Insurers wait to count losses as Katrina wanes
NEW YORK – As Hurricane Katrina weakened on Wednesday after ripping through four Southern states, insurance companies began processing claims even as the full extent of the storm remained unclear.
Death, destruction and chaos wracked the U.S. Gulf Coast in the wake of Katrina, which could go down as the costliest storm in the nation’s history.
New Orleans was filling up with water, while Mississippi officials confirmed that at least 100 people had died in the hurricane and said the death toll was almost certain to go much higher.
“The real issue, problem and challenge is city of New Orleans,” said Ray Stone, vice president of catastrophe operations at St. Paul Travelers Cos..
The company has set up in coastal areas in Alabama and Mississippi, Stone added, but the flow of claims has been slower than expected with communications networks down around the region.
St. Paul entered hard hit Biloxi and Gulfport, Mississippi and surrounding areas late on Tuesday and has 100 adjusters on hand.
Aside from permission to travel from local authorities, insurers had been waiting for safe conditions to return and roads to clear.
Hurricane Katrina could be one of the costliest U.S. storms in insurance history, but risk forecasters differ on the extent of the damage, and insurers say it is too soon to count their losses.
Through Tuesday, estimates of insured losses ranged from $9 billion to $25 billion, meaning the bill from Katrina could top the $21 billion from Hurricane Andrew, which became the costliest U.S. storm on record when it struck southern Florida in 1992.
“Katrina will take a pretty good knock out of insurers capital,” said former American International Group Inc. Chief Executive Maurice “Hank” Greenberg in a New York speech.
St. Paul Travelers Inc. and others said they would not have claims estimates for at least two weeks.
A representative for AIG AIG.N>, the world’s largest insurer by market value, said it is too early to tell the scope of any financial impact from the storm on the company.
Hartford Financial Services Group Inc. has had 1,000 claims in the southeastern part of Florida, where the storm first hit, and some losses reported in the more widely affected Mississippi and Louisiana regions.
At least one company is already warning that damage claims from Katrina will push full-year estimates for payouts past original forecasts.
German reinsurer Hannover Re on Wednesday said that because of Katrina, its damage claims for the year will probably be higher than it had planned, with the bill likely to be bigger than that from Hurricane Andrew.
The company had expected damage claims for the year to be in line with its multiyear average, which is 6 percent of property and casualty premiums.
“The damages from Katrina mean that this 6 percent is likely to be exceeded,” a spokeswoman said.