Damages from Hurricane Gustav are proving to be less costly than was originally estimated.

On Friday, catastrophe risk modelling firm Risk Management Solutions (RMS) issued revised estimates for insured losses as a result of Gustav, dropping its predications to $2.5 billion to $4.5 billion from the previously estimated $3 billion to $7 billion.

This new estimate is based on analyses of the wind field and damage associated with Gustav for onshore and offshore exposure as well as the impact of storm surge.

RMS and other modellers were yesterday tracking Hurricane Ike, which yesterday slammed into the Turks & Caicos Islands, as a category four storm, reportedly causing damage to 80 percent of buildings.

In an update issued yesterday afternoon, RMS said much uncertainty remained over Ike's future path, but it was possible that the storm could enter the Gulf of Mexico by late tomorrow, where it would be expected to strengthen.

That would put insurers on tenterhooks once more, as the hurricane approached an area dotted with offshore oil and gas rigs.

Another possible course could see Ike ravage southwestern Florida.

Gustav ravaged Cuba and Haiti, leaving behind an estimated 112 deaths, before moving on to Louisiana where it spared the still-rebuilding New Orleans a direct hit.

Christine Ziehmann, director of model management at Risk Management Solutions (RMS) said: "The key factor driving the initial estimate down was the fact the storm started decaying very rapidly just before landfall — much more than the forecasts indicated — and continued to weaken over land."

Reconnaissance teams from RMS deployed to the region found that wind damage inland was relatively limited. "People who learned from Katrina by replacing their roof or elevating their home on stilts suffered less than those who did not," the company said in a press release.

The company also found that no major damage was caused by Gustav to the oil infrastructure in the Gulf of Mexico, although production is not expected to resume to pre-storm levels for some time.

"Reports indicate that the majority of the problem stems from the Louisiana power transmission infrastructure, which sustained significant damage. It could take up to four weeks for power to be restored fully in some of the parishes," the press release said.