Hurricane Katrina, which walloped New Orleans and other Gulf Coast cities, could cost the insurance industry up to $25 billion in claims, according to updated reports Tuesday from risk assessment firms.
AIR Worldwide Corp., a risk modeling firm based in Boston, said its revised projection anticipates insured losses in a range of $17 billion to $25 billion. On Monday, the company said its initial assessments suggested property and casualty losses in a range of $12 billion to $26 billion.
A similar projection came from another firm, Risk Management Solutions of Newark, Calif., which projected insured losses from the hurricane of $10 billion to $25 billion.
That means Katrina could prove more costly than record-setting Hurricane Andrew in 1992, which caused some $15.5 billion in insured losses. Adjusted for inflation, Andrew’s cost would be nearly $21 billion today.
The figures do not cover property that isn’t insured, which could add millions to the total.
Other companies have put out lower estimates for the impact of Katrina on the insurance industry, and all emphasize that data is preliminary because research teams have been unable to get into hard-hit areas to do onsite inspections.
President Bush has declared Louisiana, Mississippi and Alabama as disaster areas, making residents eligible for federal assistance if they don’t have insurance or damages exceed their insurance coverage.
Jayanta Guin, AIR Worldwide vice president of research and modeling, said the firm revised its insured loss estimates “based on the storm’s actual track and additional meteorological information, including actual wind speed reports.”
He said while Katrina didn’t score a direct hit on New Orleans, moving on land to the east of the low-lying city, its winds “impacted several densely populated areas.”
Earlier Tuesday, Germany’s Munich Re, the world’s biggest reinsurance company, put its initial estimate for total insured damage at between $15 billion and $20 billion and its own exposure at up to $489 million, but said that figure could change as more information emerges.
Another risk modeling firm, Eqecat Inc., which is based in Oakland, Calif., initially estimated damages from Katrina at up to $30 billion, but it lowered its projections twice after the storm struck east of populous New Orleans and was quickly downgraded as it moved inland.
Eqecat’s latest projection is a range of $9 billion to $16 billion.
Last year, the four separate hurricanes that slammed Florida and other East Coast states cost insurers nearly $23 billion. The most devastating, Hurricane Charley, racked up insured losses of $7.5 billion last August.