Significant inland wind damage from Gustav and Ike

I ran across two articles in the Insurance Journal that provide some additional insight on non-coastal areas that would benefit from expanding the National Flood Insurance Program to cover wind damage as well as flooding. Given my position the need is inland as well as coastal, the stories on wind damage from Hurricane Gustav in Alexandria, Louisiana and Hurricane Ike in Kentucky caught my eye.

Alexandria is about 150 miles from Morgan City and both are easy to spot on this map of Louisiana.

Officials say Hurricane Gustav inflicted more than $25 million worth of damage in Alexandria, La., when it blew through in early September.

The estimate exceeding more than $25 million does not include damage from wind and falling trees to individual homes nor does it include individuals’ costs related to power outages. (emphasis added)

About half of that amount came from estimated damage caused by roof collapses at the Alexandria Mall during Gustav…

Rebecca Mowbray’s story in the Times Picayune provides information that support for the NFIP expansion – information in quotes from Commissioner Donelon!

Although Hurricane Gustav wasn’t as strong as Hurricane Rita, Insurance Commissioner Jim Donelon thinks it could end up being more expensive because of the path it took through the state…

…Gustav cuffed the population centers that were spared by the 2005 storms — Houma, then Baton Rouge, then Alexandria and Shreveport…

Donelon said Gustav gave rise to a new set of consumer issues that were not a factor in Louisiana after hurricanes Katrina and Rita.

The biggest change since the 2005 storms is the pervasive use of “named storm” deductibles, where insurers require policyholders to pay as much as 5 percent of the value of their homes when they make a claim following a tropical storm or hurricane. If a person with a $200,000 home has a 5 percent named storm deductible, he is stuck paying the first $10,000 in damage before the insurance coverage kicks in. (emphasis added)

Donelon said the storm deductibles will prove a rude awakening for customers, analogous to the discovery after Katrina that homeowners insurance does not cover flood damage. In many cases, insurers won’t pay anything on Gustav claims, Donelon said.

“In many cases, if not most cases, it eliminates their claims. That’s different than it was three years ago with Katrina and Rita claims,” he said. “A lot of people are surprised by it.” (emphasis added)

If people in Louisiana were surprised, one can only imagine what the reaction will be 600 or so more miles inland if claims in Kentucky are eliminated.  At present, however, the concern there is the impact on rates.

The Kentucky Office of Insurance says it’s too early to tell if the severe winds caused by the remnants of Hurricane Ike will result in insurance rate hikes.

Kentucky Farm Bureau spokesman Greg Kosse estimated the firm’s customers sustained about $40 million in damage with more than 22,000 claims turned in.

KOI spokesperson, Ronda Sloan, said the projected increase in homeowners’ rates this year was 1.4 percent — the smallest rise since at least 2002.

Sloan said if the windstorm does bring on higher premiums, they won’t be reflected on bills until well into next year.

Meanwhile, Louisville Gas and Electric spokesman Brian Phillips said that the number of
power outages has dropped to fewer than 4,000, down from a peak of 301,000.

Pretty incredible that anyone in Kentucky was without power because of a hurricane – much less over 300,000 don’t you think?  The map, by the way, shows only four states without NFIP claims filed during Federal Fiscal Year 2005 – hold on to it as we look for an updated version that will report on claims during the current Federal year.