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Insurance industry prices warming into Hurricane Harvey cost

 

Hurricane Katrina in 2005 was “the first taste of a bitter cup that will be proffered to us over and over again,” according to former US vice president Al Gore at the time.

Since then, Hurricane Sandy in 2012 and now Hurricane Harvey have borne out this prediction. The latest storm may turn out to be less fatal than Katrina, which killed more than 1,800 people but in economic terms it may be as bad. Hurricane Katrina cost about $160bn (£124bn) in economic losses in today’s terms, accounting for the last decade’s inflation, while Sandy wrought about $70bn in damage.

Preliminary estimates for the damage caused by Harvey are wide apart, spanning $90bn to $190bn, reflecting the difficulty of judging an unfolding disaster.

Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change and the Environment, at the London School of Economics, says: “Hurricane Harvey may turn out to be the most damaging weather disaster to have hit the US. It will take some time before we know what the full cost is [and] in addition to the physical damage there will be the economic losses from businesses that cannot operate. If Houston is slow to recover from the impacts, the losses will mount.”

Hurricane Katrina in 2005 was “the first taste of a bitter cup that will be proffered to us over and over again,” according to former US vice president Al Gore at the time.

Since then, Hurricane Sandy in 2012 and now Hurricane Harvey have borne out this prediction. The latest storm may turn out to be less fatal than Katrina, which killed more than 1,800 people but in economic terms it may be as bad. Hurricane Katrina cost about $160bn (£124bn) in economic losses in today’s terms, accounting for the last decade’s inflation, while Sandy wrought about $70bn in damage.

Preliminary estimates for the damage caused by Harvey are wide apart, spanning $90bn to $190bn, reflecting the difficulty of judging an unfolding disaster.

Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change and the Environment, at the London School of Economics, says: “Hurricane Harvey may turn out to be the most damaging weather disaster to have hit the US. It will take some time before we know what the full cost is [and] in addition to the physical damage there will be the economic losses from businesses that cannot operate. If Houston is slow to recover from the impacts, the losses will mount.”