Natural Disasters of the Eastern Seaboard
When we hear the words “hurricane” and “tornado,” Florida and its surrounding states come to mind. We’ve seen homes demolished, streets flooded, and billions of dollars being given away to Mother Nature.
Because of their geographic location, the Southeast has constantly fallen victim to natural disasters such as hurricanes, tornadoes, flooding, lightning and tropical storms. Virtually every square mile can easily be swept in minutes.
But the Northeast is hardly better off. As we recall, Superstorm Sandy flooded the streets of Manhattan and left nearly 6 million people without power. New York City and the coastal cities of New Jersey have spent billions of dollars recovering from Hurricane Sandy’s devastation.
According to NAPCO Property Catastrophe Insurance Insight’s State of the Market, Hurricane Sandy accounted for $25 billion in insured losses and 2011’s Hurricane Irene accounted for $4.3 billion. Although this hardly affects the insurance market, insurers are reevaluating the Northeast’s catastrophe exposures. In the near future, insurers will be reviewing and modifying catastrophe models, risk assessments and pricing. And they do expect it to be similar to the current practice in the Southeast Region.
In the past couple decades, more hurricanes and tropical storms have swept through the Northeast Region. And as a result, losses are accruing.
What we are currently seeing:
Increase windstorm deductibles ($10,000-$100,000)
Insurance market is starting to stabilize (pricing is not increasing)
What we will be seeing in the future:
Windstorm deductibles in the Northeast’s coastal cities (1%-5% of a loss’s asset value)
Catastrophe load for accounts in the Northeast
Redefining the term “flood” (including storm surge)
Insurers may carry more flood coverage
Privatization of the federal flood program