No doubt now that Irene will pass just east of NYC, and first and foremost, I urge everyone to batten down the hatches.
This is an insurance blog, so it focuses on the economic threat from the storm. On which, NYT blogger Nate Silver posted this:
Apart from the potential loss of life in the most densely populated part of the country, history suggests that the economic damage could run into the tens of billions of dollars, depending on the severity of the storm and how close it comes to the city. Unlikely but theoretically plausible scenarios could have the damage entering the realm of the costliest natural disasters of all time, and perhaps being large enough to have a materially negative effect on the nation’s gross domestic product.
From his list, I’ll point out Hurricane Gloria ($900M) had a track eerily similar to Irene. This weather-geek thread points out Gloria hit Long Island with higher winds but had a smaller storm field and moved quickly. That = less area hit by big wind and less rain to soften up the ground.
According to the geeks, Gloria hit at low tide, minimizing storm surge. Irene seems likely to come into the NY area close to high tide.
The link in Nate’s quote takes you to Accuweather’s top five, which are measured by economic losses, not insurance losses:
- 2011 Tohuku earthquake and tsunami: $235B
- 1995 Kobe earthquake: $100B
- 2005 Hurricane Katrina: $81B
- 1994 Northridge earthquake: $42B
- 2008 Sichuan earthquake: $29B
Insurance Information Institute lists the worst insurance natural catastrophes of all time through February 2011. I’ve added the March Japan quake/tsunami and the September 11 attacks, which of course were not natural catastrophes:
- 2005 Hurricane Katrina: $62.2B.
- 2001 World Trade Center terrorist attacks: $40B (in today’s dollars)
- 2011 Tohuku earthquake/tsunami: $30B.
- 2008 Hurricane Ike: $18B.
- 1994 Hurricane Andrew: $17B.
As I write this (early Saturday), Irene has already hit the Bahamas. AIR’s early estimate is $1.1B there. Eqecat put its estimate at $300M to $600M. Fortunately, according to AIR, the most densely populated islands only got clipped by tropical storm winds.
Artemis, the cat bond guru site, had this to say on Wednesday:
Any landfall made by hurricane Irene on the U.S. east coast could result in billions of dollars of insured losses, potentially enough to increase the upward pressure on re/insurance rates. A worst case scenario of hurricane Irene coming ashore on a major population centre could result in the biggest U.S. insured loss so far this year.
Well that makes sense. This year’s Alabama tornadoes and Joplin tornadoes each posted around $5B in losses.
All of that seems to make a $3B insured loss the lower bound.