Katrina Insurers Toll on May Grow Clearer
With cleanup costs from Hurricane Katrina mounting, major insurers including Allstate Corp.. and St. Paul Travelers Cos.. this week may offer early estimates of their losses from what could prove the most expensive U.S. natural disaster ever.
Insured losses from Katrina are expected to total $ 14 billion to $ 35 billion, and total economic losses might top $ 100 billion, according to risk forecasters.
Hurricane Andrew, the costliest storm to date, resulted in an inflation-adjusted $ 20.9 one billion of claims after striking Florida in 1992, the Insurance Information Institute said.
Last year’s four Florida hurricanes, which led to $ 22.8 billion of claims, nearly wiped out Allstate’s third-quarter profit and St. Paul’s cut profit by more than half.
Allstate and Hartford Financial Services Group Inc., Another large insurer, did not immediately return calls regarding expected losses from Katrina, while St. Paul declined to comment.
State Farm Mutual Automobile Insurance Co., the biggest insurer of homes in Louisiana and Mississippi, 150000 claims has so far received, spokeswoman Mia Jazo-Harris said. It has opened several mobile offices temporarily suspended billing and claims as well as cancellations of policies for nonpayment.
Allstate is letting many customers in Alabama, Louisiana and Mississippi defer premium payments by up to 90 days, spokeswoman Rebecca Hirsch said.
St. Paul has set up five mobile services claims and billing and suspended for nonpayment cancellations, spokeswoman Jennifer Wislocki said. Hartford also has many cancellations suspended for nonpayment.
Reinsurers, which help limit insurers’ storm exposure, are also expected to post big losses from Katrina.
Munich Re, the largest reinsurer, said on Friday its original estimate of claims 400 million euros ($ 501 million) likely was too low. No. 2 reinsurer Swiss Re has said it expects $ 500 million of claims, and No. 4 Hannover Re expected 250 million euros ($ 313 million) of claims.
Only about 40 percent of New Orleans homeowners have flood insurance. Standard homeowners insurance covers only damage from wind and fire, though commercial or automobile insurance covers flood damage.
Risk Management Solutions., Which the forecast of a possible $ 100 billion of economic losses, on Friday, estimated at $ 20 billion to $ 35 billion of insured losses. Another forecaster, Eqecat Inc. On Friday estimated insured losses of $ 14 billion to $ 22 billion.
Ted Collins, managing director for Moody’s Investors Service, said on Friday assessing claims processing and losses may be complicated by the scope and duration of the expected flooding, as well as by the possible causes of the specific case of damage, including fire, wind , Looting and water.
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