Dean Insured Loss At $1.5B, Say Modelers

Insured losses from Hurricane Dean damage to Jamaica and the Yucatan Peninsula of Mexico will not exceed $1.5 billion, according to modeling firm estimates.

Risk Management Solutions in Newark, Calif., said today it estimated losses will range between just $750 million and $1.5 billion, and AIR Worldwide in Boston said yesterday it estimates insured losses in Jamaica from Hurricane Dean will not exceed $1.5 billion

RMS said it expected a top loss of just $300 million from damage to the Mexican coast, with most of the remainder resulting from the storm's destruction in Jamaica.

AIR's forecast noted that Dean tracked to a sparsely populated stretch of the Yucatan coast, well south of the resort areas of Cancun and Cozumel. Once leaving Yucatan, the storm could re-intensify in the southern Gulf of Mexico, and second landfall in northern Mexico is expected for late tomorrow, AIR noted.

A later statement from AIR estimated that insured losses from the Yucatan are unlikely to exceed $400 million.

Glen Daraskevich, vice president of research and modeling at AIR, said Dean had struck Jamaica's south coast as a Category 4 hurricane and, "fortunately, the eyewall remained offshore, sparing the capital from the direct hit that Hurricane Gilbert made in 1988."

The Yucatan, RMS said, was hit with wind speeds of around 160 miles per hour approximately 40 miles northeast of Chetumal. Had the storm tracked 150 miles north it would have impacted the busy resort cities of Cancun and Cozumel, tripling the insured loss in Mexico it was noted.

According to Claire Souch, senior director of model management at RMS: "Dean has taken an extraordinarily fortunate track, slipping between St. Lucia and Martinique and striking a scarcely populated area of the Mexican coast. Given its intensity, the Caribbean and Winward Islands have faired relatively well."

Ms. Souch commented, "Though Jamaica has taken a large hit, the track for a Category 5 storm could hardly have been better planned to minimize the damage."

She added, "Dean's impact in Mexico will be similar to Hurricane Emily's in 2005, which was a Category 4 storm and caused around $250 million of insured loss. If Dean had made landfall in the north of the Yucatan Peninsula coast, we could have been looking at a near repeat of Hurricane Wilma, which devastated the area and resulted in insured losses of some $1.8 billion."

When Dean arrives at the Bay of Campeche, where the majority of Mexico's oil is extracted, it is not expected to cause much damage, RMS said.

Forecasts suggest it will not make landfall in the United States and will instead continue on a westward route and make a final landfall in a lowly populated region of Mexico tomorrow night. Interaction with land should cause the storm to decay rapidly to a tropical storm.

This article updated 9:15 a.m. Aug. 22.