Historic rainfall has caused terrible flooding in Louisiana, displacing tens of thousands people and killing dozens of others. This tragedy has more than just human costs associated with it though. The economic impact of it will be significant, impacting many people.
Relief efforts are still ongoing, so the total impact, both in terms of human and economic cost, won’t be known until a few weeks later. However, there are preliminary estimates available.
As of August 18, NBC has reported that over 40,000 homes are damaged or destroyed, 13 people have died, and another 30,000 are in shelters. This doesn’t account for the damages to businesses, cars and infrastructure.
Aon Benfield (AON), a reinsurance and risk management firm, has also put out a preliminary report covering the economic implications of the flood. They compared this flooding incident with the major flooding and thunderstorms that caused extensive damage to Louisiana, Texas and Arkansas back in March. The economic costs from that, which have been well documented at this point, added up to around $1.5 billion. Unfortunately, Aon also notes that the current flooding will likely “approach” or even “exceed” that $1.5 billion dollar cost.
Red Cross, has been much more conservative, and predicts costs of at least $30 million at this point.
There’s also the issue of who’ll end up paying for the losses. While it is true that Louisiana is the state with the third highest number of insurance policies, there are still a tremendous amount of people without flood insurance. Specifically, Aon notes that of the 2.02 million homes in Louisiana, just 452,208 of them have national flood insurance policies (NFIP), a federal flood protection policy.
Historically, Louisiana has also been the state to claim the most from NFIP, having claimed $17 billion since 1978. This is almost triple Texas’s $6 billion, which is the state with the second most claims payouts. Below is a breakdown payouts per Louisiana parish during that period.
There are some mitigators – several sections of Louisiana have been declared disaster zones, which allows individuals in the area to qualify for federal aid. This aid includes some temporary housing or low-cost loans to repair uninsured houses damaged by flood water. It’s not as good as insurance, certainly, but still better than nothing.
Rayhanul Ibrahim is a writer for Yahoo Finance.