Katrina toll on US insurers may grow clearer

With cleanup costs from Hurricane Katrina mounting, major insurers including Allstate Corp and St Paul Travellers Cos this week may offer early estimates of their losses from what could prove the most expensive US natural disaster ever.

Insured losses may total US$14 billion ($20.06 billion) to US$35 billion, and total economic losses might top US$100 billion, according to risk forecasters.

Hurricane Andrew, the costliest storm to date, resulted in an inflation-adjusted US$20.9 billion of claims after striking Florida in 1992, the Insurance Information Institute said.

Last year's four Florida hurricanes, which led to US$22.8 billion of claims, nearly wiped out Allstate's third-quarter profit, and cut St. Paul's profit by more than half.

Calls to Allstate, St. Paul and Hartford Financial Services Group Inc., another large insurer, regarding expected losses from Katrina were not immediately returned.

State Farm Mutual Automobile Insurance Co., the biggest insurer of homes in Louisiana and Mississippi, has received 150,000 claims so far, spokeswoman Mia Jazo-Harris said. It has opened several mobile claims offices, and temporarily suspended billing 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. Hartford is also suspending cancellations of many policies for nonpayment, and St Paul has set up five mobile claims offices.

Reinsurers, which help limit insurers' storm exposure, are themselves expected to post big losses from Katrina.

Munich Re, the biggest reinsurer, on Friday said its original claims estimate of 400 million euros ($717.97 million) likely was too low. No 2 reinsurer Swiss Re has said it expects US$500 million of claims, and No 4 Hannover Re expects 250 million euros .

Only about 40 per cent of New Orleans homeowners have flood insurance. Standard homeowners insurance covers damage only from fire and wind, though commercial or automobile insurance also covers flood damage.

Risk Management Solutions Inc., which forecast the possible US$100 billion of economic losses, on Friday estimated US$20 billion to US$35 billion of insured losses. Another forecaster, Eqecat Inc., on Friday estimated insured losses of US$14 billion to US$22 billion.

Ted Collins, a managing director for Moody's Investors Service, on Friday said assessing losses and processing claims may be complicated by the scope and expected duration of the flooding, and possible disputes over the causes of specific damage, including fire, wind, water and looting.

Allstate is based in Northbrook, Illinois; Hartford in Hartford, Connecticut; St Paul in St. Paul, Minnesota, and State Farm in Bloomington, Illinois.

- REUTERS