Hurricane Sandy leaves insurers with $10bn bill

INSURERS yesterday began counting the cost of this week’s US superstorm, amid predictions that it will be even costlier than last year’s Hurricane Irene.

Disaster exposure specialist RMS said the insurance bill will be larger than the $4.5bn (£2.8bn) that the industry paid out after Irene. This follows early estimates from rival firm Eqecat that the bill to insurers will be $5-10bn, with economic losses of around $10-20bn.

Fitch Ratings said it expected the “brunt of losses to be borne by primary writers”, mainly US firms such as State Farm, Allstate, Liberty Mutual Group, and Travelers. This view is shared by Societe Generale, which estimates European reinsurers such as Swiss Re and Munich Re would only be affected if losses “reach or exceed” $10bn.

Marcus Barnard, an analyst at Oriel Securities, said he expects the industry “will easily absorb these losses”. He also believes that Monday’s insurance share sell-off, which caused many Lloyd’s of London firms to drop by two per cent, “looked slightly overdone”.

London firms such as Amlin and Catlin closed up yesterday as investors realised that the storm had not been as bad as feared.