updated 9/28/2004 7:57:22 PM ET 2004-09-28T23:57:22

The four hurricanes that hit Florida this season combined to beat the record set by Hurricane Andrew for insured losses in what may be the nation's costliest hurricane season ever, officials said Tuesday.

More than one in every five Florida homes has been damaged. The number of insurance claims this season is expected to hit 2 million, far surpassing the 700,000 claims filed after Andrew 12 years ago.

Insured damage is approaching the $22 billion record, in today's dollars, set in 1992 by Andrew and Hurricane Iniki in Hawaii for the most expensive U.S. hurricane season on record, according to the Insurance Information Institute, and Standard & Poor's Ratings Services.

All of these developments raised the specter of higher rates.

Bob Hartwig, chief economist for the Insurance Information Institute, estimates the four storms cost $21.7 billion. Standard & Poor's credit analyst Thomas Upton put the loss Tuesday "in the low $20 billions."

Those estimates beat the $20 billion inflation-adjusted toll from Andrew, the world's costliest natural disaster at the time at $15.5 billion in 1992.

Assessments of Jeanne's dash up the state Sunday and Monday are still underway.

"There's going to be pressure on rates in Florida," Hartwig said. "The industry's resources need to be bolstered."

Not so quick, said Tom Gallagher, the state's top insurance regulator, who served as Florida's insurance commissioner during Andrew and now is the state's chief financial officer.

"Storms themselves are not justification for rate increases," he said. "Rates gone up just for rates' sake because of storms? That is not going to happen."

Flood losses expected to cost billions
The damage figures don't include losses covered by the federal flood insurance program, and Gallagher expects Jeanne's flood losses to be sizable. Hartwig suspects flood losses from the four storms will cost several billion dollars.

Some consumers are confused and frustrated with the insurance process so far. Some people with claims from Frances had not seen an adjuster before Jeanne compounded their losses.

"With two storms, we don't know what the procedures are. It's a whole new ballgame," said Jean Catchpole, 66, a retired real estate agent, who lived in a beachfront condominium in Vero Beach. She has been told that she might not be able to move back into her building for nine months.

Adjusters will also have to make the call between flood and wind damage, which are covered by different policies.

Citizens Property Insurance Corp., a company created by state lawmakers after Andrew as a high-risk insurer of last resort for wind coverage and for homeowners unable to find commercial policies, has received 78,000 hurricane claims from its 825,000 policyholders.

Average windstorm premiums in Florida are up more than 200 percent in the past decade, to $1,445 this year. That's separate from run-of-the-mill property and casualty policies covering fires and other hazards. The average homeowner's rate stands at $1,300.

With the series of storms in quick succession, Hartwig said, "What we see is insurers having to dig very deeply into their capital base to pay their claims."

Insurance companies at risk
The financial consequences for the industry are just beginning to emerge. Industry analysts expect the hurricanes to drop third-quarter profits an average of 40 percent to 60 percent and possibly eliminate quarterly earnings for some companies.

Andrew put 12 homeowners insurance companies out of business and a total of 22 companies, including automobile insurers, under state management. With rates rising and access shrinking, state lawmakers overhauled the homeowners market to keep private coverage alive.

"I don't see that many going insolvent this time," Gallagher said. "I think we might have a couple."

S&P's Upton said he doesn't have solvency concerns about any companies his firm rates, but earnings could be affected for up to a year.

Jay Fishman, CEO of St. Paul Travelers Companies Inc., said that storm losses now rival those seen after the 2001 terrorist attacks.

A special catastrophic insurance fund set up after Andrew to bolster the industry in case of The Big One was tapped only for Charley and Jeanne because Frances and Ivan didn't meet the $4.5 billion minimum damage threshold, Hartwig said.

S&P's Upton raised the possibility that homeowners could be charged a 10 percent assessment for a year or two to back up Citizens and the catastrophic fund.

"Having all these events this year doesn't make a repeat of Andrew next year any less likely," Hartwig said.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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