Hurricane Sandy likely to boost property insurance rates in the future
Hurricane Sandy is receding, but has solidified its status as a “superstorm.” The hurricane made landfall earlier this week and has since caused widespread damage throughout much of the northeastern U.S. Massive storm surges caused major flooding in heavily populated cities such as New York City and power outages that have affected millions of people. Hurricane Sandy has caused a significant amount of damage, but some of the storms impact may linger well into the future in the form of higher insurance premiums.
Aon Risk Solutions predicts effects of Sandy
Aon Risk Solutions, a leading risk management firm, suggests that Hurricane Sandy could have a major impact on the underwriting business in the property insurance market. Analysts suggest that insurance companies may now be pushing homeowners and property insurance rates higher as a result of the storm’s impact. These insurers may be taking a hard look at deductibles in the months to come to find a way to balance the financial losses they have seen through the hurricane.
Storm one of the worst the country has ever seen
Hurricane Sandy is responsible for no less than 70 deaths, according to the most recent accounts. The storm has also left more than 8 million people across 20 states without power. Businesses have been interrupted and the storm has dealt a disastrous blow to the supply chain for fuel and other commodities that much of the rest of the country relies on. All these factors have created a scenario in which property insurance rates are all but guaranteed to rise in the coming months.
Insurers still assessing extent of damage
It is still too early to tell the exact extent of the damage caused by Hurricane Sandy, but the storm has been much stronger than what the insurance industry had expected. Insurance companies, as well as their commercial customers, are still assessing the damage caused by the storm. Catastrophe modeling firm Eqecat had estimated that the extent of financial losses could be as much as $20 billion, but when business interruption is added into the equation, the disaster could be much more expensive.