Harvey costs could rise up to $50 bn

Tropical storm Harvey had not stopped raining on Texas before the first estimates emerged as to how many billions of dollars in damages would result from the storm. Initial estimates from insurance companies like Hannover Re put the number at $3 billion. In a note to clients, JP Morgan estimated that the insurance industry could lose $10 to 20 billion from Harvey, making it one of the top 10 costliest hurricanes to hit the U.S. Enki Holdings, a consultancy that calculates the risks and costs of various natural disasters, said Monday afternoon that its estimates for Harvey damages had reached $30 billion. 

The tropical storm continues to batter south-eastern Texas, where it has so far claimed at least nine lives, and is expected to reach southern Louisiana. Thousands of homes have been flooded, forcing residents to seek emergency shelter. US authorities estimate 30,000 people will need shelter.

So far, predictions of the final cost of the damage vary widely, although Harvey is expected to be one of the costliest storms in US history. Some analysts are putting the likely damage at $30 to $50bn – but point out that not all of this sum will be covered by insurance. However, David Havens, an insurance analyst at Imperial Capital in New York, told Bloomberg News the final bill could reach as much as $100bn.

This compares with economic damage of $176bn inflicted by hurricane Katrina in 2005, which included $82bn of insured losses, and the $75bn economic losses caused by Hurricane Sandy in 2012, of which $31bn was insured. The figures are from Swiss Re Institute.

Chuck Watson, of US data analytics firm Enki, said: “Harvey is so destructive not because it was a category 4, but because of the rain and flooding … I would not be surprised to see numbers approaching $42bn, which would put the storm in the top 10, and at the fringes of the top five, most costly storms in US history.”

Every company that predicts damages from disasters has a different method for doing so. Enki, for example, has a computer simulation that uses the laws of physics to estimate what the forces of nature such as wind, waves, and flood waters would do to the properties it is predicted to hit. The company comes up with the values of the properties in a storm’s path using data it has tabulated on what sits on parcels of land across the country.

If preliminary damage estimates hold, Hurricane Harvey is one of the costliest natural disasters in U.S. history.

At least 14 people have died and many more have been injured due to Hurricane Harvey, Fox News reported. It is unclear how many houses have been damaged or destroyed in the storm.