Zeta’s Total Onshore U.S. Insured Losses Could Rise to $5B: RMS

Catastrophe risk modeler RMS has estimated that insured losses from Hurricane Zeta could rise to as high as $5 billion in the U.S.

That figure is slightly higher than estimates announced earlier by catastrophe modelers AIR Worldwide, CoreLogic and Karen Clark & Co. However, the criteria used by the companies varied somewhat.

RMS estimates insured Zeta losses at between $3 billion and $5 billion, figures that include losses to the National Flood Insurance Program (NFIP) of between $200 million and $300 million.

KCC had estimated Zeta insured losses could top out at $4.4 billion, including losses expected in Mexico. CoreLogic estimated an insured loss high of $4 billion and AIR Worldwide, $3.5 billion.

The RMS estimate includes wind and storm surge losses across the impacted states, including Louisiana and Mississippi. Losses associated with inland flooding are expected to be negligible, due to Zeta’s fast forward speed post-landfall, which kept high rainfall totals to isolated areas, RMS said.

The RMS estimate includes a 5% reduction in possible insured onshore losses due to the cumulative impacts of Hurricane Sally, which hit the Gulf Coast on Sept. 16, damaging some of the same areas as Zeta.

“We do expect some overlap between Zeta and Sally as the industry settles losses from these two events, but not to the degree of Delta and Laura,” Jeff Waters, senior product manager, RMS North Atlantic Hurricane Models, said in a media release.

RMS has estimated that “approximately 20% of zip codes impacted by Zeta were also impacted by Sally, particularly at lower wind speeds,” he said.

Estimated losses reflect property damage and business interruption to residential, commercial, industrial and automobile lines of business, along with post-event loss amplification and non-modeled sources of loss. RMS expects most losses will be from residential lines.

RMS additionally estimated insured losses to offshore platforms, rigs and pipelines in the Gulf of Mexico would not exceed $500 million.

KCC’s Hurricane Zeta loss estimate includes $4.3 billion wind and storm surge losses in the U.S. and $80 million wind losses in Mexico. KCC’s estimate covers privately insured wind and storm surge damage to residential, commercial and industrial properties and automobiles. It does not include NFIP losses or losses to offshore assets.

Irvine, Calif.-based CoreLogic’s figures include residential and commercial wind and storm surge insured losses in Louisiana, Mississippi and Alabama from Zeta. CoreLogic’s analysis spans residential homes and commercial properties, including contents and business interruption, but not broader economic loss.

AIR Worldwide pegged industry insured losses to onshore property resulting from Zeta’s winds and storm surge in the $1.5 billion to $3.5 billion range. Included in AIR’s estimates are losses to onshore residential, commercial and industrial properties, and automobiles, as well as time element coverage.

Hurricane Zeta made landfall near Cocodrie, Louisiana, in Terrebonne Parish as a strong Category 2 storm with a maximum sustained surface wind speed of 110 miles per hour before directly hitting New Orleans on Oct. 28.

Zeta was the 27th named storm of the Atlantic hurricane season. It made landfall in Louisiana three weeks after Hurricane Delta and about nine weeks after Hurricane Laura hit the state.

Louisiana Citizens

Louisiana Citizens Property Insurance Corp. (Citizens), the state’s insurer of last resort, will take only a $35 million financial hit from the 2020 hurricane season because of its reinsurance program, according to the Louisiana Department of Insurance.

The LDI reported that Citizens has received 6,341 claims from Cristobal, Laura, Sally, Delta and Zeta totaling $75.7 million through Nov. 5, 2020.

Citizens estimates it will ultimately see 10,278 claims with losses totaling $128.6 million for the season. Damage claims from Hurricane Laura alone will reach $65 million.

Citizens will only pay for $35 million of those claims because reinsurance will cover the rest. Citizens won’t have to absorb the costs of any claims from Delta and Zeta even as it compensates policyholders for their losses, according to the LDI.

Topics Catastrophe Trends USA Profit Loss Claims Louisiana Hurricane Mexico