Insurers and reinsurers won’t know the final bill for Hurricane Sandy until after business returns to normal in New York and flooding in the path of the biggest Atlantic storm in history is fully assessed.And while there may be homeowners disputes about what damage was caused by wind and what by flooding, many in the insurance industry say these disputes will pale in comparison to the issues of insuring New York City’s massive infrastructure and business interruption losses.One reason Sandy will probably have a greater effect on the economy than Irene did last year: the storm hit on a Monday, idling a larger number of workers, according to Gregory Daco, a US economist at HIS Global Insight.New York City's subway system will resume limited operations today, four days after it was shut down ahead of the arrival of Sandy.“Usually disruptions to business activity are smaller than the infrastructure damages, which was the case with Irene last year,” Mr Daco said. “This hit us at the beginning of the week and hence the disruptions are likely to linger through the rest of the week.”Such disruptions may help push total economic losses to $30 billion to $50 billion, according to estimates by Mr Dac and his colleague Nigel Gault at HIS.“There are still a number of wild cards about insurers’ costs from Sandy,” said Jochen Koerner, a member of the executive board at insurance broker Marsh & McLennan Cos. “It remains to be seen how long it takes for New York’s infrastructure to be up and running again and to what extent inland flooding is adding to the disaster’s bill.”Insurers and reinsurers may face insured losses of about $7 billion to $8 billion, led by costs in New Jersey, Pennsylvania, and New York, according to Kinetic Analysis Corp., a hazard-research company in Silver Spring, Maryland. That compares to an estimate of $7 billion to $15 billion of insured losses from US onshore properties that AIR Worldwide, a Boston-based risk-modeller, published yesterday.Following the release of catastrophe modeller, Eqecat’s initial estimates of insured losses being between $5 billion and $10 billion on Tuesday, Willis Group Solutions Practice leader, Tom Teixeira said the loss figures could be “a lot bigger”.“These numbers, unfortunately, are not surprising. In fact, I expect the figure to be a lot bigger once all of the losses have been analysed, including the business interruption losses.” He said in a blog post that this is because many major companies have failed to take on-board the lessons learned from last year’s catastrophes.“I have no doubt we will see large business interruption losses — not just as a result of property damage at supplier sites, but as a result of power failure to suppliers leading to the stoppage or partial stoppage of production,” Mr Teixeira said.Fitch Ratings also said in a report yesterday that there is the potential for “significant” business interruption (BI) and contingent business interruption (CBI) losses related to the flooding and power outages. The insurance industry suffered extensive BI and CBI losses last year in both the Japanese earthquake and tsunami and Thailand floods, as they accounted for a considerable portion of commercial and industrial losses. Fitch also notes that these events demonstrated the extent to which BI and CVI losses have been underestimated in the modelling and underwriting of risks.Business-interruption coverage reimburses companies forced to suspend operations due to property damage or if the business is located in an area that’s inaccessible due to “civil authority” ordering people to stay out of an area.Contingent business interruption policies offer additional protection that covers loss of income when a company’s operations are disrupted when a supplier’s operations are hobbled. However, the majority of companies do not purchase CBI policies.Should claims reach $15 billion, Sandy would become the third costliest US hurricane, after Katrina, which caused more than $40 billion in losses in 2005, and 1992’s Hurricane Andrew. Sandy’s diameter was nearly twice the size of other massive hurricanes, including Katrina, Tim Doggett, Boston-based AIR Worldwide’s principal scientist, said yesterday.“The hurricane will clearly be visible in US primary insurers’ combined ratios for the fourth quarter of 2012 and should also impact reinsurance profitability,” Christian Muschick, an analyst at Silvia Quandt Research in Frankfurt, wrote in a note to clients yesterday. Munich Re and Swiss Re, the world’s second-biggest reinsurer, may see “low triple-digit million” losses in euros and dollars respectively, he said.However, the expected bill from Sandy for reinsurers isn’t enough to turn the “very benign” natural catastrophe year 2012 into an average year and “it clearly is a too small event to impact renewal negotiations tangibly,” Silvia Quandt’s Muschick wrote.Sandy could cut US economic growth as it keeps millions of employees away from work and shuts businesses from restaurants to refineries in one of the nation’s most populated and productive regions.The storm may cut output in the world’s largest economy by $25 billion in the fourth quarter according to Gregory Daco, a US economist at HIS Global Insight.Sandy lashed an area with 60 million people — about as many as Italy — that accounts for about a quarter of US economy, estimates Eric Lascelles, a Toronto-based chief economist at RBC Global Asset Management.That may reduce gross domestic product by as much as 0.2 percentage points this quarter, said Mark Vitner, a senior economist at Wells Fargo & Co.“If people aren’t going to Broadway shows and restaurants and hotels, all those businesses that rely on people spending money are going to take a hit for sure,” said Stephen Bronars, a senior economist at Welch Consulting in Washington and adjunct professor at Georgetown University. “People are still going to go out and buy a car or other durable goods they need, they’re just not going to do it this week. There will be winners and losers.”