Update: Irene Losses Mount for Insurers

While Hurricane Irene may have failed to produce the cataclysmic images of destruction of Hurricanes Katrina or Andrew, it is certainly likely to leave an impression on the balance sheets of insurers.

While not as powerful as other hurricanes, Irene was slow moving and broad and caused a wide swath of destruction as it advanced up the Atlantic coast. Preliminary reports indicate that ocean surge and rainfall caused widespread inland flooding in New Jersey. While New York City itself emerged relatively unscathed, communities in the Catskill Mountains and the Hudson River Valley have been inundated. Likewise, cities in Vermont such as Wilmington and Brattleboro have seen widespread flooding.

“Hurricane Irene’s damage is likely to be characterized more by the amount of inland flooding, storm surge and treefall than by direct wind damage, and flooding is still an ongoing concern for many states in the northeast,” modeling firm Risk Management Solutions said in a statement. “Irene’s most damaging winds spared areas of coastal Virginia, Maryland, and New Jersey, but her large windfield spread tropical storm force winds as far inland as Washington, Baltimore, Richmond, and into Central Pennsylvania.” 

Given the geographic spread on the damage, putting a firm dollar figure on insured losses will take some time, say modelers. Catastrophe modeling firm AIR Worldwide says a $2 -$8 billion estimate of damages attributed to the company was erroneous and premature and that it will announce its official estimated insured loss range for Irene later today.