Risk Management Solutions says storm Sandy’s impact on the East Coast is “much more severe” than last year’s Hurricane Irene, and the catastrophe modeler expects insured losses from Sandy to eclipse the $4.5 billion in losses from Irene.
Modeler Eqecat said yesterday that it expected damage from Sandy to be comparable to Irene, and released an initial insured-loss estimate of $5 billion.
The Consumer Federation of America, meanwhile, criticized insurers’ response to 2005‘s Hurricane Katrina and warned against a similar response to Sandy. “Insurers treated many people poorly who filed claims for damages caused by Hurricane Katrina,” CFA says in a statement. “For example, after Hurricane Katrina, insurers pulled back from offering coverage along the coasts, dumping people into higher priced, state run insurance pools. They also cut coverage and raised rates substantially.”
Regarding a response to Sandy, CFA says, “There is no reason, actuarially, for insurers to raise rates or cut back coverage due to Hurricane Sandy, which is a storm well within the projections of insurers’ current rate schedules. Insurers have already raised prices and cut back coverage along the East Coast of America and no further price or coverage action is called for.”