RMS has increased its onshore and offshore insured loss estimate for Hurricane Ida to $31bn-$44bn, after adding $6bn-$9bn of claims from inland flooding in the Ohio Valley, mid-Atlantic and northeast US regions.
It said the majority of flood loss in these regions, at between $4.5bn and $7bn, will hit the private market. An additional $1.5bn-$2bn will fall on the US’s National Flood Insurance Program (NFIP).
RMS previously estimated that insured onshore and offshore losses in the Gulf of Mexico from Hurricane Ida would be between $25bn and $35bn, including up to $4bn for the NFIP. This included wind, storm surge and inland flooding across the impacted US states of Alabama, Florida, Louisiana and Mississippi.
The loss estimate for the Ohio Valley, mid-Atlantic, and northeast regions reflects property damage and business interruption to residential, commercial, industrial and automobile lines, as well as sources of post-event loss amplification and leakage of flood losses onto windstorm policies.
Rival modelling firm AIR Worldwide recently increased its insured loss estimate for Hurricane Ida to between $20bn and $30bn, after it too added the impact of inland flooding.
Its estimate includes $2.5bn-$5bn of inland flood claims to the private market. This is on top of the $17bn-$25bn estimate for wind and storm surge previously put forward by AIR. Its losses do not include those hitting the NFIP or from offshore assets.
Rajkiran Vojjala, vice-president of model development at RMS, said the firm expects a “sizeable portion” of the overall insured losses from Ida to be associated with post-event loss amplification.
“A combination of Covid-19-related impacts, including rising construction costs, labour shortages and fewer loss inspections, could contribute to economic demand surge as repairs are undertaken in the coming months. That, along with prolonged power outages, will only lengthen recovery and repair times, all of which may lead to increased overall claim costs in this event,” he said.
Firas Saleh, director of RMS’s US Inland Flood HD Model, added: “RMS expects insured losses associated with precipitation-induced inland flooding to be material in the mid-Atlantic and northeast, even though a sizeable flood protection gap remains. RMS estimates total economic losses from flooding in this region to be more than $15bn, meaning that the majority of flood damages for this event will be uninsured.”