Covered Losses From Rita May Hit $6 Billion
Insured losses from Hurricane Rita are expected to be considerably lower than those for Hurricane Katrina because Rita lost speed before it hit land and largely missed the densely populated cities of Houston and Galveston.
“We dodged a bullet,” said Robert Hartwig, chief economist with the Insurance Information Institute in New York. “But it’s still probably going to cost insurers in the vicinity of $4.5 billion.”
That would put it among the top 10 most costly hurricanes to hit the United States, he added.
Risk assessment firms have said that Katrina, which struck Gulf Coast cities in Louisiana, Mississippi and Alabama on Aug. 29, may result in insurance claims of $40 billion to $60 billion.
On Saturday, Eqecat Inc., a risk-management software and consulting firm based in Oakland, estimated that Rita’s cost to insurers would be $3 billion to $6 billion. AIR Worldwide Corp., a Boston-based risk modeling company, forecast insured losses of $2.5 billion to $5 billion.
AIR Worldwide said it expected the Texas cities of Beaumont and Port Arthur and the Louisiana city of Lake Charles to tally the most damage. Insured losses also are expected to extend as far south as Galveston, Texas, and as far east as New Orleans.
Hartwig pointed out that if Katrina hadn’t had such a devastating effect, “we’d be talking about $4.5 billion as a lot of money -- and it is a lot of money.”
Before Katrina, the previous record-setting hurricane was Andrew, which in 1992 resulted in $15.5 billion in insured losses. Adjusted for inflation, that would be nearly $21 billion in today’s dollars.
Other high-cost storms were Charley in 2004, at $7.5 billion in today’s dollars; Ivan in 2004, $7.1 billion; Hugo in 1989, $6.4 billion; and Frances in 2004, $4.6 billion.
Phil Supple, a spokesman for State Farm Insurance Cos., the largest home insurer in Texas, said the company had not yet begun getting damage estimates from its assessors. But he said that because Rita’s path took it to the east of Houston and Galveston, he expected claims to be lower than they might have been.
“To anyone in the path of this storm it was bad,” Supple said. “But it did spare the larger-population areas, and that’s a good thing.”
Before the storm took a turn to the northeast prior to its landfall, Eqecat on Friday had projected that Rita-related losses could total $9 billion to $18 billion.
