Allstate’s Sandy loss estimate points to industry loss below $20B

U.S. insurer Allstate, who have one of the largest market shares across the northeast and mid-Atlantic states which were impacted by super-storm Sandy, has published an estimate for losses suffered by the Allstate group from the hurricane today. Allstate have estimated that Sandy has caused them a gross loss of $1.275 billion, with 66% in New York, 20% in New Jersey and 14% in other states.

Now this is interesting as Allstate is the first of the major U.S. primary insurers to publish a loss estimate for Sandy and as such we can use it to see if it can help point to where the eventual insurance industry loss total may end up.

According to market sources, Allstate command somewhere between 6.5% and 7% of the market in the Sandy exposed states across all lines of insurance business. A gross loss to Allstate of $1.275 billion would therefore point towards an industry loss total of between $18.2 billion and $19.6 billion, approximately. Of course that is assuming that market share is directly proportional to losses, which it likely won’t be, but it does give us a good figure to work with.

That is in line with projects that have been made since Property Claims Services (PCS) released their first industry loss estimate of $11 billion last week. As we discussed yesterday, Credit Suisse highlighted that the largest increase in a PCS industry loss estimate in recent years was 70% and if we apply a similar increase to the initial estimate for Sandy the final estimate would be $18.7 billion. That sits right in the range extrapolated from Allstate’s losses above.

Of course, this is unscientific and Allstate’s loss estimate is likely to creep northwards as everyone else’s are destined to do over the coming weeks.

It has to be noted that Allstate are purely a personal lines insurer, providing homeowners and auto insurance, auto insurance represents 40% of the gross loss estimate. As such they do not provide any flood cover at all. So it is going to be interesting to see at what level an insurer like Chubb with just over 5% market share, who does provide flood cover under commercial policies, announces their Sandy loss estimate at.

Allstate said that they hope to recover as much as $200m from their reinsurance programme, giving them a loss net of reinsurance of $1.075 billion.

We’ll update you as and when we hear of other major insurers, and reinsurers, loss estimates from Sandy.