Hype is de rigueur for any large storm event, and an hurricane headed for the Mid-Atlantic coast is especially vulnerable to such treatment. However, as Insurance & Technology’s Kathy Burger reports, Sandy appears to be that once-in-a-lifetime storm. Like a face that reveals its beauty when your eye searches for a flaw and come up empty, Sandy reveals its stunning power as you review the details and find in her a kind of terrible perfection. We know that there will be extensive flood damage, but what will be the toll in terms of insured losses from this end-of-season horror?
One way to put Sandy in perspective is to compare it to last August’s Hurricane Irene, suggests Loretta Worters, a spokesperson for the Insurance Information Institute (iii). “Irene impacted 14 states, caused 41 deaths and resulted in $4.3 billion in estimated insured damages,” she says. “Sandy is much more widespread and may impact even more states.”
As the storm is yet to make its maximum force felt on the land, it’s hard to predict exactly how its impact will be felt, Worters cautions. She notes that the economic conditions of the last few years might make damages worse than they otherwise might have been. “People may not have been doing maintenance, such as roof repair or replacement,” she speculates. “They may have been waiting for better times to do that.”
FEMA has predicted wind damage alone could be as high as $3 billion. Late word from EQECAT is ominous. The catastrophe modeling firm says that Sandy could impact 20 percent of the U.S. population and cause between $5 and $10 billion insured losses and $10 to $20 billion overall economic damages.
“By comparison, the estimated economic damages for large-scale storms similar to Sandy were Hurricane Irene at $10 billion, and Hurricane Ike in 2008, $20 billion,” comments Tom Larsen, senior VP and product architect at EQECAT.