Hurricane Irene weakened sufficiently both prior to landfall in North Carolina and as she moved up the U.S. coastline to significantly reduce the potential for insured losses from the storm. Early estimates from risk modelling firms EQECAT and Kinetic Analysis both suggest that insured losses of up to a maximum of $3 billion will be seen.
EQECAT clarified that figure by adding that flooding is the major threat to insured losses now as there have been significant inundations across the U.S. northeast. Much of the flooding losses will come down to the National Flood Insurance Programme (NFIP) which is sure to raise the debate around that facilities future again.
Both EQECAT and Kinetic Analysis have mentioned in press reports estimates of economic losses of up to $7 billion from hurricane Irene. It seems likely that early estimates will be slightly under the eventual total due to the widespread area affected by hurricane Irene but it is unlikely that insured losses, including losses in the Caribbean, will be over $4 billion according to contacts we’ve spoken with this morning.
Irene could have been the event that the reinsurance industry had always been wary of, a major hurricane striking a metropolitan centre such as New York, but in the end she has turned into a much tamer event and certainly not sufficiently damaging to impact reinsurance rates. It’s also extremely unlikely that any catastrophe bonds would have been severely impacted by hurricane Irene as both her windspeeds and the resulting losses don’t appear to have been severe enough to trigger any bonds that we’ve analysed.
Meanwhile tropical storm Jose formed in the Atlantic and passed close to Bermuda as the storm headed north. No significant damage is expected from this storm. Tropical depression 12 however has formed in the far eastern Atlantic and is forecast to become a hurricane as the storm heads east. It could take aim at the U.S. coastline so this is certainly a storm worth keeping an eye on with our 2011 Atlantic Hurricane Season page. There are also other areas of investigation which have the potential to develop into tropical systems so the Atlantic is looking pretty active right now.
We will update you when better insured loss estimates from hurricane Irene are available and as any new storms develop.