Early estimates of onshore property damage from Hurricane Laura by various modelers range from about $4 billion to $12 billion. Those estimates came in from CoreLogic, Karen Clark and Company and AIR.

Several days later, risk modeler RMS estimated that onshore and offshore insured losses from Hurricane Laura could range from $10 billion to $15 billion.

The RMS estimate included $1 billion to $2 billion of offshore losses, including specialty lines such as refineries and petrochemical plants.

According to RMS Model Development VP Pete Dailey, offshore assets have evolved significantly since hurricanes Katrina and Rita in 2005 and Ike in 2008, but there is still a prevalence of platforms, rigs, and pipelines in the Gulf region. Many of these assets, including several highvalue deep-water platforms, were exposed to the significant wind and wave impacts from Hurricane Laura, he said in a statement.

National Flood Insurance Program losses of $400 million to $600 million were included in the RMS estimate. The RMS figure accounts for wind, storm surge, and inland flood losses across impacted states. RMS included property damage and business interruption to residential, commercial, industrial, and automobile lines; post-event loss amplifi cation; and non-modeled sources of loss. “

Although Laura avoided major metropolitan areas like Houston and New Orleans, it was still an extremely impactful U.S. event,” maintaining intensity as it moved inland, causing widespread wind and water-driven damage well into interior portions of Louisiana, RMS North Atlantic hurricane models Senior Product Manager Jeff Waters said in a statement.

CoreLogic updated its pre-hurricane residential and commercial wind and storm surge loss estimates on Aug. 28. According to the property analyst’s new data, insured wind and storm surge losses for residential and commercial properties in Louisiana and Texas are estimated to be between $8 billion and $12 billion, with insured storm surge losses estimated to contribute less than $0.5 billion to the total.

Fueled by high sea surface temperatures, Hurricane Laura made landfall as a 150 mph Category 4 storm on Aug. 27. It was the strongest storm since the 1856 Last Island Hurricane. Laura made landfall close to Cameron, Louisiana, near the Texas state line. In addition to the winds, Laura brought with it around 15 feet of storm surge and widespread heavy rain across the Gulf region, continuing in a northerly direction through Louisiana and into Arkansas.

As Hurricane Laura approached the coast, the storm’s center struck a more sparsely populated area of the Louisiana and Texas coast. “There is never a good place for a hurricane to make landfall, but this was the best possible outcome because it spared the major population centers of Houston and New Orleans,” said Curtis McDonald, meteorologist and senior product manager of CoreLogic.

Hurricane Laura weakened as it moved over land, which safeguarded some metropolitan areas from the full impact of a landfalling Category 4 hurricane, CoreLogic said.

Two days prior to the storm making landfall, CoreLogic released data analysis showing that 431,810 single-family and multifamily homes along the Louisiana and Texas coasts with a reconstruction cost of approximately $88.63 billion were at potential risk of storm surge damage based on Laura’s projected Category 3 status at landfall. CoreLogic’s estimate included properties in Lake Charles, Lafayette, Houma-Thibodaux, Morgan City and Jennings in Louisiana and Houston, Beaumont- Port Arthur, Port Lavaca and Bay City in Texas. As the storm intensified and its trajectory changed, some of those locations were spared.

In a statement issued Aug. 31, Bostonbased catastrophe modeler Karen Clark and Company estimated that onshore insured losses from Hurricane Laura will be close to $9 billion. Laura caused $8.7 billion of losses in the U.S. from wind and storm surge and $200 million in the Caribbean, KCC said.

Included in KCC’s estimate are privately insured wind and storm surge-related damage to residential, commercial, and industrial properties, as well as insured damages to automobiles, the modeler said. The estimate does not include National Flood Insurance Program (NFIP) losses, or any losses suffered to offshore assets.

Peak storm surge heights did not reach the worst-case predictions of the National Hurricane Center, and damage from flooding was less severe than projected, KCC said.

KCC notes that losses are not expected to be as high as they perhaps could have been, as Laura’s highest wind speeds were tightly wound around the hurricane’s center, resulting in a narrow swath of extensive damage. The storm surge impacts were less than forecasted and originally modeled, as the peak surge was only around 15 feet, below the 20 foot NHC prediction.

Hurricane Laura brought tropical storm force winds to multiple islands across the Caribbean, causing trees to be downed and power outages across Hispaniola and Cuba. Light wind damage was seen to roof coverings and other exterior elements, while most structural damage was the result of downed trees, according to KCC.

Damage along the western Louisiana coast up to Lake Charles has been extensive, KCC said. Structural damage has occurred to all types of properties, including wood frame homes and commercial structures.

Damage to roof coverings, decking, and trusses has been widespread. Exterior siding, opening, and glazing damage have been extensive, and typically followed by progressive damage from water and wind infiltration. In addition to downed trees and signs, telephone poles have snapped, resulting in infrastructure disruption, KCC said.

In describing the damage farther along Laura’s path, KCC said that areas experiencing Category 1 and 2 hurricane force winds experienced less severe damage but over a slightly larger area. Scattered structural damage has occurred, and much of the severe damage has been the result of fallen trees.

Roofs throughout the area have sustained damage, with some residential and commercial buildings experiencing severe damage to roof cladding and decking.

Tropical storm force winds extended further out from the storm center causing widespread low-level wind damage to roof covering and siding.

Hurricane Laura made landfall as a strong Category 4 hurricane near Cameron, Louisiana, shortly after midnight on Aug. 27. Laura’s maximum sustained winds went from 75 to 150 mph in 36 hours, taking the storm from a Category 1 to a Category 4.

Even though the worst-case scenario storm surge did not materialize, significant flooding occurred in coastal areas. Due to extensive debris accumulation, roads have become impassable, delaying cleanup efforts in the most impacted areas, KCC explained.

Also on Aug. 31, AIR Worldwide said insured losses to onshore property from Laura will range from $4 billion to $8 billion. AIR Worldwide is a Verisk business.

“Although comparisons between Laura and Hurricane Rita have been made, they differ in two important ways: Rita was a larger storm and hit a more populous area than Laura did,” said Dr. Cagdas Kafali, senior vice president of research, AIR Worldwide. “Rita made landfall west of where Laura did, impacting population centers of Texas; Laura made landfall well east of Houston and west of New Orleans, keeping losses lower,” he said.

Laura’s rapid intensification over abnormally warm Gulf waters was similar to Hurricane Harvey in 2017 and Hurricane Michael a year later. Prior to Laura, Harvey and Michael were the two most recent Category 4 or stronger storms to hit the U.S, according to AIR.

AIR expects the combination of Laura’s track through relatively lower populated areas to keep insured losses down somewhat, despite its major hurricane status at landfall.

Wind damage was the greatest in Louisiana, particularly in areas closer to the eyewall near landfall. Preliminary maximum wind reports from the National Weather Service reported 133 mph gusts at Lake Charles in Calcasieu Parish. There are reports of damage from torn off roofs and facades to structures that were destroyed, along with upended vehicles, and damage to power lines, roads, railways and other infrastructure.

As AIR described the storm, Laura’s winds diminished after landfall, but remained at hurricane strength for nearly half the day, pummeling the region for hours as the storm’s center traversed north through Louisiana. Laura’s storm surge was not as severe as expected, as the storm tracked a bit east of the Calcasieu Ship Channel, a waterway that connects the town of Lake Charles with the Gulf of Mexico, and pushed less water forward. The highest storm surge recorded thus far was around 15 feet measured at the USACE river gauge on the Mermentau River at Grand Chenier in Cameron Parish.

Kafali concluded, “Residential buildings in and around Lake Charles saw significant damage to roofs of all geometries and with various roof cover types. Residential building envelopes were breached due to debris impacts, and the damage was further exacerbated in many cases due to the impacts of storm surge. Residential homes in Louisiana are founded primarily on crawlspace and slab foundations, both of which are vulnerable when it comes to flood damage.”

Fitch comments

While Laura generated devastating economic and insured losses in Louisiana, the storm is unlikely to trigger downgrades of individual property/casualty insurers or reinsurers, Fitch Ratings said in an Aug. 28 commentary.

While losses will take some time to reconcile, there are indications that this will be an earnings and not a capital event for the industry. Fitch-rated insurers with the largest property market share in Louisiana have capital positions that remain robust at midyear 2020 despite the impact of the coronavirus pandemic, Fitch said.

The ongoing pandemic may compound the normal logistical challenges of assessing damage to property following a catastrophe event and lead to modestly elevated levels of loss adjustment expenses, Fitch predicted. Company-specific insured loss estimates remain uncertain, Fitch said on Aug. 28 in its Non-Rating Action Commentary. Information will be more forthcoming as third quarter financial results are announced.

Losses generated by Laura in combination with previous named storm landfalls in the U.S. in 2020, ongoing wildfires and losses related to the coronavirus, puts added stress on the industry earnings, according to Fitch. Personal lines writers were relatively unaffected by underwriting losses from the coronavirus in the first half of 2020 and remain well positioned to absorb losses from catastrophe events through the remainder of the year.

Fitch expects that traditional and insurance linked securities reinsurance markets will see claims from Laura through both quota share treaties and excess of loss business that has seen an accumulation of catastrophe losses in 2020. However, given the expected moderate size of the loss, the event is likely to have a greater impact on primary insurance companies than reinsurers. The impact of Laura on insurer and reinsurer earnings is expected to add to the push for higher rates on property reinsurance at upcoming renewals.

According to Fitch, homeowners market share in the states most affected by the storm – Louisiana, Texas and Arkansas – is dominated by the top five companies, which collectively represent over 56 percent of direct premium written: State Farm, Allstate, USAA, Farmers and Liberty Mutual. Commercial lines of business that are exposed to the impact of a hurricane landfall include allied lines, fire, commercial multi-peril, non-liability and inland marine. The commercial insurance market is less concentrated than the homeowners segment, with the five largest writers representing 24 percent of direct premium written, including CNA, Liberty Mutual, Travelers, Chubb and AIG.