Hurricane Irene turned out to be more of a rain and floodingevent than the wind event many had feared, but it still could crackthe list of the 10 costliest U.S. storms if it hits the high end ofinsured-loss estimates.

The storm made landfall on Aug. 27 in North Carolina and on Aug.28 in Little Egg Inlet, N.J. and Coney Island, N.Y. as a Category 1storm, according to the National Hurricane Center (NHC). Irene thenweakened to a tropical storm and made its way through theNortheast.

Catastrophe-modeler AIR Worldwide estimates losses atbetween $3 billion and $6 billion, while Eqecat says losses areexpected to be between $1.5 billion and $2.8 billion.

Kinetic Analysis Corp. says it expects $2.6 billion in losses,far below the $14 billion in possible losses the company waswarning of as Irene approached the East Coast as a strongerCategory 2 storm.

Jon Hall, executive vice president at FM Global, saysindustry-wide losses are likely in the $2 billion to $8 billionrange, and Robert Hartwig, president of the Insurance InformationInstitute, says losses could be within the $3 billion to $4 billionrange.

Eqecat expects $200 million to $400 million in losses in NorthCarolina and South Carolina, while AIR Worldwide says the Caribbeancould see between $500 million and $1.1 billion in losses.

Some experts speculated before landfall that the storm couldturn what has been a soft P&C market. “This is not that event,”says Hartwig. “It was a far cry from what people had expected whenIrene was approaching the coast as a Category 2.”

However, insured losses from Hurricane Irene will add to $17.3billion in insured losses in the U.S. as of June 30—a 162 percentincrease over insured losses during the first half of lastyear.

“Irene could put the total up between $22 billion and $23billion,” Hartwig says. “About $16 billion was from the tornadoesearlier this year.”

As of June 30, this year had set a record with $55 billion ininsured losses globally. That is more than four times the 10-yearaverage.

Rating-agency Standard & Poor's says it does not expectHurricane Irene to affect the industry's creditworthiness and itexpects “few, if any” rating changes as a result of the storm.

At currently estimated insured losses, S&P says Irene willaffect primary insurers more than reinsurers, since the primaryinsurers retain a greater property-catastrophe risk. In itsanalysis, S&P assumes Hurricane Irene will cause less than $5billion in insured losses.

To make the list of top-10-costliest U.S. storms, Irene wouldneed to eclipse Hurricane Jeanne, which affected many of the samestates in 2004, causing about $4.15 billion (in 2009 dollars) ininsured losses. The ninth-costliest hurricane is Hurricane Frances,also in 2004. Frances caused $5.21 billion in insured losses.

Hurricane Irene should not cause significant losses forcommercial lines, according to Duncan Ellis, U.S. property practiceleader for insurance-broker Marsh. He says Irene will probablyprove to be primarily a homeowners' event.

Ellis notes, though, that the storm proves some modelers'assertions that the Northeast is susceptible to tropical cyclones,justifying underwriting increases for those types of events forcommercial accounts. “This is not a big enough loss to change themarket, but the definition of catastrophe just got a littlebroader.”

He adds that, for wind exposures, risk managers can now expectto see higher rates.

Much of the damage caused by Irene is the result of more than afoot of rain to some parts of the East Coast. Vermont in particularis “experiencing its worst flooding in a century,” says TimDoggett, principal scientist for AIR. 

Damage from flooding, including flooding generated by stormsurge, is not covered by a standard homeowners' or renters'insurance policy, though there are some exceptions. Flood damage tovehicles is covered if comprehensive coverage was purchased.

In addition to wind and storm-surge damage to onshore propertyand contents, automobiles, demand surge, and direct and indirectbusiness-interruption losses, AIR says its loss estimate includesadditional living expenses doled out by insurers to the millionswho were ordered to evacuate. Mandatory evacuation is not alwayscovered by a homeowners' policy, but “these losses are often paidfor reasons of good will,” says AIR.

As an additional impact on the industry, Irene caused theNational Association of Insurance Commissioners to cancel itssummer national meeting in Philadelphia, which had been scheduledfor Aug. 29-Sept. 1.