Had been dubbed as the “Frankenstorm” since it arrived in U.S. territorial waters, does the exorbitant insurance payouts of Tropical Storm Sandy’s devastation be the nasty October Surprise for all insurance companies concerned?
By: Ringo Bones
As Tropical Storm Sandy, despite being classified as a “mere” Category I Hurricane since it arrived in U.S. territorial waters, it had since been dubbed Frankenstorm by the press and is fast becoming the meteorological phenomena of the decade as it sparked scientific interest as the preexisting weather in the East Coast of the United States conspired to create a thousand-mile-wide “perfect storm” hitherto unseen since meteorological records began. While the “famed” storm is still strengthening, will Tropical Storm Sandy be the October Surprise to the insurance companies concerned currently still ill prepared to cough-up monstrous pay-outs?
“Super-Storm” Sandy’s devastation had indeed been unprecedented so far in the U.S. East Coast. Though tragic deaths in such natural disasters is considered one death too many, Sandy’s death toll had reached 20 in the United States as it claimed 69 lives when it hit the Caribbean last week – with Haiti, Jamaica and Cuba being the hardest hit. Even Cuban president Raul Castro is still visiting the other far-flung areas in Cuba devastated last week by Tropical Storm Sandy. And don't forget the actuarial cost of those hundreds of commercial scheduled flights in the US East Coast that had to be cancelled in the wake of Tropical Storm Sandy. Though from an actuarial perspective, the frequency of occurrence of such once-in-a-lifetime "perfect storms" / "Frankenstorms" are still exceedingly rare.
With insurance payouts via flood insurance and storm damage insurance claims alone projected to reach well over 20 billion US dollars, Tropical Storm Sandy managed to close the New York Stock Exchange for two days now. The last time the NYSE was closed for this length of time was back in 1888. In terms of infrastructure damage, the state of New York could be the hardest hit so far as the New York City’s subway system are now flooded by as much as 4 feet of seawater and most of its power grid had been shut down by Sandy. It even caused a fire in Queens, New York that destroyed 50 homes while neighboring states, like New Jersey, had been brought to a virtual standstill when storm surges flooded main roads making them impassable by conventional road vehicles.