pressure made it the third most intense hurricane ever observed in the Atlantic basin. However, Rita slowly weakened as it approached the coast.