KCC: Low-Level Wind Damage Claims Adds up to $12b Price Tag for Sandy

A lot of so-called minor damage can sometimes quickly result in a hefty price tag. 

Superstorm Sandy's mammoth 500-mile span of sustained winds of at least 40 mph caused a good deal of low-severity direct wind damage—especially to New Jersey and New York, says Karen Clark & Co. (KCC). 

There was enough of this type of damage for the firm to estimate insured wind losses due to Sandy could be around $12 billion.

“It adds up—the sheer number of claims,” Karen Clark tells PC360. “These claims have complexities even though they’re small.” 

The insured wind-loss estimate from the catastrophe risk, modeling and management company headed by Clark, creator of the insurance industry’s first probabilistic catastrophe model, would put Sandy among the top five costliest hurricanes in the United States (if the storm can be included on such a list since it wasn’t technically a hurricane when it made landfall).  This doesn’t count other insured losses, such as business interruption, which the firm is currently assessing. 

A post-disaster survey completed by KCC of the areas most affected by Sandy reveals most direct wind destruction occurred along the coast where wind speed eclipsed 60 mph. 

Clark’s field observers concluded that about 25 percent of homes along portions of the New Jersey coast suffered at least minor roof damage and a “significant percentage” had enough roof damage to warrant a complete roof replacement.

“That’s another wildcard,” Clarks says when asked about roof repairs. “Do you repair part of the roof or do you replace the roof? It’ll be done on a case-by-case basis.” 

Shingles, vinyl and aluminum siding were also damaged to varying degrees, the report outlines. 

In some cases, determining wind damage from storm surge damage could be tricky, says Clark. While the difference is obvious on some homes, the cause of damage to others is more ambiguous. The determination comes into play because the peril of storm surge is not covered by a standard homeowners’ insurance policy.   

Damages associated with downed trees were widespread on the coast and further inland. Trees fell on homes and other structures such as sheds and fences. 

Wind damage to commercial property could be seen to signs, roofs, and exterior coverings, such as panelized wall systems. 

Clark says the storm was “representative of a 1-in-100 year type of event,” evidenced by her firm’s use of “characteristic events” to understand risk. Her company’s RiskInsight product comes with 100-, 250-, and 500-year characteristic events (CEs) for U.S. hurricanes that can be floated every 10 miles along the coast from Texas to the Northeast, and superimposed on a company’s book of business.

Running a 100-year CE—a Category 1 hurricane with winds of 90 mph—on an area close to where Sandy made landfall came up with about the same amount of insured losses for wind, Clark says. The CE was more intense but not as large as Sandy was. 

“This storm should not be a shock to the system” in terms of an understanding of hurricane risk in the Northeast, Clark says.


Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

Personal Lines Pro eNewsletter

Critical insights into the personal auto, homeowners, and other consumer insurance markets to help P&C professionals stay informed – FREE! Sign Up Now!

Advertisement. Closing in 15 seconds.