Hurricane Sandy has damaged homes, ruined offices, and flooded the New York Subway system, damage that could cost insurance companies, businesses, individuals, and city municipalities upwards of $20 billion.
Insurance losses are already being estimated in the range of $7 billion to $8 billion as Hurricane Sandy spread over a 900 mile swatch of the Eastern seaboard.
When Hurricane Sandy finally reached New York, it brought with it a record storm surge of 13.88 feet as it smashed into Manhattan’s Battery park.
The storm is so bad that it caused US stock trading to close for weather related issues for the first back-to-back shutdown since 1888.
In comparing the storm’s damage to Hurricane Katrina, experts note that 2.1 million homes and businesses had power loss before Sandy made landfall with 10 million people in the region expected to lose power. Some areas will be without power for upwards of 10 days. According to Bloomberg:
“Heavy losses to public infrastructure would in some ways mirror the effects of Hurricane Katrina, which flooded New Orleans in 2005, Watson said. Katrina was the nation’s most costly natural disaster with an estimated $41.1 billion in insuredproperty losses, according to the Insurance Information Institute.”
Experts note that storm surge in major metropolitan areas is largely reflective of Katrina. It is that storm surge and the intensity of Hurricane Sandy that led Eqecat Inc. to issue a catastrophic risk model that put loss estimates at $20 billion in economic damage.
According to Eqecat vice president Tom Larsen:
“Sandy is a large storm, impacting 20 percent of the US population.”
The loss to the economy is not only focused on actual damages but also a lack of consumer buying. Should storms continue throughout New England and other areas in the coming days, consumers will spend less money, take time off work, and otherwise disconnect from the US economy. Experts believe that a loss of product buying and services could subtract 0.1 to 0.2 percentage points from the gross domestic product for Q4 2012.
With Hurricane Sandy hitting right before the start of the most consumer friendly month of the year, some analysts believe clothing and product shopping for the holidays could be down by up to 3 percent. That prediction is based off a 40 percent expected decrease in store traffic throughout affected Hurricane Sandy areas.