Hurricane Sandy makes landfall, causing chaos
Hurricane Sandy is causing havoc in the northeastern U.S. The storm finally made landfall on Monday, striking New Jersey with 115mph winds that pushed water from the ocean into several states along the East Coast, including Virginia, New York, and Maryland. Though the storm is classified as a Category 1, it has already managed to caused a significant amount of damage with just its powerful winds. When the flooding that the storm has caused is factored into its overall impact, Hurricane Sandy could be considered one of the most disastrous events of 2012.
Eqecat estimates damage caused by strong winds
Eqecat, a leading catastrophe modeling firm, has already released initial estimates concerning the level of insured losses that will be caused by strong winds alone. The firm expects that insured losses from Hurricane Sandy will be as high as $10 billion. The estimation takes account of damage done to residential property and commercial businesses, as well as business interruption and lapses in energy production. The estimate does not take into account the damage caused by flooding.
Flooding makes storm much more costly
When floods are factored in, Hurricane Sandy quickly becomes a much more expensive catastrophe. Eqecat suggests that flood damage could come in at another $10 billion, at least. Currently, Hurricane Sandy is more reminiscent of Hurricane Irene, which hit North Carolina in 2011 and marched its way up the East Coast, causing $4.3 billion in insured losses. Sandy is not expected to grow in strength, but it is possible for the storm to cause widespread flooding, that would ultimately add to its damage potential.
Insurers expected to fare well, National Flood Insurance Program may not be so fortunate
Insurers in the eastern U.S. have mobilized to manage the impact of Hurricane Sandy and assist consumers where needed. These insurance companies are expected to bear the financial impact of the storm without much difficulty, thanks to a fairly calm year in regards to natural disasters. The National Flood Insurance Program, however, may be a different matter as the federal program is already troubles by serious financial problems.