* Losses outpace those from Floyd in 1999
* More than $4 trillion in insured coastline at risk
* NYT projects potentially huge NYC economic losses
(Adds Eqecat comments)
By Ben Berkowitz
NEW YORK, Aug 26 Hurricane Irene caused as much
as $1.1 billion in insured losses in the Caribbean, catastrophe
modeling company AIR Worldwide said on Friday, with more
expected to come as the storm heads for the U.S. Northeast.
Yet in a sign of the confusion sure to plague insurers in
days to come, rival catastrophe modelers Eqecat said late on
Friday losses in the region were likely no more than $600
While no one knows yet precisely where Irene will strike or
how strong it will be at the time, it seemed certain as of
Friday that Philadelphia, the New Jersey shore, New York City,
Long Island and broad swaths of Connecticut, Rhode Island and
Massachusetts were all going to be hit.
The insured losses for the Caribbean will range from $500
million to $1.1 billion, mostly from the Bahamas, said AIR, one
of the three companies the insurance industry relies on to
model the impact of both natural and man-made disasters.
AIR had warned Irene was likely to do more damage to the
islands than 1999's Floyd, the last hurricane to strike them in
such a direct way.
But Eqecat said its own models suggested losses of $300
million to $600 million. That the two would differ in their
estimate is not unusual. However, it also serves as a reminder
of how difficult it can be to assess storm damage in the days
and even weeks after the fact.
The next question is what Irene will do to the U.S. East
Coast, with some estimates putting more than $4 trillion of
insured coastal property in its path. The losses, by some
accounts, could be enormous.
Reuters Insider stories:
Calculating the costs of Hurricane Irene:
Hurricane Irene to cause enormous beach erosion:
A live view of Hurricane Irene lashing down in the outer
banks on Atlantic Beach, North Carolina:
Breaking Views - Mother Nature threatens another mark on
An analysis by New York Times statistics blog
FiveThirtyEight found a Category 2 hurricane making landfall
within even 100 miles of New York City would cause at least
$2.15 billion in economic losses in the city alone.
If landfall was within 50 miles, the losses would approach
$10 billion in the city.
If Irene is sufficiently large, the insured losses it
causes could lead to an industrywide firming of, or rise in,
prices after years of declines caused by heavy competition and
excess capacity. [ID:nN1E77L1N4] [ID:nSTORM]
As of late Friday afternoon, all signs were that Irene was
weakening, contrary to earlier expectations. AIR said it now
looked as if Irene would be a Category 2 storm when it hit the
Carolinas and a borderline Category 1 on landfall Sunday
afternoon in Long Island.
However, the slower wind speeds are deceiving, one of the
company's top scientists said, since the storm is also moving
north faster than had been expected.
"Even though the forecast may come down 5-10 miles (an
hour) from what they had yesterday, if the storm is moving
faster than it was yesterday that can actually compensate,
especially on the right side of the storm," said Peter Dailey,
AIR's director of atmospheric science.
The storm could also prove problematic for investors in
catastrophe bonds, which insurance companies use to transfer
risk to capital markets.
The percentage of so-called cat bonds with exposure to U.S.
hurricane risk stands at 67 percent -- with $506 million
exposure to hurricanes just in North Carolina, according to
broker Guy Carpenter's GC Securities.
Bonds such as Shore Re Ltd, which covers hurricane damage
in Massachusetts, and Johnston Re Ltd, with such exposure to
North Carolina, could be particularly at risk. Standard &
Poor's said on Friday it would hold off on any rating action
until Irene passes, but it could put some bonds on a "negative
watch" after the storm if the damages appear severe enough.
(Additional reporting by Sarah Mortimer in London; editing by