Moody's Investors Service says in a new report that one positiveresult of Hurricane Sandy for insurance companies is that the eventwill likely help support price increases going into 2013.

The Moody's report says the brunt of the losses will likely beborne by State Farm, Allstate, Travelers and Liberty Mutual, ananalysis seconded by officials at Fitch Ratings.

The Moody's analysts say that as “large national writers, thesecompanies have diversified exposures and strong capital bases towithstand weather-related volatility.”

Moody's says that the property and casualty industry as a wholeis currently at a level of relative capital strength, with goodrisk-adjusted capitalization, moderate financial leverage, andearnings that have benefited from price increases and relativelylow weather-related losses through the first three quarters of theyear.

“So despite the negative earnings impact of Hurricane Sandy, weexpect that large diversified insurance carriers can absorb thenegative impact with their capital strength intact,” Moody'ssays.

Moody's, Fitch and Credit Suisse all note that the likely losses will be in the $8billion to $10 billion range, and Moody's notes that “…littleearnings or capital relief will be gained through reinsurancecovers.”

The Moody's analysts say that the wide geographic spread ofSandy means that claim frequency will be high.

The Moody's report also notes, “We expect the majority ofinsurance losses to stem from homeowners policies, commercialproperty coverages and business interruption (e.g., commercialmulti-peril, allied, fire, inland marine), and to some degreeautomobile policies.”

The Consumer Federation of America yesterday challenged the ideathat Sandy should lead to rate increases. In a statement, CFA said,“There is no reason, actuarially, for insurers to raise rates orcut back coverage due to Hurricane Sandy, which is a storm wellwithin the projections of insurers' current rate schedules.Insurers have already raised prices and cut back coverage along theEast Coast of America and no further price or coverage action iscalled for.”