AIR Worldwide increases insured loss estimates from Sandy to as high as $22 billion
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Catastrophe modeler AIR Worldwide now estimates that insured losses from Superstorm Sandy will range between $16 billion and $22 billion.
The revised estimate, which was released Monday, includes wind and storm surge damage to onshore residential, commercial and industrial properties and their contents, automobiles, and time element coverage such as additional living expenses for residential properties and business interruption for commercial properties.
In an estimate issued on Oct. 30, one day after Sandy made landfall in southern New Jersey, AIR said that the storm would cause $7 billion to $15 billion in insured damages.
“The significant increase in estimated losses from AIR's estimate issued on Oct. 30, the day after Sandy's landfall, is driven primarily by an increase in estimated losses from storm surge damage,” said Tim Doggett, principal scientist at AIR Worldwide, in a statement announcing the revised estimate. “This, in turn, is driven by a reassessment of the percentage of flood losses that will actually be paid, as well as an improved storm surge footprint run against high-resolution industry exposure information.”
In the revised estimate, AIR said, among other things, that its “default assumption,” which was used to generate insured loss estimates hours after Sandy's landfall, is that 10% of commercial structures carry flood insurance. “Based on further investigation into how storm surge losses will be covered under Sandy, AIR now believes that a revised assumption of 20% is more applicable for this particular storm and region,” said AIR in the statement. “Therefore, the above range of losses reflects the assumption that 20% of the damage from Sandy's storm surge to commercial and industrial properties will be covered.
The estimate does not include losses borne by the National Flood Insurance Program.
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