Insured loss estimates from Hurricane Dolly are starting to roll in. AIR Worldwide estimates U.S. insured losses from Hurricane Dolly at $300 million to $1.2 billion with an expected (mean) loss of $600 million. Meanwhile, Newark, Calif.-based Risk Management Solutions estimated that insured losses will be less than $750 million. Its figure includes wind, flood, and storm surge damage to residential, commercial, and industrial properties, as well as crop damage and business interruption resulting from power outages. Some 500,000 people are expected to be impacted by the storm.
The uncertainty in the loss estimates is due to Dolly’s slow forward motion, its significant precipitation and the uncertainty in its future track as it makes its way inland, AIR Worldwide said.
In that part of the coast, a 10 mile difference north or south has considerable impact on losses. Also highly uncertain is the rate at which Dolly will dissipate over land. AIR estimates insured losses in Mexico are expected to be less than a quarter of U.S. insured losses.
Sparsely-populated Padre Island bore the brunt of the hurricane, while Brownsville, which was expected to experience the highest winds, escaped a direct hit, RMS said. Dolly skimmed past several oil platforms in the Gulf, causing minimal damage and keeping insured losses relatively low.
Dr. Peter Dailey, director of atmospheric science at AIR Worldwide, said the fact that the cities of Brownsville and Matamoros — the largest exposure concentrations on Dolly’s path — are located about 20-25 miles inland, helped mitigate the damage.
“The largest uncertainty in the loss estimate comes from potential flood damage,” commented Christine Ziehmann, director of model management at RMS. “The amount of rainfall is currently well below the level of extreme historical events in the area, like Hurricane Amelia in 1987, which resulted in 48 inches of rain, and Beulah in 1969. If the flood damage is limited then we expect the total insured loss to come in much lower than $750 million.”
There have been reports of significant flood damage to cotton crops in the Lower Rio Grande Valley, and this region is also a major producer of fruit and vegetables, but it is not yet clear how much of the crop production has been lost.
Dailey said many homes are likely to suffer damage to roof shingles and wall coverings. There may be also damage to unprotected windows from the wind-borne debris.
According to the U.S. Department of the Interior, oil and gas producers in the Gulf of Mexico shut down about 5 percent of production in the Gulf by July 22, 2008. Personnel had been evacuated from 49 production platforms. However, Dolly’s tracked well south of the heaviest concentrations of offshore assets and no lasting shutdowns are expected. Dr. Dailey estimated that physical damage to platforms and rigs is “likely to be quite limited, with any insured losses dominated by business interruption.”
Dailey said that Dolly demonstrates that under slightly different environmental conditions, and in particular under a slightly different track, the intensification cycle of such a storm could have been very different. “A more southerly track may have resulted in the storm’s inability to reach hurricane strength, while a more northerly track could have produced a much stronger storm,” he said.
Source: AIR Worldwide, RMS
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