Counting the cost: Rating agencies and insurers said yesterday that losses from Hurricane Katrina remain unclear, but are growing by tens of millions of dollars each day as fire, flooding and looting ravage New Orleans.
Losses for private insurers are moving to the high end of previous estimates, according to Fitch Ratings and Moody's. Total economic losses are expected to top $100 billion, according to Risk Management Solutions. "We're looking at complete chaos in New Orleans, with explosions and uncontrolled fires," said Robert Hartwig, chief economist for the Insurance Information Institute.
"This is an insurance adjuster's worst nightmare. We're seeing tens of millions of additional damage each day and the meter is still running." Insurance adjusters are unable to enter the hurricane area, and Louisiana and Mississippi state insurance agencies have no power or telephone service, said Julie Rochman, senior vice-president at the American Insurance Institute. Insurers are trying to persuade the Bush administration to allow adjusters to fly over in helicopters, she said.
Fitch Ratings said that while the range of estimated losses from Katrina was very wide, it could be close to, or even above, the $25 billion at the high end of recent estimates. Fitch analyst Donald Thorpe said this meant Katrina would represent the largest insured loss in US history, surpassing the September 11th attacks and Hurricane Andrew (in 1992), which cost $20.1 billion and $20.5 billion, respectively. The estimates are based on property and casualty losses and do not include life and liability losses.