Though it is difficult to gauge damage caused by Hurricane Irene at this stage, insurance providers may end up shelling out as much as $6 billion in damages, reports industry publication Insurance Journal.
The anticipated damages at the storm’s onset were set to be far higher, with an original estimate of $10 billion, quotes Insurance Journal. The lower-than-expected damages coupled with promises of government aid helped the insurance market rebound.
Government Financial Aid
Local government bodies stepped up to the challenge of mitigating a further economic disaster by providing aid after the hurricane. In Maryland, the government promised to compensate expenditure by up to 75%, reports Reuters. In light of the ongoing crisis, massive expenditure on rebuilding after the storm and the associated loss of earning for businesses and employees will likely be felt all the more acutely as the US seeks to minimize damage to its already fragile economic infrastructure.
Reuters reported 20 lives were lost in the catastrophe, with as many as five million people without electricity. Extensive flooding in New Jersey and New York blocked day-to-day business operations as railways, subway lines and airports were put out of action.
Initially classed as a category 1 hurricane, and later categorized as a post-tropical storm, the detrimental weather moved from the US onwards to Canada where 95km/h winds cut the power to almost 250,000 homes in Quebec, reports CBC News.
Extreme Weather Conditions Compound US Economic Crisis
So far in 2011, severe weather conditions have taken a toll on the US economy with a combined bill of $35 billion after heat waves, tornadoes and flooding, according to Reuters. Meteorologists are keeping a close eye on other potential weather threats. In the Eastern Atlantic, the formation of a tropical depression near Bermuda, Tropical Depression Ten, is being watched.
Key Statistics – New York Hurricane Insurance (source: Insurance Information Institute)
- House insurance policies do not generally account for flood damage, which falls under the domain of the National Flood Insurance Program.
- At the close of March of this year, there were close to 163,000 flood insurance policies in operation in New York, 847 more than the same period two years earlier.
- Other hurricanes to have put a dent in US property insurance profits in 2009 include 2004 hurricanes Ivan, Frances and Jeanne which ran up bills in excess of $8 billion, $5 billion and $4 billion in damages respectively, reports ISO, provider of information on property/casualty insurance risk.
- The New York Property Insurance Underwriting Association exposure to loss rose $8.6 billion in the two decades leading up to 2010 despites the fact that it counted a 14,855 decrease in its number of policies over the same period.
- The value of insured properties along the New York coast reached almost $2.5 trillion in 2007, states risk modeling software and consulting provider AIR Worldwide.
Key Players – Top 5 Leading Homeowner’s Insurance in New York by Market Share (source: Insurance Information Institute)
- State Farm Mutual (16%), Allstate (15.2%), Travelers Cos. (10.9%), Chubb Corp (9%), Liberty Mutual Holding (7.7%)