BOSTON, Sept. 29, 2005 — After an extensive analysis of the flood and storm surge damage caused by Hurricane Katrina, AIR Worldwide estimates that property damage caused by water will total approximately $44 billion. AIR's high resolution analysis of flood depths in New Orleans and storm surge damage in Louisiana, Mississippi, Alabama, and Florida provides insurers with the detailed information they need to estimate their own losses using various payout assumptions.
"Katrina resulted in an unprecedented level of water damage," said Dr. Jayanta Guin, vice president of research and modeling at AIR Worldwide. "While the flooding of New Orleans in the aftermath of the storm has garnered the most attention, we estimate that the devastating storm surge along the Gulf Coast, including southern Louisiana, was equally destructive."
AIR estimates the cost of flood damage to New Orleans will be $22.6 billion. To arrive at the estimate, AIR analyzed hundreds of aerial images from the National Oceanic and Atmospheric Administration (NOAA) to create a detailed, block-by-block simulation of the flooding in New Orleans. Digital elevation models were used to determine the flood elevation at each of hundreds of locations, as the water level was not uniform across the city. Once the extent and depth of flooding was determined at each location, AIR used its detailed exposure database to calculate the total property damage within the flooded area.
AIR estimates that Katrina's storm surge will result in an additional $21.4 billion of damage in Louisiana (excluding New Orleans), Mississippi, Alabama, and Florida. Storm surge, which is the water forced ashore by a hurricane, is highest to the right side of the storm's center. The force of the water can knock structures off their foundations, sometimes depositing them at considerable distance from their original locations.
"We conducted this analysis because there is a great deal of uncertainty among insurers as to how much of the total water damage from Katrina they will ultimately have to cover," continued Dr. Guin. "By providing our clients with a detailed analysis of the total water damage, each company can estimate the losses to its portfolio by applying its own assumptions about the likely payout."
Below is a breakdown of AIR's flood and storm surge loss estimates:
|AIR Worldwide Estimated Total Flood and Surge Losses|
|New Orleans Flood Loss||$22.6 Billion|
|Louisiana Storm Surge Loss||$16.2 Billion|
|Mississippi Storm Surge Loss||$4.4 Billion|
|Alabama Storm Surge Loss||$793 Million|
|Florida Storm Surge Loss||$32 Million|
About AIR Worldwide Corporation
AIR Worldwide Corporation (AIR) is a leading risk modeling company helping clients manage the financial impact of catastrophes and weather. Utilizing the latest science and technology, AIR models natural catastrophes in more than 40 countries and the risk from terrorism in the United States. Other areas of expertise include site-specific seismic engineering analysis, catastrophe bonds, and property replacement cost valuation. A member of the ISO family of companies, AIR was founded in 1987 to provide its insurance, reinsurance, corporate, and government clients a complete line of risk modeling software and consulting services that produce consistent and reliable results. Headquartered in Boston, AIR has additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.