As Hurricane Irene dwindles into a tropical storm, insurers on the East Coast are left with tallying the damage. The insurance industry has already seen massive losses from natural disasters this year. These losses put the industry on unstable ground, but insurance companies remained solvent and stable. The Kinetic Analysis Corporation, a company specializing in estimating the impact of both natural and man-made disasters, has released early estimates regarding the cost of Hurricane Irene. According to the company, the storm may have caused some $7 billion in damages.
Irene was initially predicted to be a Category 4 hurricane but was later downgraded to a Category 3 as it approached land. The hurricane made landfall in South Carolina and swept north toward New York and Maine. Reports from insurers in the Carolinas note that the damage the storm caused across the two states hovers around $400 million. The cost of the damage done in the state of New York has yet to be determined, but the fact that the state is home to some of the most valuable coastal property in the nation is likely to influence the final sum.
AM Best, a credit rating and financial data firm, says that the severity of this year’s natural disasters is unprecedented. If the estimates from Kinetic Analysis are accurate, Hurricane Irene will take place among the nation’s ten most costly natural disasters, despite having been downgraded before it reached land.
Insurers are fielding claims as they come in and are well prepared having had several months of natural disasters to learn from this year. How Irene will affect the cost of property insurance is not yet known.