Big Apple Now Big Worry for Insurers

While hurricanes are widely perceived as primarily a threat to warmer locales, New York is no stranger to storm damage.

In 2004, Hurricanes Ivan, Frances and Jeanne all caused damage to coastal areas of the state as did Hurricane Gloria in 1985, Hurricane Donna in1960 and the Great New England Hurricane of 1938.

Thus, with the latest projections indicating that Hurricane Irene will come within close proximity of the New York City, insurers have ample cause for concern. According analysis by data provider CoreLogic, Long Island faces the highest risk with an estimated 387,813 properties located in the projected path of Irene. Of the properties at risk in Long Island, roughly 66 percent are located outside a hazard flood zone as designated by the Federal Emergency Management Agency (FEMA).

Moreover, according to an analysis by AIR Worldwide, the insured value of properties in coastal areas of New York totaled $2.4 trillion in 2007, the highest among all coastal states, except Florida. Citing data from a 2010 U.S. Census study, the Insurance Information Institute notes that the population in New York’s coastal areas has increased by 15.4 percent from 10.6 million in 1960 to 12.2 million in 2008.  

Like other states, New York has a residual market plan, the New York Property Insurance Underwriting Association (NYPIUA), which acts as a market of last resort for residential and commercial property insurance in the state. Nonetheless, the state maintains a robust private market, with State Farm, Allstate and Travelers each achieving double digit market share in homeowners insurance according to direct written premiums. 

 

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