Hurricane Irene has come and gone but the storms effects may linger for several years. To date, the storm accounts for an estimated $7 billion in damages throughout the East Coast, making it one of the most costly natural disasters to strike the nation. The costs of damage are expected to influence property insurers who have long been leery of offering coverage to homes and businesses in risk prone areas. Consumers may be seeing higher premiums this year as a result of the hurricane.
Higher premiums have been the theme for the past two years. Both 2010 and 2011 were host to a multitude of destructive events that cost the insurance industry billions. Despite these losses, insurers have been experiencing unprecedented levels of profit, mostly due to the fact that they are continually increasing their rates. Following Hurricane Irene, rates for property insurance on the East Coast could continue to rise well into 2012, according to Gregory Locraft, an analyst with Morgan Stanley.
Speaking with the Associated Press, Locraft noted that the storm adds to the already heavy financial burden imposed by this year’s natural disasters. The catastrophic events that happened this year account for $18 billion in insured losses. Irene brings that sum to approximately $25 billion. The year is not yet over, however, and the industry’s capital is running dry. Another major disaster could mean that the insurance industry will be unable to foot the bill, leaving the federal government paying what the industry can no longer afford.