Insurance groups worldwide were yesterday facing the prospect of multibillion-dollar claims in the wake of Hurricane Katrina.
The storm is expected to be one of the costliest ever for insurers, with first estimates of insured damage ranging up to $26bn (£14.5bn).
If the insurers' most pessimistic estimates prove correct, the bill from Katrina will top that of Hurricane Andrew, which pounded Florida in 1992 and resulted in $22bn of damage, at 2004 prices.
The four hurricanes that hit Florida last year resulted in insured losses of $28bn. The 9/11 attacks cost insurers $20bn.
David Bresch, the head of insurance giant Swiss Re's Atmospheric Perils Group, told a conference in Copenhagen that Katrina could cost up to $26bn but that it would take another couple of days for an accurate picture to emerge as a result of the widespread flooding.
None of the big American insurers, such as Allstate and St Paul Travelers, are likely to estimate their losses for a few days.
Munich Re, the world's biggest reinsurance group, said it expected Katrina to cost $15bn-$20bn, and its own bill to be $500m before the amount it can pass on to other reinsurers.
California-based risk modellers Eqecat, however, said the damage could be just $9bn. Thomas Larsen, its senior vice-president, said the storm's track, veering east of New Orleans, had "relieved some pressure".
The Lloyd's of London insurance market said it expected "significant" claims, "predominantly in relation to offshore energy installations in the Gulf, property damage and business interruption". The market has asked all its insurers to supply details of the claims they are likely to face by September 12 so that it can more accurately assess the storm's financial impact. But in a statement, Lloyd's insisted that it was "well-equipped to manage the financial impact of a catastrophe on this scale" and shares in the quoted Lloyd's insurers held up well.
Reinsurers are expected to pay a larger share of claims than for last year's hurricanes, as Katrina is a single event, so insurers pay only one deductible before their reinsurance kicks in.
