Hurricane Gustav losses could reach $10 billion
London, 4 September: The hurricane that swept through the US on Monday has added to the toll from natural disasters in 2008, causing as much as $10 billion of insured losses, according to estimates by risk modelling firms.

Hurricane Gustav resulted in more than 100 deaths, mostly on the Caribbean island of Haiti, and also caused extensive damage in the Dominican Republic, Jamaica and Cuba.

Eqecat of Oakland, California yesterday estimated US insured losses at $3-7 billion, primarily in Louisiana where the hurricane made landfall. Beyond wind damage to commercial and residential buildings, the firm’s loss estimates include business interruption, as a result of property damage, and demand surge, which occurs when the demand for products and services to repair damage significantly exceeds the regional supply.

On Monday, Risk Management Solutions put the figure at $4-10 billion, covering both onshore and offshore losses from wind and storm surge, but not taking account of any potential damage to the levees in New Orleans, or flooding from excessive rainfall which may occur in the following days. Offshore damage to oil platforms and wells accounted for $1-3 billion of the total, said the Newark, California-based firm.

AIR Worldwide of Boston, Massachusetts estimated on Monday that insured losses to onshore properties in the US are between $2 billion and $4.5 billion, again not including flooding. Insured losses to offshore assets are between $1.8 billion and $4.4 billion, AIR said, while insured losses in the Caribbean are unlikely to exceed $100 million. 

There had been fears that Gustav would wreak as much damage as Katrina did almost exactly three years earlier, but the storm was both smaller and weaker at landfall, and passed through less populated areas, said Peter Dailey, director of atmospheric science at AIR Worldwide. Hurricane Katrina was responsible for around 1,800 deaths and $80 billion of insured losses.

Gustav was the third hurricane of the 2008 season and forecasters are watching to see if Hanna, today rated as a tropical storm, builds back up to hurricane levels as it edges towards the south-east US coast.

Reinsurance firm Munich Re reported in July that there were around 400 natural catastrophes in the first six months of 2008, claiming the lives of more than 150,000 people and causing around $50 billion of losses – above the half-year average of the last 10 years. The highest death tolls were in the Sichuan earthquake and the Burma cyclone.

Achim Steiner, executive director of the UN Environmental Programme warned yesterday: “The evacuation of New Orleans in advance of Hurricane Gustav and the displacement of two million Indians by the worst flood in 50 years underline the increasing vulnerability of humanity to natural disasters – vulnerability that is set to rise ... if climate change is left unchecked.”