New York faces significant potential losses from rare but severe natural disasters, with a future 1-in-100-year hurricane possibly costing insurers more than $100 billion, according to a May 11 report by risk modeler Karen Clark & Co (KCC).
The findings highlight that while New York is not as frequently impacted by natural catastrophes as Florida or California, the state’s exposure remains high due to concentrated property values and demographic shifts. KCC noted that “beyond hurricanes, New York also experiences substantial impacts from both severe convective storms and winter storms, which together generate almost $1 billion in average annual property losses in the state.”
According to KCC, nearly $9 trillion in potential insured losses exist in New York, with $6 trillion along the coast. Factors such as rising construction costs have led premiums for an average single-family home to double over the past decade. Past events like Hurricane Sandy generated almost $10 billion in insured losses for New York; if repeated today, those figures would exceed $13 billion.
The American Property Casualty Insurance Association estimated that a major hurricane could “wipe out 69 years of homeowners’ insurance return on net worth.” The association said only Miami ranks higher than New York in vulnerability to such large-scale hurricane losses.
Patrick Schmid, Chief Insurance Officer at Triple-I, said at a recent state senate hearing that post-Sandy market adjustments helped keep homeowners’ insurance premiums “relatively average and reasonable as a percentage of household income,” countering concerns about an affordability crisis. “In other words, the ‘profitable decade’ reflects a market that learned from a major catastrophic event and adjusted accordingly,” Schmid said. “This is how insurance markets should function.”
KCC’s report also emphasized the importance of risk-based pricing: “profit is ‘the mechanism through which insurers compensate capital providers for risk.’ Rather than intervene in insurance markets, policymakers should aim to provide ‘a regulatory environment that allows insurers flexibility to set adequate rates.'”
Unlike its homeowners’ market, auto expenditures remain among the highest nationally due to repair costs and accident frequency. Proposals allowing regulators greater control over premium rate changes could further affect insurer participation.
The Insurance Information Institute supports stakeholders including consumers, media and policymakers by providing resources in English and Spanish; it represents more than 50 member companies—including regional, national and global carriers—and aims to provide data-driven insights on risk and insurance according to the official website.
