Insurers Will Bounce Back from Sandy

Insurers won't endure too much pain from Sandy, and this may even present an opportunity for firms to raise prices

Drew Woodbury 31 October, 2012 | 3:13PM
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The worst of the Sandy storm seems to have passed, and now it appears that the impact on insurance companies will be less than feared.

Initial tallies from risk modelers such as Eqecat place the estimate for insured losses due to Sandy at somewhere between $5 billion and $10 billion. This figure is less than half of the estimate for total losses, which currently stands at around $20 billion, since most of the losses will be caused by flooding. Flood insurance is not covered under standard private insurance contracts but rather is administered by the US government under the National Flood Insurance Program.

These estimates are still preliminary and will undoubtedly be revised as the situation develops and claims begin to flow in, but based on current information, we do not expect to make changes to the fair value estimates for any of the insurers we cover in light of the storm.

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Drew Woodbury  Drew Woodbury is an equity analyst covering insurance companies.