* AIR, Eqecat says risks 'notable' but not huge
* CoreLogic estimated $36 bln in homes endangered
* Analysts say will not be material for insurers
By Ben Berkowitz and Myles Neligan
Aug 28 (Reuters) - Hurricane Isaac is likely to cause substantial flooding along the U.S. Gulf Coast, but losses should be a fraction of what they were when Hurricane Katrina plowed the same path in 2005, disaster experts said on Tuesday.
If anything, Isaac may draw closer parallels to last year's Hurricane Irene, which ended up primarily causing economic losses from inland flooding throughout the northeastern and New England states.
Some coastal areas could see up to 13 feet of storm surge from Isaac -- the water that a tropical cyclone pushes forward as it comes on land -- according to the latest National Hurricane Center estimates. Even well inland, as far north as Indiana by some projections, heavy rains are likely too.
By comparison, Katrina caused more than 25 feet of storm surge and more than $21 billion in surge losses, most of which were uninsured.
Not only is Isaac smaller, but coastal defenses are in many cases stronger than they were seven years ago, leaving damage experts much less concerned.
"Isaac is taking a similar track as Katrina but significantly lower winds ... a lot lower storm surge and wave heights," said Tom Larsen, senior vice president at disaster modeler Eqecat, in an interview. "The expected damage is very low because most of the storm attributes are within designs."
Even inland, where some farm states are expecting six inches of rain from Isaac's remnants, this summer's crushing drought means rivers and reservoirs are below normal, giving them greater capacity than usual to absorb floodwaters.
Larsen said it was far too early to hazard an estimate of actual damages, adding that it would be at least three hours after landfall before the firm could start to get a better loss picture. But he said that Isaac had the potential to at least be "notable" in the damage it causes.
AIR Worldwide, another of the major disaster modelers for the insurance industry, said the story of Isaac has been one of missed expectations.
"The potential is there for this to be a stronger storm, but ever since this thing was in the Caribbean it has not lived up to that potential at all," said Tim Doggett, the company's principal scientist.
Over the weekend, housing data specialist CoreLogic estimated that up to $36 billion in residential property along the coast could be at risk of flood damage from a Category 2 hurricane making landing in Louisiana or Mississippi. But that is a worst-case scenario, assuming all the properties in all the vulnerable areas were a total loss.
While insurers clearly expect substantial claims following Isaac, they appear to be relatively calm about the magnitude of losses, as do analysts following the sector.
"At this stage, I doubt whether it'll be a material event for the insurance and reinsurance industry," said Nick Johnson, insurance analyst at Numis Securities in London.
Along the Gulf Coast, the most exposed insurers include: State Farm, Allstate Corp and Southern Farm Bureau on the residential side; and Travelers, Zurich and CNA on the commercial side.
After last year's record-breaking losses from severe tornadoes, those insurers and their peers have had a much quieter 2012, which should also minimize the impact of any losses from Isaac.
"A category one (hurricane) bordering on a category two - if you live there it's not very nice - but it's really when you're talking about category three, four and five that you start thinking about material losses," said Joy Ferneyhough, insurance analyst at Espirito Santo bank in London.
Shares in major insurers were little moved in early-afternoon U.S. trade while the major European reinsurers were down slightly, as markets accepted that a repeat of Katrina was unlikely with Isaac.
"At this point I think those comparisons are inevitable, but I'm not sure how productive they are," AIR's Doggett said.