As Hurricane Isaac hit the Gulf coast as a Category 1 storm, an interesting tidbit came across the wires regarding state-run property insurer Louisiana Citizens Property Insurance Corp.
In a press release, think tank R Street Institute noted that Pelican Re Ã¢â‚¬“ a $125 million catastrophe bond issued by Louisiana Citizens Ã¢â‚¬“ would be triggered if the storm produces more than $200 million in losses for the residual market entity.
If these conditions are met, Isaac would be the first storm ever to trigger a catastrophe bond issued by a state-run insurer.
As well as Louisiana Citizens, Florida Citizens also accessed the capital markets in 2012, issuing a $750 million catastrophe bond Ã¢â‚¬“ making it the largest single peril catastrophe bond in the history of the insurance-linked securities market.
They join a growing list that includes North CarolinaÃ¢â‚¬â„¢s Beach and Windstorm Plan and the Massachusetts Fair Plan.
Word from the National Hurricane Center (NHC) this morning is that Isaac Ã¢â‚¬“ on the verge of hurricane status Ã¢â‚¬“ poses a significant storm surge and freshwater flood threat to the northern Gulf coast.
NHC is projecting potential storm surge levels as follows:
– Southeast Louisiana and Mississippi: 6 to 12 ft
– Alabama: 4 to 8 ft
– South-central Louisiana: 3 to 6 ft
– Florida Panhandle: 3 to 6ft
– Florida West Coast including Apalachee Bay: 1 to 3 ft
Remember a recent report from CoreLogic warned that over four million homes along the U.S. Atlantic and Gulf Coasts are at risk of hurricane-driven storm-surge damage, with more than $700 billion in total property exposure.
Along the Gulf coast, there are just under 1.8 million homes at risk, valued at nearly $200 billion, CoreLogic said.
Figures compiled by catastrophe modeler AIR Worldwide show the total value of insured coastal exposure in these six states was $3.8 trillion in 2007. ThatÃ¢â‚¬â„¢s slightlyÃ‚ under half the $8.9 trillion value of insured coastal property in hurricane prone states as a whole.
But itÃ¢â‚¬â„¢s not just coastal property that could feel IsaacÃ¢â‚¬â„¢s effects. As Hurricane Irene demonstrated last year, the impact of a storm Ã¢â‚¬“ winds, floods, and rains Ã¢â‚¬“ can be felt far inland.
A post over at the Disaster Safety Blog (official blog of the Insurance Institute for Business & Home Safety) observes that the 20th anniversary of Hurricane Andrew serves as a reminder that it only takes one storm to cause significant damage.