The price tag for Hurricane Sandy for insurers could reach $25 billion, according to a recent report in The Wall Street Journal, citing new estimates by catastrophe modeling firm Risk Management Solutions.
In an online commentary, Willis Group Holdings said the continuing increase in insured-loss estimates should not be a surprise. Dave Finnis, Willis’ national property practice leader, said a number of factors are combining to drive up losses.
According to Finnis, “Cleanup and restoration efforts are underway, but lost sales and high expenses will soon translate into business interruption losses. Business Interruption losses take time to materialize and will continue to mount.”
Also, Finnis said, the density of assets in the New York and New Jersey area hit directly by the storm will be another factor likely to escalate the insured loss total. He also expects that the demand surge on contractors and other service providers and the high cost of these services, especially as the winter months draw near, will likely drive up costs.
For commercial claims, Dave Passman, Willis’ national director of property claims in North America, said Sandy is “bringing a new dimension of losses.”
Beyond the obvious property damage, “we are seeing losses related to business interruption, service interruption and many time-element losses such as losses caused by order of civil authority and losses caused by prevention of ingress and egress,” Passman said.
In addition, “we are dealing with issues of price surge and issues of pollution, contamination and other environmental issues,” said Passman.