- The Washington Times - Monday, August 29, 2005

NEW YORK - The property and casualty insurance industry, hit hard last year when four hurricanes slammed into Florida, now faces as much as $16 billion in claims from Hurricane Katrina’s foray into Louisiana and neighboring Gulf Coast states.

Eqecat Inc., a risk modeling firm based in Oakland, Calif., said yesterday that early estimates suggest damage to homes, small businesses and automobiles could range from $9 billion to $16 billion.

If correct, that would make Katrina second in cost only to Hurricane Andrew, which caused about $21 billion in insured losses in 1992 to property in Florida and along the Gulf Coast.

Eqecat initially estimated damages from Katrina at up to $30 billion, but lowered its estimates twice after the storm struck east of populous New Orleans and was downgraded quickly as it moved inland from a Category 4 hurricane to a Category 2 storm.

Eqecat spokesman Thomas Larsen said the storm’s move eastward reduced 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 to the east.

The estimates, which Mr. Larsen emphasized were preliminary, do not include damage to drilling platforms and other oil operations in the Gulf, which produces and refines a significant amount of U.S. fuel.

Mr. Larsen noted that Hurricane Ivan last September caused serious damage to some oil rigs. “Katrina is to the west of Hurricane Ivan’s path, in an area more densely populated with oil platforms,” he said.

Last year, the four 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 — already dealing with the fallout from Katrina in southern Florida, where the storm passed late last week — yesterday 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 Allstate Corp. of Northbrook, Ill.

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 insurance claims.

“We have to wait for civil authorities to open areas so we can get in and assess damages,” Mr. Supple said.

Allstate, the No. 2 home insurer in those states, also has teams prepared to move in after the storm. Spokesman Mike Trevino said the company has mobile units fitted with generators and satellite dishes so they can deal with claims in hard-hit areas where electricity and phone service isn’t available.

“At this early stage, our advice to everyone is to stay safe,” Mr. Trevino said. “And once people are able to get back into the area, they need to be very careful about going into homes, especially if there appears to be structural damage.”

“What we’re looking at is one of the top two or three most expensive storms in U.S. history,” said Robert Hartwig, chief economist with the Insurance Information Institute in New York, a research center supported by property and casualty insurers that provides information about home, auto and other insurance products to the public.

Mr. Hartwig said damage from Katrina was harder to project than damage from earlier hurricanes because New Orleans has a significant number of businesses, such as tourist hotels and restaurants, that could suffer both physical damage as well as losses from business interruption.

He said that in the four hurricanes that hit Florida last year, one-third of the insured losses were for commercial properties that sustained physical damage or were shut down for an extended period for repair.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide