A repeat of the ice storm that struck a large swath of Canada and the Northeast United States in 1998 could push insurance losses as high as $3 billion today, said a catastrophe risk modeler.
Newark, Calif.-based Risk Management Services said losses from a repeat of the 1998 ice storm that hit the provinces of Ontario and Quebec, Canada, and portions of the United States could result in total insured losses ranging from $1 billion to $3 billion. The 1998 storm cost insurers $1.3 billion.
While there have been infrastructure improvements since the storm, the increased concentration of homes and businesses could result in the doubling of losses, RMS said.
"This storm demonstrates that direct physical damage from a catastrophic event may comprise only a minor percentage of the total insured losses," said Robert Muir-Wood, chief research officer at RMS, in a statement.
"Infrastructure disruptions such as power outages lead to costly business interruption losses for commercial and industrial properties, as well as additional living expenses for homeowners forced to evacuate their freezing homes," said Mr. Muir-Wood.
Insured losses cover physical damage to autos and property, additional living expenses, and refrigerator and freezer contents that could be lost as a result of prolonged power outage.
The early January storm in 1998 struck northern New York state and the St. Lawrence River Valley region, dumping up to four inches of ice across some portions of the region. While such storms are not rare, this one was unique in its duration, geographical extent and precipitation.
The storm caused widespread damage and power outages. It was responsible for 45 fatalities.
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