Loss estimates from Hurricane Irene continued to fall and ratings agencies said insurers would have no problem with claims, helping boost insurance industry shares Wednesday.
The relatively limited losses Irene appears to have caused to the private insurance industry means much of the burden is likely to fall on the federal government, since it writes almost all of the nation's flood insurance and flooding is Irene's overwhelming consequence.
Catastrophe modeling agency Eqecat said early Wednesday that it estimates U.S. insured losses from Irene of $1.5 billion to $2.8 billion. That is far less than the estimate from competitor AIR Worldwide, which suggested losses would range from $3 billion to $6 billion.
While it is not unusual for the two to differ in their estimates, the trend is clearly toward Irene costing the insurance industry much less than had been feared. In the days before Irene made landfall, many were predicting a $10 billion event or worse.
The S&P insurance index rose 0.9 percent, outpacing the broader S&P 500 index , and most property insurers were at least 1 percent higher.
NO RATINGS IMPACT
Given the relatively limited losses, ratings agency A.M. Best said the industry should have no problem absorbing the costs. While analysts have said losses could wipe out third-quarter earnings, it appears that will be the extent of the damage, leaving insurers' balance sheets intact.
"Despite the considerable catastrophe losses recorded through the first half of 2011, the overall (property insurance) industry remains adequately capitalized," A.M. Best said in a report. "Accordingly, Hurricane Irene is not a solvency event from an industrywide perspective."
