Disaster modeling company Eqecat now estimates that monster storm Sandy caused up to $20 billion in insured losses and $50 billion in economic losses in the United States, the company said on Thursday.
But governors of New York and New Jersey and other U.S. states said insurance companies should not charge hurricane deductibles on damage claims because Sandy was a "post-tropical storm" by the time it hit land and wreaked havoc. That would save individual homeowners at least thousands of dollars each in out-of-pocket costs.
Eqecat's insured loss estimate is double what it forecast previously. The firm said subway and electrical outages will produce much more substantial losses than had been expected.
At the high end of the range, Sandy would rank as the fourth-costliest catastrophe ever in the United States, according to the Insurance Information Institute, behind Hurricane Katrina, the 9/11 attacks and Hurricane Andrew.
Eqecat's estimate is higher than peer AIR Worldwide, which projected insured losses from Sandy at $7 billion to $15 billion. RMS, the other modeler used by the insurance industry to forecast losses, has said only that Sandy would clearly be costlier than last year's Hurricane Irene.
"If the storm tops $8 billion in insured losses that will make Sandy the fifth largest hurricane in U.S. history," Allstate Corp Chairman and Chief Executive Tom Wilson said Thursday on a conference call.
He said it was too early to estimate the impact of the storm, but the catastrophe is not expected to have a material impact on Allstate's overall financial condition. Wilson said it would provide an estimate for catastrophe losses that occur in a month if it tops $150 million.
If insurance companies aren't allowed to charge hurricane deductibles, the impact on them may not be that much, given the relative scope of the damage, Wilson said.
"Industry losses obviously would be higher than when (the hurricane clause) is triggered because that is a higher deductible," Wilson said. "But I don't think it would substantially alter the numbers...The ranges of (estimated damages) are billions of dollars. So I don't think it would impact it much."
Allstate shares dipped 2.4 percent, or 97 cents, to $39.01 in Thursday afternoon trading. American International Group Inc's stock was up 0.5 percent, or 16 cents, at $35.09. AIG was set to report third-quarter results after the market closes on Thursday.
In New York, many homeowners' insurance policies for homes located in downstate areas contain hurricane deductibles based on a percentage of a property's insured value, New York Gov. Andrew Cuomo's office said on Thursday. These deductibles typically range from 1 percent of a home's insured value to 5 percent. A 5 percent deductible on a home insured for $300,000, for example, would have the homeowner pay for the first $15,000 of damage.