(Reuters)--Insurance adjusters are already moving into some of the areas hit by Hurricane Irene, which early indications suggest was as bad as people feared but not as devastating as some other storms to hit the Carolinas.

But as the storm moves up the U.S. East Coast, it is presenting a greater flooding risk than some had expected. With the overwhelming majority of flood insurance in the United States written by the government's National Flood Insurance Program, that storm surge could turn out to be a huge headache for Washington at a time of deficit-cutting pressure.

Catastrophe modelers say Irene caused up to $1.1 billion in insured losses just in the Caribbean, and depending on the storm's track in New England some have said losses north of $10 billion are possible.

Eqecat, one of those companies, said Saturday it appears Irene caused less damage in North Carolina and Virginia than 1999's Hurricane Floyd, which the National Hurricane Center ranks as one of the 15 costliest hurricanes ever.

A spokesman for Allstate Corp, the country's largest publicly traded home and auto insurer, said the storm has been as bad as the company expected.

"I've got to imagine we're going to see some evidence of property damage, auto damage down along the North Carolina area," Brett Ludwig said.

While people appear to have prepared as much as they could in coastal areas, Ludwig -- who was in the field for legendary hurricanes like Katrina, Rita and Gustav -- said there was much less evidence inland that people had made preparations such as boarding up windows to harden property for the storm.

An agent for State Farm, the country's largest property insurer, said he was surprised at the intensity of the wind and the duration of the storm, but he added that Irene so far seemed to have done less damage than 1996's Hurricane Fran or 1999's Floyd.

"There's a lot of trees down, a lot of power outages, a lot of shingles missing but I didn't see any huge structural damage as we saw in Fran," said David Hull, whose Jacksonville, North Carolina home had already been without power for 14 hours. He said utility company crews were already out in his neighborhood assessing damage.

While Irene's intensity was diminishing, meteorologists say its size and speed make up for any decrease in the winds. Forecasters for the ABC affiliate in New York said Saturday the storm surge from Irene will be higher than expected, perhaps 5 to 8 feet in the city itself.

With an unusually high tide expected Sunday, the surge could be made that much worse.

New York is one of the most heavily insured states by the National Flood Insurance Program, or NFIP. As of June 30, according to government statistics, the program had $8.61 billion of insurance in force on nearly 38,000 policies just in New York City.

Cities across Long Island are also heavily insured, with at least six towns with more than $1 billion in insurance policies in force.

By way of comparison, the NFIP's administrator, the Federal Emergency Management Agency, paid out more than $11 billion in claims after Hurricane Katrina.