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SILVER SPRING, Md.—Insured losses from Hurricane Irene probably will be slightly less than $3 billion, according to Kinetic Analysis Corp.
Economic damages could reach $7 billion, Jan C. Vermeiren, CEO of the Silver Spring, Md.,-based consultant, said Monday. He said economic damage could rise because flood damage is difficult to model. Even so, an increase in flood-related losses might not have a significant impact on insured losses, as most flood coverage is provided through the federal government's National Flood Insurance Program.
No jump in ILWs
Meanwhile, the storm—which ultimately did not cause as much damage as feared—did not have a significant effect on the industry loss warranty market.
Stefano Nicolini, a Westfield, N.J.-based senior vp at BMS Intermediaries Inc., which offers ILW protection, did not do any ILW trades as a result of Irene.
“If the losses would have been bigger, I think there would have been a lot more activity,” he said. He added that people still are assessing the extent of their losses related to the storm. “If Irene had made landfall as a Category 2, it would have had more losses and we would have seen a peak in the ILW market” as happened earlier this year, he said.
“I'd anticipate a return to normalized trading levels” of cat bonds given the path Irene actually took, said Craig Bonder, head of insurance-linked securities trading at the brokerage Rochdale Securities L.L.C. in New York.
Late last week, Boston-based catastrophe modeler AIR Worldwide Corp. estimated that Irene caused as much as $1.1 billion in insured losses in the Caribbean. Oakland, Calif.-based modeler EQECAT Inc. estimated Sunday that storm caused between $200 million and $400 million in insured damage in the Carolinas.
NEW YORK (Reuters)—Hurricane Irene could cost U.S. state and local governments billions of dollars in damages, but funds from the federal government might ultimately cover much of this expense.