Property and casualty insurers are well positioned to absorb losses from Hurricane Sandy, according to A.M. Best Co., after a relatively quiet 2012 on the storm front.
A.M. Best rates the capital structures of insurance carriers, and has its main office in Oldwick, N.J. in the direct path of Hurricane Sandy”™s track.
For most primary insurers, the biggest impacts from Sandy are likely to be wind and downed tree damage to roofs and cars, as well as business interruption losses from prolonged power outages, A.M. Best stated. It is likely that the brunt of the storm”™s financial impact will fall on the National Flood Insurance Program, which is responsible for almost all flood coverage in the country.
NFIP paid out $1.3 billion last year from Hurricane Irene, making it the fourth-costliest flood event of the last generation. Compared with Irene, Sandy produced a much broader surge impact, A.M. Best noted, given its landfall coinciding with a lunar tide.
While A.M. Best said the industry is well capitalized to absorb the financial impact of a storm with Sandy”™s impact, it added individual carriers may be impacted depending on their risk concentration relative to the path of the storm. A.M. Best added that over the past several years, catastrophe risk management efforts have been under way to address this type of potential loss scenario, to include percentage deductibles and pricing changes.
A.M. Best did not immediately address any impact on reinsurance companies that underwrite the risks taken on by other carriers, with Fairfield County home to the main offices of several including General Reinsurance Corp., OdysseyRe, ACE Tempest Re and XL Capital in Stamford; and W.R. Berkley Corp. and PartnerRe in Greenwich.
