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Early U.S. State Government Figures Estimate Economic Loss from Sandy at $30 Billion

Source: Aon

Posted on 09 Nov 2012 by Neilson

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AonImpact Forecasting, the catastrophe model development center of excellence at Aon Benfield, today releases the latest edition of its monthly Global Catastrophe Recap report, which reviews the natural disaster perils that occurred worldwide during October 2012. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc.

The report reveals that Hurricane Sandy will become one of the costliest natural disasters in U.S. history after causing extensive damage with 113 dead. In addition, four other tropical cyclones also caused impacts around the globe during the month of October.

Sandy made landfall in the U.S. state of New Jersey as a post-tropical cyclone, causing exceptional damage in the state and also in New York City. Heavy rainfall, storm surge, high winds, inland flooding, fires and heavy snow were all recorded in association with Sandy, as up to 60 million people in 24 states were affected. Select effects included more than 8.5 million power outages, 21,000 flight cancellations, extensive infrastructure damage, a two-day shutdown of the New York Stock Exchange and NASDAQ, and nuclear reactor shutdowns.

Preliminary state-released government estimates indicate that total economic losses will approach or exceed USD30 billion. Although publicly-released industry estimates suggest that total insured losses are likely to approach or exceed USD10 billion, Impact Forecasting has not externally released its own modeled estimate.

Prior to landfall in the U.S., Sandy tracked through the Caribbean and the Bahamas, where the hurricane made landfalls in Jamaica and Cuba. Non-U.S. impacts from Sandy included: Jamaica (1 dead, economic losses JMD5 billion (USD55 million)); Cuba (11 dead, 218,000 homes and other buildings damaged or destroyed, economic losses CUP53 billion (USD2 billion)), Haiti (54 dead, up to 75,000 homes damaged, economic losses HTG3.1 billion (USD74 million)),  Dominican Republic (2 dead, 3,500 homes destroyed), Puerto Rico (1 dead), the Bahamas (2 dead, economic loss USD300 million, insured loss up to USD100 million), Canada (2 dead).

Steve Jakubowski, President of Impact Forecasting, said: "The devastating impact of Sandy has been closely observed by the insurance industry, which will play an important role in the recovery process. Sandy was certainly a unique meteorological event, most notably with its expansive tropical storm-force wind field in excess of 1,000 miles.  Storm surge and coastal flooding were the major sources of damage from this event, particularly in the hardest-hit areas of New Jersey and New York City. Impact Forecasting is unique amongst the major modeling firms in that we have both a storm surge model and a riverine model to help insurers estimate the financial losses for events such as Sandy."

In other tropical cyclone news, Typhoon Son-tinh made landfall in Vietnam after initially crossing the Philippines and later entering China. At least 36 people were killed and nearly 59,000 homes were damaged or destroyed. Total economic losses included PHP155 million (USD4 million) in the Philippines, VND2.69 trillion (USD129 million) in Vietnam and CNY1.13 billion (USD197 million) in China.

Tropical Storm Nilam made landfall in southern India after first brushing by Sri Lanka. At least 59 people were killed. Economic losses were listed at INR2.0 billion (USD37 million).

Hurricane Paul made landfall as a rapidly weakening storm in Mexico, causing MXN200 million (USD15.5 million) in infrastructure damage. Hurricane Rafael caused minimal damage in the Atlantic.

Also in October, major flooding continued across much of Nigeria as the death toll rose to at least 363. More than 2.1 million residents were displaced from their homes due to flood damage and the government sought NGN100 billion (USD636 million) to cover the extensive damage. Flooding events were also recorded in Colombia, Argentina, Italy, Benin, Indonesia, China, and Sweden.

Thunderstorms spawned a severe hailstorm and flooding rains throughout parts of South Africa, including in the city of Johannesburg. Golf ball-sized hail led to as many as 25,000 claims being filed with payouts expected to reach ZAR1 billion (USD114 million). Thirteen people were killed.

A magnitude-7.7 earthquake struck a sparsely populated area of western Canada, though damage was minimal. No injuries or fatalities were reported.



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