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Member, Beacon International Group, Ltd.
MONTE CARLO, Monaco—The global catastrophe reinsurance industry may have dodged the proverbial bullet when Hurricane Irene failed to generate the magnitude of losses many observers had feared.
Although the late August storm's heavy rains caused severe flooding throughout much of the U.S. East Coast, Irene did not end up packing winds as high as initially predicted.
According to catastrophe modelers, the storm ultimately may cause as much as $6.6 billion in insured property damage. Flood damage to homes is not covered by most homeowners' insurance; rather, it is available through the U.S. government's National Flood Insurance Program.
Flood damage, however, is covered under some commercial property insurance policies.
Reinsurers already were battered by $70 billion or so in losses from a spate of catastrophes such as the Japanese earthquake and tsunami: the earthquake that destroyed a significant portion of downtown Christchurch, New Zealand; and bad weather across much of the United States during the first half of the year. But they may be spared significant losses from Irene.
Irene will be more of an insurance event than a reinsurance event, said W. Marston Becker, president and CEO of Hamilton, Bermuda-based Alterra Capital Holdings Ltd.
A loss of up to $10 billion is more of an insurer loss than a reinsurance event because of insurer retentions, said Bill Pollett, senior vp of Hamilton, Bermuda-based Montpelier Re.
Irene weakened to a tropical storm by the time it reached New York, lessening the damage it caused, said Ulrich Wallin, chairman of the executive board of Hanover, Germany-based Hannover Re Group.
“It will be a loss for us but not a major loss,” Mr. Wallin said. “We expect a low double-digit figure, but it is too early to give a precise figure.”