The Superstorm off the Atlantic is predicted to be less expensive than only Hurricanes Katrina and Ike.
The damage caused by Superstorm Sandy is now predicted to be the third most expensive faced by the National Flood Insurance Program in the United States, and will have the largest amount of cost outside of the Gulf Coast region of the country.
The states that were hardest hit include New York and New Jersey.
According to Bloomberg Government’s BGOV Barometer, those two states are covered for nearly $100 million in flood insurance, combined. The estimated $54.5 billion in New Jersey is exceeded only by the coverage in four other states (California, Florida, Louisiana, and Texas), according to Federal Emergency Management Agency (FEMA) data.
The flood insurance claims from this most recent storm will cost an estimated $2 billion to the government.
Two thirds of all of those flood insurance claims are expected to come from New Jersey and New York. This information is based on the Silver Spring, Maryland based hazard research firm, Kinetic Analysis Corp. The losses that are covered by the national subsidized program are in addition to the $6.6 billion in insured losses that are the result of damage from causes other than floodwaters. This consists, primarily, of wind damage.
Only Hurricanes Katrina (2005) and Hurricane Ike (2008) on the Gulf Coast racked up tallies that were more costly to the flood insurance program than this most recent superstorm.
The struggle that is faced by the government with this specific type of coverage has a great deal to do with the clusters of coverage under the federal flood insurance program. According to a Bloomberg Industries insurance analyst, Jonathan Adams, this makes the risk extremely widespread, which makes it very challenging to minimize costs.
He explained that “The distribution among those who need it is pretty thorough,” and went on to say that “The distribution among those who may not need it isn’t as thorough.”
The federal flood insurance program continues to fight with debt problems that arose after the costs from Hurricane Katrina. Earlier this year, Congress voted to allow for increased premiums and to extend the program for an additional five years.