Humberto Loss Seen Minor As 9th Storm Brews

Losses from Hurricane Humberto will prove minor in insurance loss terms, coming in at well under $1 billion, according to loss modeling firms.

Their estimates arrived as a ninth storm, Ingrid, was formed in the Atlantic.

Risk Management Solutions in Torrance, Calif., said it does not expect that total estimated insured losses will exceed $500 million, and Eqecat in Oakland, Calif., said estimated “ground-up” damages, including monetized additional living expense, “are unlikely to exceed $1 billion from this event”–and impacts of deductibles and limits will reduce the “insured loss” to less than this.

RMS said wind damage was fairly limited for two main reasons: Humberto made landfall in a relatively sparsely populated area of Southeast Texas, and hurricane-force winds were mainly confined to the northeast, extending outward to about 15 miles.

Due to Humberto's relatively small wind field, RMS said damage was generally limited to Jefferson, Orange and Galveston counties in Southeast Texas, with the most severe damage seen in coastal communities, such as High Island.

RMS said it does not expect flood damage to significantly impact the total insured losses, given that the flooding seems not to be as severe as what was initially expected and flood insurance uptake is relatively low.

Hurricane Humberto came ashore shortly after midnight Central time yesterday, as a Category 1 storm on the Saffir-Simpson scale with sustained winds close to 80 mph, near High Island, Texas.

The storm developed with surprising speed, increasing from a tropical storm into a hurricane in 12 hours.

Eqecat said Humberto crossed very close to Port Arthur, Texas, noting that area and neighboring communities contain many petroleum refining facilities, some of which were impacted by the winds and floods from Hurricane Rita in 2005. But, Eqecat said Humberto did not have sufficient time to develop the wave action that typically causes significant platform damage and undersea damage to the connecting system of pipelines that brings offshore petroleum products to shore.

Gary Kerney, assistant vice president, with the Property Claim Services subsidiary of the Insurance Services Office in Jersey, City, N.J., said that so far there are relatively few reported claims from Humberto. Many areas suffered the heavy rains, but winds were light and not damaging. At least one tornado has been reported, but it caused very localized damage, he said.

Mr. Kerney said PCS is busy compiling loss information based on claims reports from insurers in Texas and Louisiana and expects to have additional information early next week.

Some of the areas affected by Humberto in Louisiana were also badly damaged two years ago by Rita. In some cases the recovery is still underway, PCS noted. “Power is out in many areas, and flooding continues. These factors often contribute to a delay in policyholders filing claims,” said Mr. Kerney.

While Humberto has broken apart and is spreading rain through the South, the National Hurricane Center reported the ninth name storm of the season with Tropical Storm Ingrid in the Atlantic. There is no prediction of the storm reaching land at least through Wednesday.