The claims for damage may near $26b mark
NEW YORK -- The property and casualty insurance industry, which was hit hard last year when four separate hurricanes slammed into Florida, now faces as much as $26 billion in claims from Hurricane Katrina's foray into Louisiana and neighboring Gulf Coast states, according to preliminary risk assessments.
AIR Worldwide Corp., a risk modeling firm based in Boston, said late yesterday that insured losses could range from $12 billion to $26 billion.
At the high end, that would make Katrina more expensive than the previous record-setting storm, Hurricane Andrew, which caused $21 billion in insured losses in 1992 to property in Florida and along the Gulf Coast.
Another risk modeling firm, Eqecat Inc., which is based in Oakland, Calif., initially estimated damages from Katrina at up to $30 billion, but it lowered its projections twice after the storm struck east of New Orleans and was downgraded as it moved inland from a Category 4 hurricane to a Category 1 storm.
Late yesterday, Eqecat's estimate for damage to homes, businesses, autos, and trucks ranged from $9 billion to $16 billion.
An Eqecat spokesman, Thomas Larsen, said the storm's move eastward reduced some of the potential for losses in the New Orleans area. At the same time, he said, ''it has raised concerns about Biloxi and Gulfport," both in Mississippi, as well as other Gulf Coast cities.
The estimates, which Larsen emphasized were preliminary, do not include possible damage to oil drilling platforms and other oil operations in the Gulf, which produces and refines a significant amount of US fuel.
Larsen noted that in September, Hurricane Ivan caused serious damage to some oil rigs and added: ''Katrina is to the west of Hurricane Ivan's path, in an area more densely populated with oil platforms."
There were no immediate estimates of damage to oil operations, although Royal Dutch Shell PLC said on its website that two drilling rigs with tracking devices had ''drifted off location."
AIR Worldwide attributed its higher estimate to Katrina's size, noting that ''hurricane-strength winds extended more than 120 miles from the center of the storm and tropical storm-strength winds extended as much as 230 miles from the center."
Last year, the four separate hurricanes that slammed Florida and other East Coast states cost insurers nearly $23 billion. The most devastating, Hurricane Charley, racked up insured losses of $7.5 billion last August.
Major insurance companies, dealing with the fallout from Katrina in southern Florida, where the storm passed late last week, began turning their attention to Louisiana and Mississippi.
The largest property and casualty insurance companies operating in the southern states are State Farm Insurance Cos. of Bloomington, Ill., and
Phil Supple, spokesman for State Farm, said the company has teams ready to move into New Orleans and Gulf Coast cities after Katrina passes, to begin processing claims. ''We have to wait for civil authorities to open areas so we can get in and assess damages," Supple said.
Allstate, the No. 2 home insurer in those states, also has teams prepared to move in. Spokesman Mike Trevino said the company has units fitted with generators and satellite dishes. 