Losses of up to US$55 billion if 1938 hurricane hit today

If the Great New England Hurricane of 1938 were to hit today, insured losses would reach between US$40 billion and US$55 billion, RMS reports.
This would include losses to both the private insurance market and those policies covered under the National Flood Insurance Program (NFIP), according to the RMS report, The 1938 Great New England Hurricane.
RMS undertook its research for the report in 2008, as part of its recognition of the 70th anniversary of the 1938 hurricane.
The New England storm began off the coast of Africa on Sept. 4, 1938. It remained a tropical storm for five days, sustaining wind speeds of less than 74 mph as it travelled westward.
The storm, which made landfall in New England on Sept 21, had one of the highest forward speeds ever documented for a tropical cyclone. Its translated velocity was estimated at approximately 70 mph, according to the report.
Windstorms around the eye of the storm measured between 90 mph and 186 mph, the report notes.
Property damage at the time totalled roughly US$400 million, but recent studies re-calculated the loss at approximately US$300 million. In today’s dollars, that translates to between US$4.5 billion and US$6 billion. If the same storm were to hit today, the RMS report notes, and taking into consideration increases in population and average wealth of households in the area, estimated damage losses would be more in the order of between US$37.3 billion and US$39.2 billion.
“If the 1938 Great New England Hurricane occurred in 2008, it would be a major regional catastrophe leading to a post-disaster loss amplification principally related to economic demand surge, raising the costs of insurance claims,” the report reads. “In addition, as a large amount of tree damage is anticipated, some insurance coverage expansion is expected to cover losses due to fallen trees.”
Although in 2008 the coastline of the northeastern United States was spared the ill effects of major hurricane, “this is not like to continue indefinitely in the future,” the report concludes. “A major hurricane will strike New England again; only uncertainty in the size and timing of the event remains.”