Damage From Irene Could Cost U.S. up to $7bn, According to Aon Benfield Catastrophe Study

Sep 08, 2011, 10:00 ET from Aon Corporation

CHICAGO, Sept. 8, 2011 /PRNewswire/ -- Aon Benfield, the global reinsurance intermediary and capital advisor of Aon Corporation (NYSE: AON), today releases the latest edition of its Monthly Cat Recap report, which reviews the natural disaster perils that occurred worldwide during August.

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Published by Impact Forecasting, the firm's catastrophe model development center of excellence, the report reveals that insured losses solely in the United States from Hurricane Irene are expected to range between USD1.6-6.6 billion. The storm killed at least 46 people in the U.S. and injured dozens more, resulting in a dangerous storm surge and significant river flooding. Nearly eight million power outages were recorded at its peak, as well as damage to tens of thousands of homes, businesses, other structures and vehicles. Irene became the first landfalling hurricane in the U.S. since Ike in 2008.

On August 23, a rare, magnitude-5.9 earthquake impacted the Mid-Atlantic region in the United States. The most notable impacts were felt in Washington, D.C., where several monuments sustained cracks, while additional structural damage and isolated incidents of broken gas and water pipes were seen in Virginia, West Virginia, New York, Maryland, New Jersey, Delaware and Pennsylvania. Economic losses from the earthquake were listed at approximately USD250 million, with insured losses of around USD100 million.

Meanwhile, extreme wildfire conditions led to dozens of homes being destroyed in the U.S. states of Texas and Oklahoma during the month of August. Texas endured its hottest summer on record in 2011, combining as well with an historic drought.

Steve Jakubowski, President of Impact Forecasting, said: "The U.S. was impacted heavily by natural catastrophe events during August, but in some ways the situation could have been far worse. Hurricane Irene was initially expected to make landfall as a more significant storm, highlighted by the extensive measures taken by many states to evacuate residents and ensure that structures were secured. In the end, Irene weakened prior to coming ashore and the resultant damage is perhaps many times less than would have been the case had Irene remained a major hurricane at landfall, as was initially expected."

Outside of the U.S., destruction from Irene killed at least eight people in the Caribbean and the Bahamas, while Puerto Rico sustained widespread damage from the storm, expected to exceed USD500 million with an additional USD149.4 million in lost productivity to the public and private sector, according to government estimates.

In Hispaniola, the Dominican Republic recorded DOP1 billion (USD26.3 million) in damages from the hurricane, amid total Caribbean economic losses estimated at nearly USD1.5 billion, and combined insured losses listed around USD1 billion – primarily from damage in the Bahamas.

Elsewhere, Typhoons Muifa and Nanmadol made landfalls and killed dozens of people in parts of the Philippines, China, Taiwan, Japan and Korea. The storms caused nearly USD1 billion in combined economic losses.

Major flooding took place across the globe during the month, with parts of North America, Africa and Asia particularly affected. In Pakistan, at least 143 people were killed and nearly 700,000 homes were damaged or destroyed by the deluge.

And severe weather spawned tornadoes, large hail and damaging winds in the U.S., Canada, Belgium and Australia.

About Aon Benfield

As a recognized leader in treaty, facultative and capital markets, Aon Benfield is redefining the role of the reinsurance intermediary and capital advisor. Through our notable expertise and industry-leading proprietary tools and products, we help our clients to redefine success. Aon Benfield offers unbiased capital advice and customized access to reinsurance and capital markets. As a trusted advocate, we provide local reach to the world's markets, an investment in innovative analytics, including catastrophe management, actuarial, and rating agency advisory, and the right professionals to advise clients in making the optimal capital choice for their business. With an international network of more than 80 offices in 50 countries, our worldwide client base is able to access a broad portfolio of integrated capital solutions and services. Learn more at aonbenfield.com.

About Impact Forecasting® LLC

Impact Forecasting is a catastrophe modeling center of excellence whose seismologists, meteorologists, engineers, mathematicians, finance risk management and insurance professionals analyze the financial implications of natural and man-made catastrophes around the world.  Impact Forecasting's experts develop software tools and models that help clients understand risks from hurricanes, tornadoes, earthquakes, wildfires and terrorist attacks on property, casualty and crop insurers and reinsurers.  To find out more about Impact Forecasting® LLC, visit www.impactforecasting.com.

About Aon

Aon Corporation (NYSE: AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human resources solutions and outsourcing. Through its more than 60,000 colleagues worldwide, Aon unites to deliver distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally in over 120 countries. Named the world's best broker by Euromoney magazine's 2008, 2009 and 2010 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and 2009. A.M. Best deemed Aon the number one insurance broker based on revenues in 2007, 2008 and 2009, and Aon was voted best insurance intermediary 2007-2010, best reinsurance intermediary 2006-2010, best captives manager 2009-2010, and best employee benefits consulting firm 2007-2009 by the readers of Business Insurance. Visit http://www.aon.com for more information on Aon and http://www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.

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