Newspaper article International Herald Tribune

Insurers Prepared for Storm Claims

Newspaper article International Herald Tribune

Insurers Prepared for Storm Claims

Article excerpt

The tropical storm slamming the East Coast of the United States won't have as big an effect on the insurance industry as Hurricane Katrina did, but insurers say they are prepared for the claims.

The insurance industry could be responsible for paying for $5 billion to $10 billion in property and casualty claims from the storm that was Hurricane Sandy, but it has the resources to make the payouts, industry experts said Monday.

Eqecat, a company that tracks natural disasters and estimates their cost, said it expected the storm's total economic damages to range from $10 billion to $20 billion, which includes damage to homes and cars, and business lost because of the storm. The company said the insurance industry would be responsible for covering $5 billion to $10 billion of that, a smaller amount in part because insurers generally do not cover the flooding of homes and businesses. A U.S. government insurance program would most likely pick up much of that uncovered cost.

Insurance payouts toward the lower end of the Eqecat estimate would be on par with the $6.4 billion insurers covered after Hurricane Rita in 2005. According to the Insurance Information Institute, the most expensive hurricanes, in inflation-adjusted dollars, were Katrina in 2005, with $47 billion in insured losses along the Gulf of Mexico; Andrew in 1992, with $23 billion; Ike in 2008, with $13 billion; and Wilma in 2005, at $12 billion, the last three in Florida.

Robert Hartwig, president of the Insurance Information Institute, said the property and casualty industry had the resources to absorb losses estimated for the latest storm. Until now, the industry had been having a year of minimal losses from natural disasters.

Eqecat noted that about 20 percent of the population of the United States lived in the areas exposed to Sandy's effects.

AIR Worldwide, a company that models hurricanes and estimates their damage, said the value of insured properties in coastal areas of New York state was $2. …

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