Dennis Loss May Exceed $2.5 Billion

Modelers' early estimates of the insured losses from Hurricane Dennis' strike on the Florida panhandle put it between $1 billion and $8 billion.

The highest estimate, from Eqecat in Oakland Calif. made at 3:45 p.m. Sunday, put the possible loss at $3 billion to $8 billion, while a later estimate from AIR Worldwide in Boston put the figure at from $1 billion to $2.5 billion.

AIR noted that while the storm made landfall in the same region as Hurricane Ivan in 2004, insured losses from Dennis are expected to be significantly lower than Ivan's, since Dennis differed from Ivan in four important aspects: intensity, size, speed and location.

Insurance Services Office put the loss figure for Ivan at $7.1 billion.

Dennis and Ivan were both Category 3 hurricanes, Ivan had sustained wind speeds of 130 mph versus 120 mph for Dennis, AIR said.

The firm noted Hurricane Dennis was more compact with peak winds extending only about 10 miles from the center, resulting in a much narrower swath of damage. The swath of peak winds was 25 miles for Ivan

AIR measured Dennis' forward velocity at landfall at approximately 21 mph versus 13 mph for Ivan.

The company said the storm's fast forward speed will also mean less damage to properties.

According to Atul Khanduri, manager of wind risk modeling for AIR Worldwide, "When prolonged winds occur over a very large geographic area, as in Hurricane Ivan, the number of claims can increase significantly. Losses for Dennis would have been higher had the storm moved at a slower pace."

After 36 hours tracking parallel to Florida's west coastline, Hurricane Dennis made landfall just east of Pensacola, Florida, an area with less property than the area impacted by Ivan.

Dr. Khanduri noted that much of the damage from the multiple hurricanes that hit Florida in 2004 has not yet been repaired and will impact the ability of contractors to respond to Dennis. "In this way the damage from 2004 will likely lead to increased repair costs for Dennis," he said.

Looking at the season ahead, Tropical Storm Risk (TSR) sees a 20 percent increase in Atlantic hurricane activity for this year and now anticipate with a 97 percent probability an above-normal season.

TSR co-sponsors a consortium of climate physicists, meteorologists and statisticians at University College London and the Met Office that for the year predicts 15 tropical storms in the Atlantic basin as a whole, including nine hurricanes, four of which are expected to be intense.

However, only two of the hurricanes are expected to hit the U.S.

Last year four hurricanes hit Florida. The storms resulted in damage estimates between $15 billion and $20 billion and total claims of up to two million according to the Florida Insurance Council.

Currently the repair work in the state's affected areas is far from over and opinions expressed at the PCS Catastrophe Conference in New Orleans last May indicated that residential repairs in Florida would not be completed until first-quarter 2007.