Sandy Set to Be 3rd Costliest Hurricane, but Storms of the Past Offer Perspective

Heavy machines place pilings into the sand Tuesday, Feb. 19, 2013, in Seaside Heights, N.J., where workers have begun rebuilding the boardwalk that was destroyed by Superstorm Sandy. (AP Photo/Mel Evans) Heavy machines place pilings into the sand Tuesday, Feb. 19, 2013, in Seaside Heights, N.J., where workers have begun rebuilding the boardwalk that was destroyed by Superstorm Sandy. (AP Photo/Mel Evans)

Superstorm Sandy will likely become the third-costliest hurricane in U.S. insurance history, but when examining historical storms using today’s dollars and exposures, Sandy would fall to the 12th costliest storm, says the Insurance Information Institute.

In a presentation posted on I.I.I.’s website, initially given at Midwestern Actuarial Forum in Chicago today, I.I.I. Chief Economist Steve Weisbart projected Sandy insured losses to hit $20 billion, based on estimates of catastrophe-modeling firms and reported losses as of Jan. 12. That would place Sandy behind 1992’s Hurricane Andrew ($25.6 billion in insured losses) and ahead of 2008’s Hurricane Ike ($13.4 billion). All of those storms are dwarfed by 2005’s Katrina ($48.8 billion).

However, even mighty Katrina would be a middle-of-the-pack hurricane if some storms from the past occurred today. A 1926 hurricane that struck Miami, for example, would cause $125 billion in insured losses today. Another storm that struck mid-Florida in 1928 would cause $65 billion in insured losses. Factoring in these storms from the past, Katrina would fall to the sixth-costliest hurricane -- tied with a 1915 storm that struck Galveston, Texas and just ahead of the 1938 Long Island Express that struck parts of New England.

But with the lack of exposures back then compared to those that exist today, none of those destructive storms of the past crack the actual list of top-12 costliest storms. Instead, the current list features 10 storms that have occurred from 2004 and later. The only two not from that time period are Andrew and 1989's Hurricane Hugo ($7.8 billion in insured losses).

After the top four of Katrina, Andrew, Sandy and Ike, the list shows 2005’s Wilma ($11.1 billion in insured losses), 2004’s Charley ($9.2 billion), 2004’s Ivan ($8.7 billion), Hugo, 2005’s Rita ($6.7 billion), 2004’s Frances ($5.6 billion), 2004’s Jeanne ($5.6 billion) and 2011’s Irene ($4.4 billion).

On the top-12 list that includes historical storms with today’s exposures, only Katrina, Andrew and Sandy make the cut. 

For his presentation, Weisbart relied in part on research done by Karen Clark & Co. for the current costs of historic hurricanes. Last year, PC360 provided the below infographic based on Karen Clark & Co.'s research. 

About the Author
Phil Gusman, PropertyCasualty360.com

Phil Gusman, PropertyCasualty360.com

Phil Gusman is Managing Editor of PropertyCasualty360.com. Prior to joining National Underwriter in 2008, he was Editor of Insurance Advocate. Gusman has also served as Associate Editor of Crackdown!, an insurance fraud publication, and Assistant Editor of Empire State Report, which covers New York politics. He graduated in 2002 from Plattsburgh State University in New York. Gusman may be reached at pgusman@summitpronets.com. Follow him on Twitter: pgusman and PC360_Markets

Comments

Resource Center

View All »

Complimentary Case Study: Helping achieve your financial goals By:...

Find out how a Special Investigation Union used TLOxp to save the company money and...

Do Your Clients Hold The Right CDL License?

Learn about the various classes of CDL Licenses and the industries that are impacted by...

Integrated Content & Communications: A Key Business Issue For Insurers

Insurers are renewing their focus on top line growth, and many are learning that growth...

High Risk Insurance Coverage in the E&S Market

Experts discuss market conditions, trends and projected growth in a rapidly changing niche.

Top E-Signature Security Requirements

This white paper covers the most important security features to look for when evaluating e-signatures...

EPLI Programs Crafted Just For Your Clients

Bring us your restaurant clients, associations and other groups and we’ll help you win more...

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.