British Insurers Also Bracing for a Hurricane : Record Claims Feared if Gilbert Damages Oil Rigs

Hurricane Gilbert, headed for Texas after its Caribbean rampage, could result in record insurance claims, British insurers said Thursday.

“It depends where he goes next. If he goes north into Texas and Louisiana, there could be a hell of a lot of damage,” said a spokesman for Lloyd’s of London insurance market.

“London underwrites a lot of business in that part of the world,” added a leading insurance broker.

Lloyd’s recently said a freak storm that hit southern England and other parts of Europe last October was the biggest insured loss on record at $3 billion.

Insurance sources reckoned the worst North American hurricane to date, in terms of insurance losses, was probably Frederick in 1979, which swept up from the Mississippi to New York and caused losses worth $752 million.

Too Early to Tell

London insurers are heavily involved in both both primary insurance and reinsurance for the area threatened by Hurricane Gilbert, where large petrochemical and electric utilities are situated.

As a result, insurance rates may move up after the record losses from the October storm in Europe and a $1.3-billion loss from a fire on the Piper Alpha oil platform in the North Sea in July--the biggest loss involving a man-made structure.

Insurance sources said it was too early to estimate the precise cost of devastation already caused by Gilbert in Jamaica, the Cayman Islands and Mexico.

“The damage in Jamaica and the Cayman Islands is unquantifiable because communications have been destroyed and in Mexico there have been no assessments yet,” the Lloyd’s spokesman said.

In the aftermath of Gilbert’s assault on Jamaica, Prime Minister Edward Seaga estimated that the island needed about $400 million to start repairing damage.

Insurers were anxiously watching reports of Gilbert’s speed and direction through the Gulf.

Although weather reports said the wind speed had dropped to 125 m.p.h. from more than 200 m.p.h. Wednesday, there are fears it could gather strength, insurance sources said.

The Mexican state oil company Petroleos Mexicanos said it closed 146 offshore wells in the Bay of Campeche--the country’s prime oil-producing region--because of the storm.

Petrochemical plants and electric utilities along the Texas and Louisiana coast said they were taking emergency measures to cope with what could be widespread damage.

Oil Workers Evacuated

Exxon Corp., Texaco Inc., Amoco Corp., Chevron Corp. and others said they evacuated offshore oil workers and temporarily stopping production totaling about 870,000 barrels per day of oil and 8 billion cubic feet of natural gas.

Although all Gulf Coast refineries and petrochemical plants are designed to withstand hurricane-force winds, storms the size of Gilbert could cause significant damage, said William Barry, an industry consultant with DeWitt & Co. in Houston.

“Our clients are taking very serious precautions right now and will shut down not later than 12 hours ahead of the storm,” Barry said.

U.S. weather service officials said oil rigs along the U.S. and Mexican coasts were in danger. London underwriters said that if the oil platforms were hit, insurance claims could be huge.