Hurricane Irene Strikes East Coast;
More Of A Flood Event Than Wind
BY CHAD HEMENWAY AND MARK E. RUQUET
HURRICANE IRENE turned out to be more of a rain and flooding event han the wind event many had
feared, but it still could crack the list of the
10 costliest U.S. storms if it hits the high
end of insured-loss estimates.
The storm made landfall on Aug. 27
in North Carolina and on Aug. 28 in Little Egg Inlet, N.J. and Coney Island, N.Y.
as a Category 1 storm, according
to the National Hurricane Center (NHC). Irene then weakened
to a tropical storm and made its
way through the Northeast.
Worldwide estimates losses at between $3 billion and $6 billion,
while Eqecat says losses are expected to be between $1.5 billion
and $2.8 billion.
Kinetic Analysis Corp. says it
expects $2.6 billion in losses, far
below the $14 billion in possible
losses the company was warning
of as Irene approached the East Coast as a
stronger Category 2 storm.
Jon Hall, executive vice president at FM
Global, says industry-wide losses are likely
in the $2 billion to $8 billion range, and
Robert Hartwig, president of the Insurance
Information Institute, says losses could be
within the $3 billion to $4 billion range.
Eqecat expects $200 million to $400
million in losses in North Carolina and
South Carolina, while AIR Worldwide says
the Caribbean could see between $500 million and $1.1 billion in losses.
Some experts speculated before landfall
that the storm could turn what has been a
soft P&C market. “This is not that event,”
says Hartwig. “It was a far cry from what
people had expected when Irene was ap-
proaching the coast as a Category 2.”
However, insured losses from Hur-
ricane Irene will add to $17.3 billion in
insured losses in the U.S. as of June 30—a
162 percent increase over insured losses
during the first half of last year.
“Irene could put the total up between
$22 billion and $23 billion,” Hartwig
says. “About $16 billion was from the
tornadoes earlier this year.”
As of June 30, this year had set a re-
cord with $55 billion in insured losses
globally. That is more than four times
the 10-year average.
Rating-agency Standard & Poor’s says
it does not expect Hurricane Irene to affect the industry’s creditworthiness and it
expects “few, if any” rating changes as a
result of the storm.
At currently estimated insured losses,
S&P says Irene will affect primary insurers
more than reinsurers, since the primary
insurers retain a greater property-catas-trophe risk. In its analysis, S&P assumes
Hurricane Irene will cause less than $5
billion in insured losses.
To make the list of top-10-costliest U.S.
storms, Irene would need to eclipse Hurricane Jeanne, which affected many of the
same states in 2004, causing about $4.15
billion (in 2009 dollars) in insured losses.
The ninth-costliest hurricane is Hurricane
Frances, also in 2004. Frances caused $5.21
billion in insured losses.
Hurricane Irene should not cause
significant losses for commercial lines,
according to Duncan Ellis, U.S. prop-
erty practice leader for insurance-broker
Marsh. He says Irene will probably prove
to be primarily a homeowners’ event.