Fitch rating estimates the losses from Hurricane Sandy to be similar to Hurricane Irene, which struck the East Coast in 2011 and generated insured losses of between $4 billion-$5 billion.
Loss estimates for Sandy will be influenced considerably by the landfall location and actual storm path.
“We expect the brunt of losses to be borne by primary writers, including State Farm, Allstate, Liberty Mutual Group, and Travelers, based on market share positions in the Mid-Atlantic and New England regions,” said the firm.
“Market share was calculated based on direct written premiums and gives no consideration for reinsurance. The likelihood of losses being allocated to the reinsurance industry increases if losses come in at the higher end of the range.”
“While Sandy landed as a category one storm, the storm hit in a densely populated area with high value of developed property and the footprint is over wide area that losses could unfold from Maryland to New England,” commented Jim Auden of Fitch.
“The nature of the storm will lead to wind related losses, but we think compared to hurricane Irene in 2011, this storm could have greater losses from storm surge and business interruption. As event unfolds may have significant inland flooding in spots.
“For captives, we do not rate many so have not closely followed impact of previous catastrophes on them. Many captives are liability focused, so do not have exposure to property losses from this event. If a captive does write commercial property, important to note that a captive is a mainly a self insurance mechanism for its owner, so risk borne by captive in reality remains within the organisation.
"However, a captive writing commercial property typically would by reinsurance to protect against large losses. So losses for a captive hit by Sandy would be affected by the insured retention and the limit of reinsurance purchased.”
