Despite weakening just before making landfall in Louisiana, Hurricane Gustav will still cost the insurance industry billions in property/casualty payouts.
Gustav began powering its way toward the Gulf Coast late last week. At one point, the storm reached Category 4-strength, meaning wind speeds were measured between 131 and 155 mph. During this period, it caused offshore damage to oil platforms and wells, including production interruptions caused by wind and waves that would likely range between $1 billion to $3 billion, according to Risk Management Services' (RMS) estimates.
Another risk modeling firm, AIR Worldwide Corporation, estimated offshore losses to be between $1.8 billion and $4.4 billion, but said that these losses could top $10 billion because of wind and wave damage to oil platforms and direct and indirect revenue losses stemming from reductions in oil and gas production.
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