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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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AIR Worldwide Sets Laura Insured Losses at $4 billion to $8 billion

Beach house damaged by hurricane
September 02, 2020

Industry insured losses to onshore property as a result of Hurricane Laura's wind and storm surge will range from $4 billion to $8 billion, according to catastrophe risk modeling firm AIR Worldwide.

Hurricane Laura made landfall near Cameron, Louisiana, close to the Texas border, on August 27, 2020, as a strong Category 4 storm, bringing catastrophic winds, around 15 feet of storm surge, and widespread heavy rain across the Gulf region, with wind and rain continuing north into Arkansas, AIR noted.

Although Hurricane Laura has been compared to 2005's Hurricane Rita, an AIR statement noted that there were significant differences.

"Rita was a larger storm and hit a more populous area than Laura did," Dr. Cagdas Kafali, senior vice president of research at AIR Worldwide, said in a statement. "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."

AIR's statement said the combination of Laura's track through relatively lower populated areas and the fact that the distance between the center of the storm to the location of its maximum winds was on the smaller side should keep insured losses down somewhat, despite its major hurricane status at landfall.

Wind damage from the storm was greatest in Louisiana, particularly in areas closer to the eyewall near landfall, AIR said. Reports show damage from torn-off roofs and façades to structures that were destroyed, AIR said, along with upended vehicles, damage to power lines, roads, railways, and other infrastructure.

AIR noted that 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. The risk modeler added that 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.

AIR Worldwide is a Verisk business.

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