August 25, 2011
By: Robert M. Runyon and Michael J. Kurtis
This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
After inflicting devastating damage to the Bahamas, Hurricane Irene continues to gain strength as it turns north toward the U.S. mainland. According to the U.S. National Hurricane Center, Irene has the potential to increase to a Category 4 storm before striking the southeastern United States. Current information on Hurricane Irene's path is available from the National Hurricane Center.
Most computer models presently show Irene passing to the east of Florida and impacting North Carolina on Saturday, August 27th. Hurricane warnings have been issued for coastal North Carolina, with towns throughout the Outer Banks under evacuation orders. Atmospheric variables make exact predictions of the storm's track difficult, however Irene is expected to move up the mid-Atlantic Coast into New England, and is likely to substantially impact major population centers of at least 12 states stretching from South Carolina to Maine. Recent shifts in the tracking models have Irene traveling slightly farther to the east than originally predicted, though the hurricane is still forecast to pass close to the coastlines of New Jersey, New York and Massachusetts.
Irene is the ninth named storm, but the first recorded hurricane of the 2011 season. Earlier this month, the National Oceanic and Atmospheric Association (NOAA) revised the severity of the 2011 storm season upward, predicting that there will be seven to ten hurricanes across the Atlantic Basin, three to five of which could be major hurricanes (Category 3 or greater). Although recent years have seen active storm systems in the Caribbean, the last time the United States has been impacted by a major hurricane was Wilma in 2005.
There has been some speculation that another major catastrophic loss event in an already active year of storms could materially affect reinsurance pricing and capacity. Analysts are predicting that Irene could cause billions of dollars in insured losses, potentially making it the long-awaited trigger that leads to a firming of reinsurance rates. In a year that has already seen massive earthquakes in Japan and New Zealand, as well as severe winter weather in the Midwest and devastating tornadoes in Alabama and Missouri in the spring, to name a few, catastrophe-related losses for the first half of 2011 are estimated to already exceed the total losses seen in 2010.
Most analysts have expressed in recent reports that the reinsurance industry has sufficient capacity to respond to the losses that have occurred and to absorb additional losses. The true test may come as Irene kicks off what has been predicted to be an extremely active hurricane season, potentially on par with 2005 - when hurricanes Katrina, Rita and others resulted in losses in excess of $100 billion.
NLdH will continue to monitor the progress of Hurricane Irene and report as events unfold.
For additional information on issues related to Hurricane Irene and other catastrophic property loss events, please contact Robert M. Runyon at 215-358-5181 or via email at rrunyon@nldhlaw.com or Michael Kurtis at 215-358-5139 or mkurtis@nldhlaw.com.
