While it’s still unclear if Hurricane Irene will make landfall or stay offshore when it reaches the U.S. Eastern Seaboard this weekend, the massive size of the storm can create significant storm surge and likely impact the commercial insurance market -- producing significant personal and commercial property claims, Willis, the global broker, said on Thursday.
Commenting on the storm, Dave Finnis, Property Practice leader for Willis North America said: “The latest path has Irene skirting the Eastern Seaboard, and the Outer Banks of North Carolina are likely to take the brunt of it because it will still be a CAT 3 when it affects that area. The Mid-Atlantic States will also feel the storm as it goes by as a CAT 2.
The storm is then pointed at the New York Metro area, but hopefully it will weaken to a CAT 1 with winds right around 75 MPH.
At that point it should be a storm surge and rain event because we would hope that coastal areas are able to withstand minimal hurricane force winds.”
“The other incredible feature of this storm is its width, which is roughly 400 miles wide, so even if its course changes by 50-100 miles the Eastern Seaboard should still feel the impact as described above,” Finnis said.
Another potential impact is Sunday’s new moon with expected high tides in the New York Metro area. The combination of storm surge plus the expected high tides could spell some very difficult conditions, Finnis said.
The insurance industry has suffered significant losses from catastrophes in New Zealand, the earthquake in Japan, and other U.S. storms, but capital is abundant, and the market has not made any broad adjustments thus far. Willis believes the industry would need to experience a loss event of $15 - $20 billion to materially change the market for commercial customers.