Hurricane Irene will not create enough loss for the private property/casualty market in order to impact pricing, according industry watchers But the weekend storm will likely put even more stress on the money losing government-backed flood insurance program.
“From an insurance perspective, this is not market turning event,” says Robert Hartwig, Ph.D.,” president of the Insurance Information Institute. “There was a lot of speculation prior to the storm that that could happen, but much of the loss will reside with the National Flood Insurance Program.”
Initial losses estimates form Hurricane Irene have started to trickle, with several catastrophe modeling firms saying the private insurance market’s exposure could run between $1 billion and $3 billion.
Modeling firm EQECAT estimates that insured losses from Irene will range between $200 million to $400 million for hardest hit North and South Carolina. Maryland-based Kinetic Analysis Corp. estimated insured losses would total $14 billion prior to the storm making landfall but quickly dropped that estimate to $2.6 billion, according to published reports.
“It will still be a multibillion property insurance loss for property casualty insurers with some additional loss for the state run property residual markets,” Hartwig says. “This will be a significant loss for the National Flood Insurance Program, likely several billions dollars”
EQECAT also adds that the flooding from Hurricane Irene would drive losses, explaining in a statement issued Monday that rainfall was “more than forecasted” in North Carolina and Virginia and reached 20 inches in some areas.
Risk Market News Newsletter
Join the newsletter to receive the latest updates in your inbox.