In New York alone nearly 2 million homes and businesses are still without power and the clean-up is expected to cost several billion. New York and New Jersey State have both asked the U.S federal government to pay all the costs of cleaning up and repairing damage. Typically the federal share is about 75% of the costs.
Hiscox today informed analysts that the insurance industry could suffer losses of up to $20 billion from Sandy. This is in line with estimates we have heard from other Lloyd's players. We understand that primary insurers will be carrying the majority of the exposure and the top three commercial insurers in the affected states are Liberty Mutual, Travelers and Chubb, while the top auto insurers are Berkshire Hathaway’s Geico, Allstate and State Farm.
The New Jersey department of banking and insurance commissioner has stated hurricane deductibles will not be applicable for Sandy-related claims in New Jersey. The lack of hurricane deductibles means insurers may have to pay out greater amounts.
As far as the London market is concerned, we would expect some exposure under local binding authorities, some claims on the direct and facultative account such as the damage to the casinos in Atlantic City and ultimately some claims on the reinsurance programmes of both local insurers and possibly the lower layers of nationwide insurers. We will keep you posted as the news come in.
Source : Alpha Insurance Analysts