Insurers Could Face $1 Billion In Offshore Rig Damage Claims from Hurricane Ida

By Tom Ozimek
Tom Ozimek
Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'
September 4, 2021 Updated: September 4, 2021

Insurers are bracing for a hit of some $1 billion from physical damage to offshore rigs and structures from Hurricane Ida, according to preliminary estimates from property data and analytics company CoreLogic.

A CoreLogic spokesperson disclosed the estimates to Reuters, noting also that the preliminary projections don’t include losses from disruptions to production.

The Bureau of Safety and Environmental Enforcement (BSEE) said in a Sept. 3 update that the volume of oil shut in by the hurricane in the Gulf of Mexico rose to 1.7 million barrels per day of offshore output or just over 93 percent of total production.

The agency also reported that, as of 11:30 CDT, personnel had been evacuated from 133 production platforms and six rigs in the Gulf of Mexico.

Hurricane Ida
A satellite image shows Hurricane Ida in the Gulf of Mexico and approaching the coast of Louisiana, on Aug. 29, 2021. (NOAA/Handout via Reuters)

Earlier, CoreLogic estimated that the hurricane-related wind, storm surge, and inland flooding would lead to between $27 billion and $40 billion in insured and uninsured losses to commercial and residential properties.

Uninsured losses in Louisiana, Mississippi, and Alabama could total $19 billion, according to the analytics firm, including between $8 billion and $12 billion in uninsured flood damage.

“While only 40 to 50 percent of the flood damages from Hurricane Ida appear to be covered by insurance, this is actually an improvement from the uninsured flood damages we saw from Hurricanes Harvey and Katrina,” Tom Larsen, principal, insurance solutions at CoreLogic, said in a statement. “The flood insurance gap is shrinking.”

President Joe Biden visited Louisiana in the aftermath of the hurricane and promised federal aid to recovery efforts in affected communities. The president also urged private insurance companies to not “hide behind the fine print” and step up to cover temporary housing costs and help their customers.

Joe Biden
President Joe Biden talks as he tours a neighborhood impacted by Hurricane Ida, in LaPlace, La., on Sept. 3, 2021. (AP Photo/Evan Vucci)

Hurricane Ida made landfall on Aug. 29 near Louisiana’s Port Fourchon and headed northward, eventually sweeping through the U.S. East Coast with heavy rain and flash flooding in parts of states including Maryland, Pennsylvania, New York, and New Jersey, on Wednesday.

Ida is the fifth most powerful hurricane to strike the United States, with maximum winds of 150 mph (240 kph) when it made landfall.

On Friday, the death toll in Louisiana rose to 10, while the death toll on the East Coast rose to at least 46.

In Louisiana, power transmission lines were toppled and Gulf oil operations were taken offline. About 823,000 homes and businesses remain without power in the state on Friday, after electric utility Entergy Corp said it had restored service to about 225,000 customers.

Mimi Nguyen-Ly, Reuters, and The Associated Press contributed to this report.

Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'