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Aug 30, 2021

Hurricane Ida - rolling updates Monday 30 August

Image for Hurricane Ida - rolling updates Monday 30 August

This article will be updated and amended as more information is reported.

Ida's Landfall

Ida made landfall in Louisiana about 60 miles south of New Orleans.

Jeff Master's commented "At landfall, Ida was undergoing an eyewall replacement cycle (ERC), which halted intensification just before landfall, causing the pressure to rise from 929 mb to 930 mb. The ERC kept the winds at the core from increasing further, but greatly broadened the area experiencing hurricane-force winds." Full article available here.

Further to our earlier news items here on Sunday, after making its second landfall at Galliano, Ida maintained its Category 4 strength for several hours with maximum sustained winds of 115 mph. Ida was downgraded to a tropical storm early Monday, as it moved inland.

Certainly Ida has a much smaller footprint than Katrina with hurricane force winds of 50 miles circumference and so expectations are that insured loss estimates will be much lower than Katrina which took place on the same day 16 years ago.

Water damage

Hurricane Ida will have been the biggest test of the approx US$15bn expenditure by the US Army Corps of Engineers on upgrades against hurricane defenses in the New Orleans area, since Katrina in 2005, involving (re)building and improving some 350 miles of levees and floodwalls around SE Louisiana. The catastrophe modeller AIR Worldwide has mentioned that if Katrina had not breached flood defences it would have cost US$46bn.

A huge surge barrier has been constructed and a series of high capacity pumps for removing any spill over and heavy rainfall.

Ida is slow moving however and continues to cause heavy rainfall of between 10 to 18 inches. Category 5 Katrina's by contrast caused flooding to 80% of the city with waters up to 6m deep.

Most of New Orleans has lost its power supply from Sunday evening which affected its pumps and sewer system capacity. Some generators and backup power supplies have come on line. The state power company Entergy has a map available here showing where power is still unavailable. About 1m people are affected.

Flooding from over topped levees has taken place in various New Orleans parishes and towns such as Jean Lafitte and LaPlace.

Rivers are expected to reach flood levels as per this graphic from Baton Rouge's WBRZ.com - over the next few days - click here.

The Federal Emergency Management Agency (FEMA) has reports of significant structural damage across the area, potentially some buildings that have collapsed. Clearly, assessing the extent of the damage is going to take a long time yet.

Wind damage

Reports of structural damage in New Orleans have been made for example to one power transmission tower which has knocked out power in most of the city and to a hospital roof and to the municipal court and to Louisiana State University. We await further reports.

Other areas outside New Orleans in SE Louisiana

The Baton Rouge area is a major industrial zone with its ports and petrochemical plants. Oil refineries have been shuttered. We await news as to the effects on these from Ida.

S&P Global Platts said on Sunday that government statistics show that 95% of oil and gas production in the Gulf Coast region was shut down as Ida made landfall. Mark Zandi, chief economist at Moody’s Analytics, has suggested that the impact on the overall U.S. economy should be modest so long as damage estimates don’t rise sharply and refinery shutdowns are not prolonged, click here for full article.

Insured damage

Aon's Impact report issued Monday afternoon, available here, states "A significant financial cost is anticipated, with the direct economic toll likely to be well into the double-digit billions (USD). A sizeable portion of this total will not be covered by insurance, including most damage to infrastructure or properties without an active
National Flood Insurance Program (NFIP) policy. Early indications suggest that the insurance impact – including losses from private and public entities – will also be a double-digit billion (USD) total. It will take many months or longer for the financial view of this event to fully develop. Loss estimates will be subject to several revisions as more data is obtained."

Various preliminary estimates have been made concerning Ida for an industry loss of US$15bn to US$25bn. This would make Ida more than Hurricane Laura last year c.US$10bn but much less than Katrina which it is estimated would have cost US$86bn at today’s prices. Inflationary factors will play a role in setting the final loss. This is therefore an earnings event rather than a capital event for the industry.

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