A storm hitting New York City this hurricane season could cause up to $US65 billion ($A86.5 billion) in insured damage, Lloyd’s America President Wendy Baker has warned. Her estimate is the result of new modelling that has increased the potential damage by 8%.

Speaking to the North-east Hurricane Conference last week, Ms Baker said a great deal is at stake but the huge weather-related risk is still insurable. She warned against any moves to create a reinsurance pool for hurricanes regulated by the US Government, saying the market is best suited to manage the risk.

“Proposed national and state catastrophe plans risk damaging the nimbleness of capital markets and force taxpayers to underwrite repeated high-risk behaviour,” she said.

Instead, insurers need to carefully price policies to reflect customers’ risk-reducing efforts. They should reward policyholders that build in moderate and low-risk zones, and penalise those that ignore the hurricane risk so prevalent along the north-east and Gulf coasts.

“If we expect Mother Nature to be kind to us, we need to be kinder to her.”