Insurers Might Have Dodged Bullet; Damage Could Be Less Than Feared
For all its fury, Irene might have given something of a break to the property- insurance industry, which has paid out billions of dollars in natural-disaster claims in recent months.

The massive storm downed trees and power lines, ripped off roof shingles and dislodged siding from homes. But wind-speed monitors in the storm's path have generally shown that ground-level winds were significantly slower than what were reported by the hurricane-hunter aircraft tracking Irene's progress as it moved north, according to disaster experts who monitored the storm.

The worst of the damage from North Carolina to New York appeared to be the result of flooding, which isn't covered under standard homeowners' policies.

The storm carved a path through some of the most densely packed parts of the country. The New York coast's total insured property value of $2.38 trillion sits just behind that of Florida. Massachusetts has $772.8 billion in total insured coastal property, ranking it fourth nationally, after Texas.

Rod Fox, chief executive of reinsurance broker TigerRisk, said his back-of- the-envelope estimate was that Irene likely caused $3 billion to $5 billion in insured losses. At the high end of that range, Irene would be the tenth most expensive hurricane in U.S. history, behind 2004's Hurricane Frances.

The major insurers had stationed rapid-response teams along the Eastern Seaboard before Irene struck, and began deploying claims specialists into hard- hit communities as the storm passed by. They didn't have immediate estimates of costs, though the largest home insurer in the country, State Farm Mutual Automobile Insurance Co., said it had received more than 3,500 home and auto insurance claims from North Carolina to New York by Sunday afternoon.

Al Tobin of Aon Corp.'s (AON) national property practice said the storm, coming after earthquakes in Japan and New Zealand and record tornadoes in the U.S., could also provide a reason for insurers to raise their rates.

The cost to home insurers like Allstate Corp. (ALL) and Travelers Cos. (TRV) may be held down in part because of steps many private-sector insurers have taken over the past decade to make their home-insurance operations more profitable. Insurers have scaled back sales of policies in hurricane-prone areas and required consumers to pay steeper deductibles in some instances. With no hurricane hitting the East Coast since Wilma in 2005, Irene is the first major test of those measures for many insurers.

Disaster-modeling firm Eqecat Inc. estimated the hurricane caused between $200 million and $400 million in insured losses in North and South Carolina.

The federal flood program, meanwhile, is expected to cut tens of thousands of checks. From North Carolina to Maine, there are about 900,000 flood-insurance policies in force. New Jersey and New York rank among the top 10 U.S. states in number of flood policies in force, at 222,890 and 162,583 polices, respectively, according to the flood program's website.