Hurricane Fabian Loss Estimate Up To $350M

By Michael Ha

NU Online News Service, Sept. 8, 3 :24 p.m.EDT?Hurricane Fabian--the most powerful hurricane to hitBermuda in more than 50 years--could cause insurable losses of upto $350 million, according to one industry estimate.

"The damage reports are just coming in, and at this point,insurable losses are expected in the 300-to-350 million dollarrange," said Atul Khanduri, manager of engineering at AIRWorldwide, a catastrophe and weather risk modeling unit ofInsurance Services Office in Jersey City, N.J.

The hurricane, a Category-3 system with winds of more than 120miles per hour, passed over the mid-Atlantic British colony lastFriday, Sept. 5, causing significant property damage in its path.The hurricane's severe winds felled trees and power lines, and fourpeople are missing and presumed dead.

After hitting Bermuda last Friday, Fabian has moved north overthe weekend, no longer posing any threat to land. The last timeBermuda came across a Category-3 system was in 1953, when HurricaneEdna hit the island with 115 mph winds.

As Bermuda begins to assess damages, Mr. Khanduri observed thatthe hotel industry appears to have taken a big hit "because manyhotels and condos are on the beach front, and a lot of those hotelshave glass claddings out there. So it appears that commercialproperties, especially the hotels, have taken a relatively bighit."

As for Bermuda residential buildings, "they are built out ofconcrete, and that kind of structure is prettyhurricane-resistant," he noted. "And roofs are generally very heavytimber, and over that, they have limestone covering, which is verywind-resistant."

But still, at many houses, "tiles have been taken off the roofsand those roofs have been ripped off," he said.

Mr. Khanduri forecast that while there is no clear estimate yet,his guess would be that commercial properties might be taking a lotmore damage than residential properties.

Compared to other Caribbean islands, Bermuda has much morewind-resistant buildings, and the island government enforces astrict building code, requiring newly built structures to be ablewithstand winds of up to 110 mph. But, he noted, "these buildingshave really not been tested severely before."

Mr. Khanduri also added that the storm surge will also make up agood proportion of the overall damage, and that there would also bebusiness-interruption losses as well, particularly for some hotelsthat are expected to be closed for a couple more weeks.

As for Bermuda-based insurance companies, "I know some of themwere closed last Thursday and Friday in anticipation of thehurricane," said Loretta Worters, spokesperson for the InsuranceInformation Institute in New York. But she said damages andinterruption of business are expected to be minimal.

Mr. Khanduri also pointed out that most Bermuda-based insurersare located in Hamilton, which is in the northern part of theisland. "And this area appears to have incurred less damagecompared to other parts of the island. The southern part of theisland is where the most extensive damage has occurred," hesaid.

The Hamilton, Bermuda-based insurer ACE Limited, for example,announced that its global headquarters are undamaged by the effectsof Hurricane Fabian and that they are open for business today.

"We've received no reports that any of our employees wereinjured during the storm and for this we are particularlygrateful," said Brian Duperreault, chief executive officer at ACE.Mr. Duperreault said it will take a few days before ACE's entireBermuda workforce of 300 can return to work.

However, ACE's operations in Bermuda are fully functional andthe company is ready to resume business, he said.