Hurricane Irene caused as much as US$1.1 billion in insured losses in the Caribbean, catastrophe modeling company AIR Worldwide said on Friday, with more expected to come as the storm heads for the US Northeast.
Yet in a sign of the confusion sure to plague insurers in days to come, rival catastrophe modelers Eqecat said late on Friday losses in the region were likely no more than US$600 million.
While no one knew yet precisely where Irene would strike or how strong it would be, it seemed certain as of Friday that Philadelphia, the New Jersey shore, New York City, Long Island and broad swaths of Connecticut, Rhode Island and Massachusetts were all going to be hit.
The insured losses for the Caribbean will range from US$500 million to US$1.1 billion, mostly from the Bahamas, said AIR, one of the three companies the insurance industry relies on to model the impact of both natural and man-made disasters.
AIR had warned Irene was likely to do more damage to the islands than 1999’s Floyd, the last hurricane to strike them in such a direct way.
However, Eqecat said its own models suggested losses of US$300 million to US$600 million. That the two would differ in their estimate is not unusual, but it serves as a reminder of how difficult it can be to assess storm damage in the days and even weeks after the fact.
The next question is what Irene will do to the US east coast, with some estimates putting more than US$4 trillion of insured coastal property in its path. The losses, by some accounts, could be enormous. FiveThirtyEight found a Category 2 hurricane making landfall within even 100 miles (161km) of New York City would cause at least US$2.15 billion in economic losses in the city alone.
If landfall was within 50 miles, the losses would approach US$10 billion in the city. If Irene is sufficiently large, the insured losses it causes could lead to an industrywide firming of, or rise in, prices after years of declines caused by heavy competition and excess capacity, the polling aggregation Web site said.