AIR Estimates Insured Losses from Very Severe Cyclone Hudhud at Between USD 100 Million and USD 400 Million
For Immediate Release:
AIR Estimates Insured Losses from Very Severe Cyclone Hudhud at Between USD 100 Million and USD 400 Million
BOSTON, Oct. 21, 2014 - Catastrophe modeling firm AIR Worldwide estimates that insured losses from Very Severe Cyclone Hudhud will range between USD 100 million (6.0 billion INR) and USD 400 million (24 billion INR). The range in the modeled insured losses reflects uncertainty in the meteorological parameters associated with this event. For the insured loss estimation, there is additional uncertainty in the take-up rates (insurance penetration) for India. AIR's insured loss estimates assume insurance penetration of 3% for residential lines, 20% for commercial, and 30% for industrial. These take-up rates are somewhat higher than state-wide insurance penetration rates and reflect the fact that the majority of losses are coming from Visakhapatnam (Vizag), which has higher insurance penetration compared to the average across Andhra Pradesh.
"Very Severe Cyclone Hudhud made landfall on October 12, 2014 between 6:30 and 7:30 UTC near the city of Vizag on the east coast of India with maximum sustained winds of 87 knots, according to the India Meteorological Department (IMD)," said Dr. Peter Sousounis, assistant vice president and senior principal scientist at AIR Worldwide. "Hudhud weakened to a depression after landfall and moved to the north-northwest over south Chhattisgarh."
In the immediate aftermath of the storm, transportation in and out of Vizag was cut off due to blocked roads and restricted rail traffic; however, rail and bus services have since been restored. Vizag's power grid also suffered major damage as hundreds of electric poles were uprooted due to gusty winds.
"The majority of the insured damage caused by Hudhud is concentrated in Vizag -the largest city in the Indian state of Andhra Pradesh and the third largest city on the east coast of India with a population of 2 million," said Dr. Praveen Sandri, managing director and senior vice president at AIR Worldwide India. "Many of the commercial buildings in Asilmetta, Sampath Vinayaka Temple Road, Maddilapalem, and Muralinagar in Vizag, and a reported 48,000 residential homes in Odisha's southern districts were badly damaged."
A crucial component of providing an accurate insured loss estimate is ascertaining the storm's exact strength at landfall. However, this is a challenging task, because as is typical, there are discrepancies in the storm's reported intensity from various agencies due to satellite-based algorithms, parameter estimation, and averaging times.
To produce loss estimates for Hudhud, AIR used track information from the IMD and a formula derived for North Indian Ocean basin tropical cyclones, which relates central pressure to maximum gradient wind speed. This formula is a justifiable choice since central pressure is a more reliable parameter than wind speed for estimating storm intensity, as barometers are much more durable than anemometers. In addition, the formula has been validated using data from the IMD for previous storms in which anemometers have remained intact. AIR also used the IMD track information to consider several different scenarios that reflect a range of Rmax values.
AIR's industry insured loss estimates reflect:
- Insured physical damage to property (residential, commercial, and industrial), due to wind and precipitation-induced flooding in India
- AIR's assumed take-up rates-that is, the percentage of properties in India that are insured against wind and flood damage
AIR's industry insured loss estimates do not include:
- Losses to infrastructure
- Losses to crops
- Losses to auto
- Losses resulting from physical failure of flood defenses
- Losses from hazardous waste cleanup, vandalism or civil commotion whether directly or indirectly caused by the event
- Demand surge
- Other non-modeled losses
About AIR Worldwide
AIR Worldwide (AIR) is the scientific leader and most respected provider of risk modeling software and consulting services. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 90 countries. More than 400 insurance, reinsurance, financial, corporate, and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities, detailed site-specific wind and seismic engineering analyses, and agricultural risk management. AIR, a Verisk Analytics (Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.
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For more information, contact:
Kevin Long
AIR Worldwide
617-267-6645
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