According to the Private Risk Management Association, the increasing severity of tropical storms is becoming the new normal, with each year producing another record-breaking hurricane season after another.
August’s Hurricane Ida was the fifth most powerful storm to strike the U.S. and ninth named storm of the 2021 Atlantic hurricane season. With maximum winds of 150 miles per hour, the storm resulted in estimated damages of at least $50 billion, leaving more than 1 million homes and businesses in the south without power. Catastrophe risk modeller RMS estimated that onshore and offshore insured losses in the Gulf of Mexico alone may total between $25 billion and $35 billion.
Allstate reported CAT losses of $876 million, with $692 million of net losses due to Hurricane Ida. Allstate is the second largest provider of homeowners insurance in Louisiana.
State Farm initially pledged to cover loss-of-use claims regardless of the type of evacuation order given across Louisiana prior to the storm, however, the carrier stated that it would not pay loss-of-use claims where no express civil authority order was in place. As a result, the carrier might have to pay a fine or lose its license in the state for its failure to comply with the commissioner’s orders to cover ALE costs for victims.
The category 4 storm hit Louisiana on the 16th anniversary of Hurricane Katrina, the costliest tropical cyclone in U.S. history. State Farm, Allstate and USAA announced plans to pay policyholders additional living expense (ALE) coverage to policyholders in Louisiana who evacuated their homes in the aftermath of the storm. Farmers deployed members of its catastrophe claims team to assist those affected by the hurricane.
