Of course, Florida factors heavily in the above figure, with a 51% probability of a hurricane making landfall and a 21% probability of a major hurricane hitting during 2013.
Breaking its probabilities down by state, the Tropical Meteorology Project said that the probability of a hurricane making landfall in New York during 2013 was 8%, with a 3% probability that a major hurricane would hit. For New Jersey, the probability of a hurricane hitting land is 1%, with a probability of less than 1% for a major hurricane. For Connecticut, the probability of a hurricane strike is 7%, with a 2% probability for a major hurricane hitting land.
Big Insurers Have Strong Reserves
It's too early to calculate the total amount of insured losses for U.S. property and casualty (P&C) insurance carriers this year, as claims for damage caused by Sandy are still being processed.
Insurance Information Institute
president and economist Robert Hartwig says there's "an enormous range" of estimates ranging from $10 billion to $25 billion. "when you put them all together you come up with a figure of $18.8 billion, as sort of a midpoint at all the ranges, which would put Sandy in the number 3 spot for insured losses from hurricanes," behind Katrina and Andrew, which devastated southern Florida in August 1992.
Hartwig says that "the industry entered the 2012 hurricane season very strong financially and it finished the season very strong financially despite Hurricane Sandy and despite the fact that 2011 was the fifth most expensive year for insured catastrophic losses in the U.S., and the most expensive globally."
"Sandy is generally categorized as an earnings event and not a capital event," he says. "It does reduce fourth-quarter earnings, but the industry is no longer impaired by a lack of capital going forward."
When asked whether or not the large P&C carriers have sufficient reserves to survive a major hurricane strike in the Northeast, Hartwig doesn't mince words: "Absolutely. There are many scenarios for events larger than Sandy, in the $30 billion range, for a Category 3 or Category 4 storm. It is far more likely that something like that would hit the Long Island area," than it would be for a major hurricane to hit other areas, he says.
"There are models for a repeat of the 'Long Island Express' storm of 1938, also known as the 'Great New England Hurricane.' Such a storm could cause over $30 billion in loses according to various models, but this is exactly the type of event for which the industry plans.