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AIR estimates Delta losses at $1bn-$3bn

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Industry insured losses to onshore property resulting from Hurricane Delta will range from $1bn to $3bn, catastrophe risk modelling firm AIR Worldwide has estimated.

The estimates include losses to onshore residential, commercial and industrial properties and automobiles for their building, contents and time coverage, AIR said on Wednesday.

AIR’s estimate comes shortly after CoreLogic and Karen Clark & Company released their insured loss estimates for onshore damage of $0.7bn-$1.3bn and roughly $1.25bn, respectively.

Thus far, all loss estimates have fallen in line with source expectations pre-landfall that the loss would come in well below $5bn.

The storm made landfall on 9 October near Creole, Louisiana as a Category 2 hurricane. It hit roughly 12 miles from where Hurricane Laura had landed six weeks prior, bringing strong winds, storm surge and heavy rain, AIR noted.

“Strong winds from these storms impacted areas in common, including mainly the coastal area of Cameron Parish and Lake Charles and environs, although Delta’s maximum winds were significantly weaker than Laura’s,” the modelling firm explained.

Before Delta made landfall, aerial imagery showed many structures in these areas had blue tarps on their roofs and many of those structures still had blue tarps on their roofs after the storm passed.

However, Delta flooded and blew tarps off homes and businesses already damaged by Laura and blew shingles off roofs that had not been impacted by the previous hurricane, AIR noted.

The firm’s modelling approach assumes independence between these events, which is reflected in the published loss range, but several aspects of the storm stood out, AIR added.

“On the one hand, wind-driven rain and wind-borne debris impacts following Delta could have exacerbated the damage caused by Laura to these properties. Furthermore, structures that may have been weakened by Laura’s winds may have been further damaged by Delta,” AIR explained.

“On the other hand, it could be posited that structures that had the potential to be damaged were already damaged by the relatively-stronger Hurricane Laura, and therefore, not much was left to be damaged by Delta,” it added.

Two hurricanes impacting the same area within a short period of time is not a new phenomenon and was seen in 2004 when hurricanes Frances and Jeanne impacted virtually the same place on the east coast of Florida within six weeks of each other, AIR pointed out.

At that time, loss amplification was reported after the storms, and given the back-to-back nature of Laura and Delta, the same cannot be ruled out in Louisiana, the agency said.

Large surge occurred after Delta made landfall, but compared with Laura, the maximum surge elevation was lower and the parishes more heavily impacted by Delta were farther east than those more heavily impacted by Laura, AIR noted.

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