Billions of dollars in losses feared from Hurricane Irene

[Pastor Dale Morgan]

Perilous Times and Climate Change

Billions of dollars in losses feared from Hurricane  Irene

by Staff Writers
New York (AFP) Aug 26, 2011

Hurricane Irene is threatening to deliver another blow to the already shaky US economy, with one forecasting firm predicting Friday that it could cause up to $10 billion in damages.

Irene is slated to smash into North Carolina on Saturday and then travel northward along the heavily populated US east coast to score a direct hit on New York City on Sunday, according to the Miami-based National Hurricane Center.

Kinetic Analysis Corp., a company that does computer modeling of predicted storm damage, predicted that Irene would cause $5-10 billion in damages, based on the latest available weather data.

Losses could include damage to flooded buildings, business interruptions and cleanup costs picked by the government, said Chuck Watson, the company's director of research and development.

The toll could vary strongly depending on how close the storm comes to New York City, the US financial capital and largest city with nearly 19 million people living in its metropolitan area.

"Literally a 20-mile (32-kilometer) difference in where the core of the storm goes could double the damages," he told AFP.

"If it goes right over New York City, even a weak hurricane could run up a billion dollars' worth of damage without any trouble."

Officials from North Carolina to New York have declared states of emergency and tens of thousands of residents have been ordered to higher ground as Irene races toward the US mainland.

Big-box retailers such as Wal-Mart said they had stocked up on items that people needed ahead of a natural disaster, such as bottled water and canned foods.

"Water is our number-one selling item," a Wal-Mart spokeswoman said.

The insurance industry could be strained by Irene, particularly since it has already been forced to pay out billions for worse-than-usual weather this year, analysts said.

"Budgets for catastrophe-related losses have already been exhausted," said AM Best, an agency which rates the credit of insurance companies.

"Hurricane Irene as well as the potential for an ongoing active hurricane season will further test the US (property and casualty) and global reinsurance markets."

Insured losses caused by severe storms in the United States totalled more than $16 billion in the first half of 2011, according to data from German reinsurance giant Munich Re.

In the last 10 years, the average figure was only $6.4 billion, but losses jumped this year because of a streak of deadly tornados.

Hurricanes rarely reach the northeastern United States, but a handful of precedents suggest that the economic impact of Irene could be serious.

The 1938 New England hurricane, which came within 40 miles (64 kilometers) of Manhattan, caused the equivalent of $45 billion in losses as measured in today's dollars, statistician Nate Silver wrote in The New York Times.

The costliest hurricane in US history was Katrina, which flooded New Orleans in 2005 and is estimated to have caused more than $100 billion in losses.