Storm cost could reach $25 billion

[Bradcore]

Risk modeling firm says Hurricane Katrina may top Andrew with insured damage of up to $25 billion.

August 29, 2005: 1:25 PM EDT

 

NEW YORK (CNN/Money) - Hurricane Katrina may cost the insurance industry $12 billion to $25 billion, which could make it the most expensive storm in history for U.S. insurers.

 

Risk modeling firm Eqecat initially estimated that the hurricane, which slammed into Louisiana early Monday, would cost the industry between $15 billion and $30 billion in insured losses but later scaled back that forecast.

 

"The reduction was based off the fact that winds were lower than expected and the track of the storm is 25 miles to the east of the expected track last night," said Tom Larsen, senior vice president of Eqecat. "That puts New Orleans onto the lean side of the hurricane."

 

Even with the revision, Hurricane Katrina could still end up as the costliest storm ever for the nation's insurance industry. Hurricane Andrew previously held that distinction, causing $15.5 billion in insured damage.

 

Shares of many insurers and reinsurers fell, though some analysts said the move was an over-reaction on the part of investors. (For more on that story, click here).

 

Larsen said storm surge is still expected to jump as much as 28 feet in areas. About 70 percent of New Orleans is below sea level and is protected from the Mississippi River by a series of levees.

 

The firm added that its estimates don't include any potential damage to oil rigs in the Gulf of Mexico.

 

Larsen said in 2004, Hurricane Ivan cost the insurance industry about $2 billion in damages to oil rigs. But Katrina's trajectory places the storm in an area with even more oil platforms with higher winds, increasing insurers' risk of exposure.

 

It often takes days or weeks after a major storm to assess damage, and several insurers said Monday that it was too soon to estimate losses. Katrina may have generated $2 billion in claims when it tore through Florida on Friday, analysts said.

 

State Farm Mutual Automobile Insurance Co. is the largest insurer of homes in Louisiana and neighboring Mississippi, according to the Insurance Information Institute, Reuters reported.

 

Allstate, American International Group Inc., the Louisiana Farm Bureau Mutual Insurance Co. and St. Paul are the next largest in Louisiana, while Mississippi Farm Bureau Mutual Insurance Co. and Allstate follow in Mississippi.

 

Ray Stone, vice president of catastrophe operations at St. Paul, said flooding in the city is a big worry, according to Reuters. St. Paul does not expect to be able to assess losses before Wednesday.

 

-- from staff and wire reports

 

 

Source

[MarlinFan10]

If I worked in the insurance industry in that area, I'd be in Mexico right now under an alias.

[Lefty]

Meanwhile, how cheap is property going to be. I think I might invest.

[CapeFish]

Meanwhile, how cheap is property going to be. I think I might invest.

920588[/snapback]

Property values go up after storms usually. Charlotte County saw rises of almost 100% in 6 months in some areas.

[Lefty]

Meanwhile, how cheap is property going to be. I think I might invest.

920588[/snapback]

Property values go up after storms usually. Charlotte County saw rises of almost 100% in 6 months in some areas.

920650[/snapback]

Cheap to buy property. I'm pretty sure the area near Punta Gorda last year was full of cheap property.