Fitch Ratings Inc. said in a note Monday that preliminary estimates show a potential insurance industry loss from Hurricane Ida of $15 billion to $25 billion, which would be well below the record $65 billion in insured losses from Hurricane Katrina in 2005.

Ida, however, which made landfall in Louisiana as a Category 4 hurricane on Sunday, will likely surpass winter story Uri as the largest industry event in 2021. Uri, which hit swaths of the country in February, caused about $15 billion in insured losses.

“While losses will take some time to reconcile, there are indications that this will be an earnings and not capital event for the industry,” Fitch said.

Although Hurricane Ida is expected to generate “significant economic and insured losses in Louisiana,” the storm is unlikely to trigger ratings downgrades of individual property/casualty insurers or reinsurers, the rating agency said.  

Moody’s Investors Services Inc. cautioned Monday that it could take “months” to assess the magnitude of Ida’s impact on the property/casualty sector after it barreled into the Louisiana coast on Sunday.

After making landfall at Port Fourchon, Louisiana, south of New Orleans at about 1 p.m. ET Sunday with maximum sustained winds of 150 miles per hour, Ida remained a Cat 4 for about six hours, then was downgraded to a Cat 3 with winds about 120 mph by 7 p.m. ET. It is expected to become a tropical depression over Mississippi by late Monday, according to a note Monday from Morgan Stanley.

Ida tied with the Last Island Hurricane in 1856 and Hurricane Laura in 2020 for the strongest maximum sustained winds for a Louisiana landfalling hurricane on record, Phil Klotzbach, a research scientist with Colorado State University’s Tropical Meteorology Project in Boulder, wrote on his Twitter feed.

Moody’s warned that evaluating Ida’s effect on the industry will take a long time.

“It will take months to determine the magnitude of insured damages and the degree to which the hurricane affects primary property and casualty insurers and regionally focused carriers, which are most vulnerable,” Moody’s said.

The top commercial property insurers in Louisiana based on direct premiums written are CNA Financial Corp. ($133 million); Liberty Mutual Group Inc. ($87 million); and Zurich American Insurance Co., part of Zurich Group ($82 million), according to Moody’s data. American Internal Group Inc. ($81 million) and Chubb Ltd. ($72 million) round out the top five.

The top 10 insurers in Louisiana write a total of $744 million in direct premiums, and the industry total premiums for the state are $1.735 billion, according to Moody’s.

Commercial business interruption claims could be “sizable” if the hurricane disrupts critical infrastructure or causes long-term power outages, Moody’s said. Insurers could also face claims on private passenger and commercial vehicles, watercraft and other insured assets.

“Hurricane Ida is likely to be a significant wind and flooding event, with substantial service interruption claims. We also advise clients to consider all of the potential impacts, including loss exposures that might involve commercial auto, liability and environmental claims,” said William Liebler, U.S. chief claims officer at Marsh LLC.

Mr. Liebler, who is based in New York, added that any final tally is some time away.

“It’s obviously too soon to make any accurate projections in terms of insured losses from Ida. We are currently reaching out to our clients in the impacted area to ensure they are safe and whether they believe their properties have been damaged or their business operations have been impacted,” he said.

Aon PLC’s Impact Forecasting also noted the initial damages and likely extended timeline. “Hurricane Ida has caused extensive wind, storm surge and inland flood-related damage across Louisiana. Further damage is anticipated in Mississippi, Alabama and other inland states as heavy rains and gusty winds from Ida or its remnants move into the Tennessee Valley and Mid-Atlantic,” Impact said in a Monday alert

Impact said that while the economic toll is likely to be well into the double-digit billions of dollars, a “sizeable” portion will not be covered by insurance, including most damage to infrastructure or properties without an active National Flood Insurance Program policy.

Finally, Aon’s impact said that although “early indications suggest that the insurance impact — including losses from private and public entities — will also be a double-digit billion dollars … it will take many months or longer for the financial view of this event to fully develop.”

Morgan Stanley noted several potential mitigating factors for potential damages, most notably the roughly $15 billion upgrade to the Hurricane Storm Damage Risk Reduction System completed in 2011. Also, the adoption of statewide building codes based on the 2006 International Building Code and International Residential Code could help mitigate the likelihood of wind damage.

Louisiana Citizens Property Insurance Corp., a residual market mechanism for state residents and small businesses unable to procure property insurance through the voluntary market, may help absorb losses along the coast, Moody’s said. The agency has $545 million in total reinsurance and catastrophe bonds in place to pay storm losses.

Hurricane Ida made landfall in Louisiana 16 years to the day after Hurricane Katrina, which was the largest natural catastrophe in U.S. history, with insured losses of $65 billion — $86 billion in 2020 dollars, according to Aon figures cited by Moody’s.