I.I.I. Estimates Isabel Insured Loss At $1 Billion
By Michael Ha
NU Online News Service, Sept. 19, 3 :57 p.m. EDT–Losses from Hurricane Isabel are likely to cost U.S. insurers $1 billion, but are not expected to have a significant effect on insurance rates, according to the Insurance Information Institute in New York.
Bob Hartwig, chief economist at the I.I.I., commented that, "Isabel will fall generally within the range of catastrophic risk that insurers anticipated and built into insurance premiums for homeowners and businesses along the East coast."
Mr. Hartwig remarked that, "Thankfully, Hurricane Isabel, as a Category-2 storm, did not approach the level of damage of Hurricane Floyd, which hit the same general area in 1999."
Separately, AIR Worldwide, a catastrophe and weather modeling unit of Insurance Services Office in Jersey City, N.J., this afternoon lowered its insured-loss estimate.
Peter Dailey, manager of atmospheric sciences at AIR Worldwide, said he now estimates losses from wind damage to be just under $1 billion, down from AIR's initial expectation in the $1-2 billion range. The reason for the downward revision, Mr. Dailey said, was the lower-than-expected wind speed when Isabel made landfall yesterday.
"The initial forecast for landfall winds was 110 mph and when the system actually made landfall, the National Hurricane Center was releasing 95 mph," Mr. Dailey told National Underwriter. "The 15 mph change makes a big difference in damage to buildings. Now our scenarios are in the range of $900 million and approaching $1 billion."
I.I.I. also noted that aside from the wind damage to homes, commercial properties and automobiles, the widespread mandatory evacuations in North Carolina and Virginia will trigger some business interruption coverage as well.
Mr. Hartwig also pointed out that even though the industry has the capacity to pay Isabel-related claims, when these are added together with major tornadoes that hit the Midwest earlier in the year, the year 2003 is becoming "a relatively bad year for catastrophe-related losses."
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