Billion$ down drain
By CHUCK BENNETT
Last Updated: 3:46 AM, October 31, 2012
Posted: 12:46 AM, October 31, 2012
Reuters RUINED: Flood wreckage awaits costly repairs in Brooklyn yesterday.
It will take deep pockets to pay off this Sandy-soaked bill.
Economic damage from superstorm Sandy could cost the region a staggering $10 billion to $20 billion, according to initial estimates.
“The storm sort of played out the way we expected it to,” said Bill Keogh, president of EQECAT, a risk-management modeling firm that studies natural disasters for the insurance industry.
“We had the record-setting storm surges and a lot of damage from the storm surges,” he said.
Keogh put the $20 billion estimate on the “high end,” but noted that assessments have barely begun. About $5 billion to $10 billion worth of destruction caused by Sandy is insured, according to EQECAT.
Another forecasting firm, IHS Global Insight, estimated that Sandy will end up causing about $20billion in property damage alone and another $10 billion to $30 billion more in lost business.
That would make the storm one of the costliest US disasters on record.
“The path of destruction she left in her will be felt for some time,” warned Mayor Bloomberg yesterday. “It was a devastating storm, maybe the worst we ever experienced.”
Hurricane Katrina, by contrast, wreaked $45 billion worth of damage and the 9/11 attacks caused $23 billion. Insured losses from Hurricane Irene last year cost about $500 million.
That’s not to downplay the awful toll Sandy took.
On top of any physical damage done to their properties, businesses will also likely file claims worth millions of dollars for business interruptions.
Meanwhile, the MTA, which is largely self-insured, hasn’t even calculated the cost to revive its drowned subway system.
But, like city and state agencies, it can appeal to the Federal Emergency Management Agency for aid. FEMA will also help pay for repairs for roads, bridges, water facilities, public buildings and utilities.
Municipalities like New York also self-insure as well as take out policies with major underwriters for disasters, although officials yesterday said it was too soon to discuss what possible claims they could file.
Severely displaced or affected people may be eligible for $31,000 in personal assistance from FEMA — money that could be used to pay rent as well as repairs.
Although homeowner-insurance policies generally do not cover flood damage, insurers will still be on the hook for billions in other damages.
“We expect the brunt of losses to be borne by primary writers, including State Farm, Allstate, Liberty Mutual Group and Travelers,” said James Auden, an insurance analyst for Fitch Ratings.
He expected a slew of business claims from companies downtown from hotels to firms unable to perform a day’s work when their employees can’t come in and there’s no power in the office.
Still, in the wake of Sandy, many insurance-industry professionals expect a wave of phone calls from homeowners and renters asking about flood insurance.
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