Reuters reported yesterday that while the official total for insured losses caused by Hurricane Irene are not yet official or complete the catastrophe modeling company AIR Worldwide is estimating $3 to $6 billion…and while those are big numbers, they’re actually lower than what was anticipated.
Before Irene actually made landfall, many insurance industry analysts were expecting the losses to meet or exceed $10 billion, but once the storm actually arrived it became clear that the damage was much less than expected.
AIR, whose estimate extends to onshore U.S. properties, is the corporation that makes the software that insurers use to model – or predict – exposure to disasters like earthquakes and hurricanes. On Monday, insurance shares rallied much more significantly than the rest of the market, and it is believed that this is based on investors being relieved that payouts would not be as extensive as predicted.
Even with better-than-expected numbers, however, Hurricane Irene is being considered a “worst case scenario” by some analysts, especially for Allstate Corp. and Travelers Companies, Inc, which may have just had some or all of their third-quarter earnings literally washed away. Nevertheless, this should not prompt any kind of industry-wide insurance rate increases.
Of the areas affected, millions were still without power and suffering from heavy flooding even late yesterday, especially in suburban New Jersey and rural Vermont. Adding up those losses will take some time, as will sorting out how many of those affected individuals and businesses had government-backed flood insurance.
On the up-side, insured losses in the Carolinas are estimated at a ‘mere’ $200 million.