Harvey’s expected aftermath could be not that far-off from Katrina’s
Besides rain, insurance and damage estimations are one of those things that also ‘flood’ both digital and written media during a natural disaster. Harvey is definitely one of the strongest storms that have hit the U.S. since Katrina and analysts are already sharping their pencils to let us know what the financial meaning of ‘strong’ is.
During these kind of disasters, most of the urban infrastructure is heavily exposed to damages from the strong current, which drags trees, stones, cars and wreckage, building kind of a demolishing force when it reaches a high speed.
To give you an idea of how big these damages can be, Hurricane Ike costed around $35 billion, which is almost nothing next to Hurricane Sandy, a disaster that costed double that figure ($70 billion) or Katrina, for now the most expensive one, with a final blow of $160 billion.
Research and financial analysts from different firms are already calculating what would be the economic aftermath of Harvey and, not that surprisingly, they are saying something like: A Katrina-like cost is not actually that unlikely.
According to a report from the U.S. Department of Energy, the country’s refining capacity has been reduced by 11% due to the shutdown of many facilities located in the area. This has pushed gasoline prices up by at least 10% as supply continues to shrink. On the other hand, Goldman Sachs has calculated even higher supply reductions, ranging around 17% of refining capacity.
On the insurer’s side, numbers are all over the place. Analysts have released estimations that insurance claims might be as high as $20 billion and many others are being even more pessimistic about it, saying that the damage could go as high as $100 billion.
In this regard, Mark Hanna, a representative from the Insurance Council of Texas, said to BBC: “Nobody can put a figure like that on a storm at this moment,” nevertheless he also added: “We know the losses are going to be extensive. When you have a city the size of Houston… under water, that alone tells you that you have a massive problem”.
Insurance businesses from all over the world are fastening their seat belts, as this dark cloud continues to move over the state. This year is certainly going to be a tough one for the industry. Congress is currently waiting for President’s Trump debrief on the current situation to analyze further actions and pick up the tab after the skies are clear again.
Meanwhile, we remain confident that all of our fellow Houston and Texas friends will find the way to overcome the situation and we are here to help! We can help you to get the funds you need for you or your business.
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