Hurricane Sandy generating more claims than Hurricane Katrina
Hurricane Sandy may be little more than a bad memory for some, but the insurance industry is still reeling from the impact of the storm. The storm struck eastern states very hard, generating massive storm surges that caused widespread floods in New York and its neighboring states. Hurricane Sandy generated thousands upon thousands of flood insurance claims. The National Flood Insurance Program is reporting that it has received more claims than it had seen from 2005’s Hurricane Katrina.
Sandy shows more in the way of flood damage
Hurricane Katrina is considered the most devastating storm to have struck the U.S. in recent history. The Category 5 hurricane generated some $108 billion in damage caused by its strong winds and the floods that it brought to the Gulf Coast region. While Hurricane Katrina exceeded Hurricane Sandy in terms of strength, the latter appears to have overcome the former in terms of financial impact.
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Insurers see modest claims regarding wind damage
McMahon Agency Insurance claims that claims from Hurricane Sandy have far surpassed those associated with Katrina. Floods are the primary culprit, as the powerful storm caused little damage with its winds. This sentiment is being shared by larger insurance groups that have seen few claims relating to wind damage in the wake of Hurricane Sandy. Instead, floods have caused the vast majority of damage in several states, which may cause a problem for the National Flood Insurance Program, which is the primary source of flood insurance coverage for homeowners in the U.S. Most major insurance groups that operate along the East Coast do not offer flood insurance protection that can be attained affordably.
Flood claims may push the boundaries of the National Flood Insurance Program
The National Flood Insurance Program is currently being crippled by massive debt, ranging in the trillions of dollars. Most of this debt was accrued during Hurricane Katrina, when the federal program began to struggle with paying claims. Hurricane Sandy struck much larger and more affluent communities than Katrina, which has contributed heavily to the storm’s overall cost. If claims continue to rise, the National Flood Insurance Program may be unable to issue payouts due to the fact that it is quickly running out of money.