The insurance industry is putting damages from Hurricane Katrina and subsequent flooding in New Orleans at more than $100 billion. The estimate comes from Risk Management Solutions, a leading insurance industry analyst.
The company said the losses are the result of two separate catastrophic events: first, the landfall of Hurricane Katrina in southeast Louisiana and coastal Mississippi on Aug. 29 causing extensive wind and coastal surge damage; and second, the Great New Orleans Flood which has resulted from failure of the levee systems that are supposed to protect the city.
At least 50 percent of total economic loss is expected to come from flooding in New Orleans, in addition to hurricane losses from wind and coastal surge, infrastructure damage, and indirect economic impacts.
The company said that what it calls the "2005 Great New Orleans Flood" has developed into the most damaging flood in U.S. history. It estimates that at least 150,000 properties have been flooded, surpassing the previous U.S. record from flooding and levee failures on the Lower Mississippi river in 1927, which inundated 137,000 properties.
"The economic and insurance consequences of the 2005 Great New Orleans Flood will depend highly on how quickly authorities can respond to the event," said Laurie Johnson, vice president of technical marketing at RMS.
She noted that the longer it takes to drain the water, the more damage will be done by the warm, polluted water now infiltrating wooden residential buildings and other structures.
Although hurricanes of category 4 or 5 strength are well-understood to occur in this region of the country, the levee system in New Orleans was designed only to protect against a category 3 strength storm. Also, Johnson said, shortcomings in preparedness are exacerbating the situation.
RMS said the nearest analogy to the New Orleans flood a 1953 flood in the Netherlands, also caused by a major wind-driven storm surge that overwhelmed poorly-maintained defenses protecting land below sea level. That flood led to more than 1,800 deaths and the inundation of 47,000 properties. It took six months to pump out all the water from the flood bowl.