Hurricane Gustav Makes Landfall Near New Orleans
Hurricane Gustav has made landfall about 70 miles west of New Orleans as a strong Cat 2 hurricane.
Immediately prior to landfall Gustav was a Category 3 storm. The intensity and duration of the storm offshore directly impact the surge - agitating factors include the fact that Gustav was a cat 3 offshore (higher than the intensity at landfall which will directly influence wind property damages). Mitigating factors include the speed at which Gustav was moving at the time of landfall - a faster storm implies less time for the surge to build up.
The winds from Gustav peaked at 130 kts (about 150 mph) after it exited Cuba, but dropped to CAT 3 level winds for most of the transit across the Gulf of Mexico. The highest seas are estimated to have been on the scale of 32 feet, high enough to do damage to platforms in the Gulf.
EQECAT estimates onshore property damages ("industry loss") at from $2 to $6 billion.
Offshore energy losses are difficult to translate directly into insured losses to industry.
EQECAT estimates that production lost in the Gulf will be approximately 25 Million barrels of oil and 200 billion cubic feet of natural gas. These figures are an integration of the expected initial loss in production due to damage plus the expected ramp-up in production as damage is repaired, over the next 12 months.
Monetized at current prices (~$115/bbl oil, $7.5/Mcf gas) produces a "loss" figure exceeding $4 billion. Insurance contracts do not necessarily cover all (or any) lost production, and when they do they may not cover it at this price, so insured losses are expected to be a fraction of this figure.
In prior events, the ratio of property/other coverage losses to has been about 1:1.
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