While 2012 has been a much better year for property and casualty insurers than 2011, Hurricane Sandy could be a game changer with its surprising timing, direction and possibly its duration.Insurers, reinsurers and cat bond investors are no doubt keeping a close watch on the storm’s developments.The storm, which killed as many as 65 people in the Caribbean on its path north, may be capable of inflicting as much as $18 billion in damage when it barrels into New Jersey tomorrow and could knock out power to millions for a week or more, according to forecasters and risk experts.Though insured catastrophe losses are down dramatically from last year when US insurers saw numerous loss events cause approximately $110 billion of losses, Robert Hartwig, president and economist of the Insurance Information Institute said that could soon change, “Hurricane or Tropical Storm Sandy could alter that, but it’s too soon to tell,” he told financial news site The Street.Pointing out how unusual it would be for the Northeast and the New York City area if Hurricane Sandy hits, Mr Hartwig said, “it’s almost surreal to look at the track of a hurricane at the very end of October slamming into the Northeast — the very same area, on almost the same day, got a blizzard last year, on October 29 and 30, with widespread power outages, causing hundreds of millions of dollars in damage. So we have freakish weather two years in a row just in time for Halloween.”Sandy sent insurance and reinsurance stocks lower Friday.The biggest losers were Plat The biggest losers were Platinum Re which closed down 2.50 percent, Flagstone Re down 3.26 percent, and Validus down 3.51 percent.The S&P 500 Property & Casualty Insurance Index slipped 0.7 percent. The eight-member gauge has declined for six straight days, its longest losing streak since May.While no one can predict what Sandy will do or what effect the storm will have on insurers, all it takes is one big storm to change the story for P&C insurers’ underwriting profit or loss for the year.Validus Holdings CEO, Ed Noonan told The Royal Gazette that as of Friday, the company believed any coastal landfall is likely to be a tropical storm of mild category one hurricane.Though, Mr Noonan said that there are a few factors that could make it a more serious event, adding more precipitation to the scenario: warmer ocean temperatures off the eastern seaboard, tonight is a full moon with astrological tides at their high level for the month and the storm interacting with a Canadian low pressure system.He said it’s believed most of the damage will likely be from wind, flooding and loss of electricity, but, as of Friday, it’s unlikely to be a large economic event.Had Sandy hit in 2011, it may have been more of a problem for the insurance industry, which dealt with record-breaking losses around the world last year, mostly from US tornadoes and Asia-Pacific earthquakes. But in 2012, most insurers’ disaster losses are down substantially, leaving them with more capacity to absorb the billions of dollars in costs some expect from Hurricane Sandy.“In terms of losses, I certainly don’t think it’s going to be the largest loss of the last 100 years,” Tom Larsen, senior vice president of Eqecat, said in an interview with Reuters late Friday. “It’s not an end-of-days scenario.”The brunt of the storm’s financial impact may end up falling on the National Flood Insurance Program, which is responsible for almost all US flood coverage.A unit of the Federal Emergency Management Agency, the NFIP paid out $1.28 billion in losses last year from Irene, making it the fourth-costliest flood event of the last generation.Catastrophe modelling firm AIR Worldwide said Friday that Sandy is a very large storm that may potentially inflict hurricane force winds on the Mid-Atlantic or Northeastern states, possibly leading to serious coastal erosion and flooding.“As Sandy moves along the east coast of the United States, it is expected to cause high winds and heavy rains in coastal regions stretching from Florida to North Carolina,” said Dr. Tim Doggett, principal scientist at AIR Worldwide.Many are drawing comparisons between this storm and the “Perfect Storm” of 1991, when Hurricane Grace was absorbed by a nor’easter and then wreaked havoc across the eastern seaboard.The Perfect Storm caused about $200 million in damage and killed 13 people.The warm, moist, tropical air from Hurricane Sandy could sit over the New York and New England areas for a number of days — bringing the risk of snow, heavy rain and damaging winds.Storm surge and coastal or inland flooding are big causes for concern, forecasters said.“It’s going to be a long-lasting event, two to three days of impacts for a lot of people,” Mr Franklin said.Some say insured losses from a storm like this could exceed that of Hurricane Irene which caused $4.3 billion in insured losses — making it one of the ten costliest hurricanes according to the Insurance Information Institute.The 2012 Atlantic hurricane season has been a very active Atlantic hurricane season with 19 tropical storms, 10 hurricanes, and only 1 major hurricane.