Hurricane Sandy has the potential to be one of the most expensive storms in modern memory, according to estimates.
The storm, which ripped into the mid-Atlantic coast on Monday, could cost the insurance industry between $5 billion and $10 billion, according to estimates released Monday by Eqecat, a disaster-modeling company.
At the high end of that range, Sandy would rank as the fifth-most expensive hurricane of all time, surpassing Hurricane Charley, which cost the insurance industry an inflation-adjusted $8.8 billion when it struck Florida and the Carolinas in 2004, according to The Wall Street Journal. Even at the low end of the range, it would rank as the 10th-most expensive storm, the paper reported.
Eqecat also estimated total economic damages could range between $10 billion and $20 billion.
But insurance companies are prepared. “Companies are staffed up in anticipation of this,” said Brent Cross, executive vice president of Cross Insurance in Bangor.
Cross spent Monday on the phone with clients, including one in New Jersey in the direct path of the storm, walking them through their insurance, explaining what’s covered and what’s not, and whether business interruption is part of the policy, and other helpful information.
“A lot of what we do right now is communicate,” he said. “There’s a lot of uneasiness during this time, and people like to know they have coverage in place and they’re all set.”
But don’t expect to be able to insure your property on the eve of a big storm like Sandy.
Cross Insurance is the retail arm of larger insurance carriers like Travelers and Progressive, and it’s typical for those insurance carriers to place a moratorium on writing new policies when serious storms approach, Cross said.
“Not a lot transpires over the next couple days,” he said. “We won’t be binding anything new. People will have to have been prepared before now.”
As for the estimated cost of the storm, Cross expects insurance companies will be able to handle the insured losses and haven’t needed to do any financial adjustments to prepare themselves for the flood of expected claims.
“Insurance companies stay liquidated,” he said. “They don’t have to shift money from something nonliquid to something liquid in anticipation; they have to stay liquid anyway.”