Hurricane Rita could cause insured losses of $2.5 billion to $6 billion, making it one of the 10 costliest storms ever to hit the United States, according to estimates issued Saturday by two risk management firms.
But the track of the storm, which made landfall at the Texas-Louisiana border, probably spared the many oil refineries in the region from heavy damage, according to analysts at one of the firms. And damage could have been much worse if the monster storm had stayed at its peak intensity and remained on course to hit the heavily populated Houston region with its many oil refineries and chemical plants.
AIR Worldwide Corp., based in Boston, estimated insured losses from Rita at $2.5 billion to $5 billion. That is far less than the estimated $35 billion in damage to insured property caused by Katrina last month, but still would put Rita among the 10 costliest storms, along with four hurricanes that swept through Florida last year.
The cities of Beaumont and Port Arthur, Texas, and Lake Charles, La., will likely see the most significant damage, with damage extending as far south as Galveston, Texas, and far east as New Orleans, according to a news release issued by the firm about 8 hours after the eye of the storm made landfall.
"We expect to see significant damage to residential and commercial properties near and to the east of Rita's track," said Dr. Jayanta Guin, vice president of research and modeling at the company. "Fortunately, the heavy commercial and industrial areas of Port Arthur and Beaumont — with their numerous refineries — were to the left of the storm's track, where wind speeds are lower, so we do not expect to see significant structural damage to the refineries."
EQECAT, a rival Oakland-based risk management firm that Friday predicted Rita could cause $9 billion to $18 billion in losses, lowered that estimate Saturday to a range of $3 billion to $6 billion based on the weakened intensity of the storm and the location of landfall. Rita also caused an estimated $300 million to $800 million in damage to insured property when it swept through the Florida Keys earlier in the week, according to EQECAT.
While the storm mostly spared the vulnerable island city of Galveston and heavily populated Houston, peak winds of 120 mph were strong enough to cause unreinforced masonry walls to collapse and tear shingles and siding off structures, according to AIR Worldwide's models.
Although insurance adjusters have not even been able to get into some of the areas damaged by Katrina, early estimates based on computer models suggest the storm caused $35 billion in insured losses, making it the costliest storm ever by far. Previously Andrew was the costliest U.S. hurricane, destroying about $21 billion in insured property after adjusting for inflation, according to the Insurance Information Institute.