Hurricane Ike (2008)

On September 13, 2008, Ike makes landfall at Galveston, Texas, as a Category 2 but with a storm surge of nearly sixteen feet on a low coast, because its size is enormous. The hurricane had crossed the Gulf of Mexico first, damaged or destroyed oil platforms and pipelines, then reached the Houston area, where winds broke windows in office towers. Insurers book about twelve to thirteen billion dollars of insured loss in the United States, plus an offshore energy charge. Ike hits two weeks after Gustav, which had struck Louisiana, and two days before the failure of Lehman Brothers: reinsurers took the cat loss in the middle of the financial crisis, with falling asset portfolios and a need for capital. Cat reinsurance prices rose at January 1, 2009. The Texas public windstorm insurer, the Texas Windstorm Insurance Association, took one of its biggest losses, which led to bond financing and use of reinsurance. The episode also showed the importance of the distinction between wind and storm-surge flooding, where private policies cover wind only.