Ratings analysts at A.M. Best Co. said  that it is likely that the brunt of Hurricane Sandy’s financial impact will fall on the National Flood Insurance Program (NFIP), which is responsible for almost all flood coverage in the country.

For most private primary  property/casualty insurers, the biggest impacts from Sandy are likely to be wind and downed tree damage to roofs and cars, as well as business interruption losses from prolonged power outages.

As a whole, the industry is well capitalized to absorb the financial impact of this type of event, according to A.M. Best. However, individual companies may be negatively affected, depending on where they write and their degree of risk concentration relative to the ultimate path of the storm.

Catastrophe modeling firm Eqecat has estimated that insurers may be hit with up to $10 billion in claims.

Over the past several years, catastrophe risk management efforts have been under way to address this type of potential loss scenario. In particular, insurance companies have implemented exposure management initiatives, percentage deductibles and pricing changes. The ultimate effectiveness of these programs may be tested by Hurricane Sandy, A.M. Best said.

The NFIP paid out $1.28 billion in losses last year from Hurricane Irene, making it the fourth-costliest flood event of the last generation. Compared to Irene, Sandy is expected to produce a much broader surge impact, as landfall is expected to coincide with the lunar tide. According to the National Oceanic and Atmospheric Administration (NOAA), Sandy could be the largest storm ever to hit the United States.