MIAMI (CBS4) – When Hurricane Irene stormed up the East Coast late last week into the weekend, the insurance industry feared losses could potentially approach $100 billion.
New York alone has an estimated $2.4 trillion in waterfront property, with hundreds of billions more spread between Georgia and New England. But because Hurricane Irene hit some of the most populated areas of the eastern seaboard with tropical strength wind, most of the losses will be from flooding and water damage which is not covered by most residential insurance policies. Flood damage is covered under the National Flood Insurance Program.
Insured losses for the industry are expected to approach about $3 billion with overall losses totaling about $7 billion, according to Kinetic Analysis Corp, an insurance industry consulting firm.
So what will “Hurricane Irene” mean for everyone’s insurance bills, especially in South Florida?
“It will mean possibly higher rates from increased re-Insurance costs for insurance companies,” warned Dulce Suarez-Resnick of NCF Insurance Associates of Miami.
Insurance companies have to buy re-Insurance to cover their losses. The re-insurance industry can raise rates whenever the like because they are not regulated by state insurance regulators.
Even South Florida’s “insurer of last resort”, Citizen’s Property Insurance, has to buy re-insurance and has no place else to pass along any extra costs like higher re-insurance bills.
“We’ll see in January, when all their policies start coming up for renewal again, how much the increases could be,” said Suarez-Resnick.
What about Hurricane Irene’s estimated $7 billion loss? Officials at the Property Casualty Association said they’ll have no trouble paying out their claims.
So far, 2011 has been a record-breaker for the insurance industry which has already had an estimated $18 billion in losses between earthquakes, blizzards, and tornadoes.