NEW YORK, Sept 3: Rating agencies and insurers said on Friday that losses from Hurricane Katrina remained unclear, but were growing by tens of millions of dollars each day as fire, flooding and looting ravage New Orleans.
Losses for private insurers are moving to the high end of previous estimates, according to Fitch Ratings and Moody’s, with total economic losses expected to top $100 billion, according to Risk Management Solutions.
“We’re looking at complete chaos in New Orleans, with explosions and uncontrolled fires,” said Robert Hartwig, chief economist for the Insurance Information Institute.
“This is an insurance adjuster’s worst nightmare. We’re seeing tens of millions of additional damage each day and the meter is still running.”
Insurance adjusters are unable to enter the hurricane area, and Louisiana and Mississippi state insurance agencies have no power or telephone service, according to Julie Rochman, senior vice-president at the American Insurance Institute (AIA).
Insurers are trying to persuade the Bush administration to allow adjusters to fly over in helicopters, she said.
“We’re operating in primitive conditions,” said Rochman. “The size and scope is bigger than anything we’ve ever seen.”
Eqecat Inc, a risk modeller, late on Friday raised its forecast for insured losses to between $14 billion and $22bn from between $9 billion and $16 billion.
Meanwhile, Fitch Ratings said that while the range of estimated insured losses from Katrina was very wide, the total could be close to, or even above, $25 billion.
Fitch analysts Donald Thorpe said this meant Katrina would represent the largest insured loss in US history, surpassing the Sept 11, 2001 attacks and Hurricane Andrew in 1992, which cost insurers $20.1 billion and $20.5 billion, respectively.
The estimates are based on property and casualty losses and do not include life and liability losses. Total insured losses from Sept 11 are expected to be about $31.7 billion.
A leading New Orleans insurer, State Farm Mutual Automobile Insurance Co, has processed over 50,000 claims in the affected area and the number is rising, said spokesman Dick Luedke.
While its adjusters cannot get into New Orleans, they are in Gulfport and Hattiesburg, Mississippi. Other companies were also struggling to reach New Orleans.
“The roads are blocked, but we’re as close as the suburbs,” said Jennifer Wislocki, a St. Paul Travellers Cos. spokeswoman. “We’ve got five mobile locations so clients can find us.”
Allstate Corp has a total of 1,075 representatives already adjusting claims and another 500 standing by, many of them in Baton Rouge, waiting to enter New Orleans.
Roy Krause, chief executive of temporary staffing company Spherion Corp, said he was getting orders from insurers wanting temporary adjusters to help assess damage.
Moody’s Managing Director Ted Collins said Katrina presents “significant challenges” to the insurance industry’s claims process, making it more costly than recent hurricanes.
Those challenges include widespread flooding after the hurricane, disputes over determining the cause of damage, such as fire, wind, water and looting; the length of business disruption and delays causing water damage to become worse.
Risk Management Solutions said at least half the total loss of $100 billion is likely to be caused by flooding, where claims are generally handled by the federal government.—Reuters
