RMS: Potential Losses for Hurricane Ivan, $2 to $7 Billion

Risk Management Solutions (RMS), reported that insured losses from Hurricane Ivan in the U.S. are likely to range from $2 to $7 billion, based on updated information on landfall location and wind speeds. Additional insured losses of $1-2 billion are expected from damage in the Caribbean over the past week, with the majority occurring in the Cayman Islands.

Hurricane Ivan came onshore at approximately 3 a.m. EDT Thursday near Gulf Shores and Palmetto Beach southeast of Mobile Bay, Alabama as a category three hurricane. Maximum sustained wind speed estimates range from 110 to 130 mph at landfall, lower than forecasts issued mid-day Wednesday. Ivan’s track and landfall location placed the highest winds near Pensacola, Florida. Initial wind speed recordings include a wind gust of 93 mph near Mobile, Alabama and a gust of 102 mph at Dauphin Island, Alabama. Coastal areas south of Pensacola, Florida, where maximum wind speeds were expected, recorded a gust of 98 mph before instrumentation failed.

Ivan’s landfall to the east of Mobile Bay limited the most severe effects of storm surge flooding to barrier islands in the region of the Gulf Islands National Seashore, southwest of Pensacola, Florida. Surge heights of six to 12 feet were expected in this area. Inland flooding also remains a risk as the storm continues to move inland. While most flood losses, including coastal surge, are covered by the National Flood Insurance Program, the insurance industry does underwrite a limited amount of commercial and residential coverage in excess of NFIP limits.

The storm has now moved inland and weakened. At 2 p.m. EDT the center of Ivan, now classified as a tropical storm, was located about 45 miles west/northwest of Montgomery, Alabama, and moving toward the north/northeast at near 14 mph. Maximum sustained winds had decreased to near 70 mph with higher gusts. Ivan is expected to turn toward the northeast with its center moving into northeastern Alabama tonight. Additional weakness is forecast during the next 24 hours.