Hurricane Katrina caused at least $125 billion in economic damage and could cost the insurance industry up to $60 billion in claims, a leading risk assessment firm said in updated estimates released Friday.
That’s significantly higher than the previous record-setting storm, Hurricane Andrew in 1992, which caused nearly $21 billion in insured losses in today’s dollars.
Risk Management Solutions of Newark, Calif., said its revised damage figures reflect, in part, the ravages of heavy flooding in New Orleans, which has prompted officials to try to evacuate the city.
“About half of the economic losses would be attributable directly to the flooding,” said Laurie Johnson, an RMS vice president.
She added that the flooding, which occurred when levies collapsed and water from rivers and canals flowed into the low-lying city, also makes it harder to project final losses.
“The longer these flood waters sit there and toxic deposits build up that need to be cleaned up ... the longer the recovery line,” Johnson said.
She estimated damage to infrastructure such as roads and bridges and the utility system in New Orleans alone at more than $10 billion.
Economic losses include projections of property damage to homes, cars, ports, refineries and public property as well as the disruption of businesses in the disaster area, which extends from Louisiana to Mississippi and Alabama, Johnson said.
Johnson said that RMS sent assessment teams into the area on the ground and by air. The latest RMS report put insured losses in a range of $40 billion to $60 billion.
A week ago, RMS had estimated total economic losses in excess of $100 billion and insured losses in a range of $20 billion to $35 billion.
Two other risk firms said Friday they were holding to earlier estimates until more information is available.
AIR Worldwide Corp., a risk-modeling firm based in Boston, has estimated insured losses in a range of $17 billion to $25 billion.
AIR Worldwide, which had three damage survey teams on the ground in the affected states last week, said its estimates cover wind and surge damages but include very little from flooding.
Jayanta Guin, AIR Worldwide’s vice president for research and modeling, said that “with Katrina, things are very unusual because of the degree of flooding in New Orleans.”
Guin said it could be “well over a year” before final figures for the damage are available, noting that data is still coming in from the four hurricanes that hit Florida last year.
The four hurricanes last year — Charley, Ivan, Frances and Jeanne — together caused nearly $23 billion in insured losses in Florida and neighboring states, according to figures from the Insurance Services Office, an actuarial company based in Jersey City, N.J.
Another risk-modeling firm, Eqecat Inc., which is based in Oakland, Calif., has projections of $14 billion to $22 billion for insured losses from Katrina.
Earlier Friday, Europe’s biggest insurer, Allianz AG, said it could pay out as much as $583.6 million in claims from Hurricane Katrina.
The company, headquartered in Munich, Germany, estimated total claims from the storm, which hit the Gulf Coast on Aug. 29, at more than $37 billion.
Louisiana Insurance Commissioner J. Robert Wooley has estimated the insured losses in his state alone at $19 billion. The Florida insurance commissioner estimated the total economic impact from the hurricane at up to $150 billion.