AIR’s estimate for Sandy

. . . $10B, with a range of $7B to $15B. Details here. (Recall Eqecat estimated $5B to $10B.)

However . . .

• The estimate doesn’t count low-level losses in Virginia and Ohio. Nor does it count the West Virginia blizzard.
• It assumes that 10% of NYC commercial insureds bought flood insurance. (A 50% take-up rate adds $600M to $1.2B to the estimate, AIR notes.)
• The estimate includes business interruption coverage. However the model doesn’t consider flooded subway lines and loss of the Con Edison explosion, either of which could drag things out for days.
• And perhaps most interesting: That wasn’t a hurricane that hit New Jersey; it was a “post-tropical cyclone,” according to the National Weather Service. And, in AIR’s words, “There is, as a result, uncertainty in how carriers will treat deductibles.” Most policies have a higher deductible for hurricane losses. AIR’s estimate reflects the use of a hurricane deductible.

Update: About the deductible: This pdf from NJ DOI seems pretty clear. A hurricane deductible can only be invoked “from a storm designated as a hurricane by the National Weather Service and (emphasis in the original) only if sustained wind speeds of 74 mph have been measured somewhere in the state.” Well, the storm was designated a hurricane. There were plenty of gusts above 74 mph – my hometown clocked 88 mph – but I haven’t found a record of sustained wind speeds that exceeded 45 mph. Wouldn’t be surprised if this ended up in court to interpret the meaning of the word sustained.