Ike Was Very Unusual, Says Modeling Firm

SCOTTSDALE, Ariz.--The varying and belated damage estimates after Hurricane Ike resulted from a storm that was a rarely occurring weather event, according to a catastrophe modeling company.

Uday Virkud, AIR Worldwide executive vice president, said Ike was "very unique" because it re-gathered strength and did more damage when it joined with another dangerous weather system after being downgraded from hurricane status.

Maximum estimates of total industry insured loss for Ike have varied widely--Aspen Insurance Holdings, $16 billion; AIR Worldwide, $17 billion; Validus Holdings, $18 billion; and Risk Management Solutions, $21 billion.

The storm, after buffeting Texas and Louisiana, had been petering out and the National Hurricane Center had left off tracking it, Mr. Virkud explained. Ike then moved north and teamed up with an extra tropical cyclone in Ohio, and the two reenergized and battered that state with winds from 60 mph to 70 mph.

Also hit by the same storm combo were parts of Arkansas, Indiana, Illinois, Kentucky, Missouri, Pennsylvania, New York, Tennessee and West Virginia, according to AIR.

Peter Dailey, director of atmospheric science at Boston-based AIR, said that normally, extra tropical cyclones move east to west while hurricanes track northward, so for the two to combine involves unusual timing. Extra tropical cyclones, he said, are normally stronger in winter and cause events such as blizzards.

After Ike moved through the Midwest, AIR said it supplemented its real-time estimate of up to $14 million insured damage ($2 million to offshore facilities, $12 million onshore) to add "Ike remnants" losses of up to $3 million.

Mr. Dailey said catastrophe damage models are constantly improving and adding new factors. In 2005 when Katrina hit, modelers did not have a framework for possible damage to energy operations offshore, he noted.

After the 2004 hurricane season in Florida, he added, models were changed to account for the damage that can occur to expensive pool enclosures that are a feature of many homes in that state.

Mr. Dailey could not say what the odds are for Florida avoiding another severe hurricane hit, but he mentioned that the yearly average number of hurricanes making U.S. landfall is 1.8 and Florida has the highest frequency among states with hurricane landfalls.

The state has not been hit by a hurricane since 2005, he said, noting that each hurricane season is independent, so either two hurricanes hitting the nation or zero next year would be no surprise.

Mr. Daily and Mr. Virkud were interviewed in Scottsdale, Ariz., where they were on hand to meet with clients at the site of the Property Casualty Insurers Association of America (PCI).