The Financial Services Authority is asking insurers for information about the impact of Hurricane Katrina on their business amid mounting uncertainty about the size of the bill faced by the industry to clean up the devastation.
Estimates for total insured losses range from $25bn (£13.5bn) to $60bn, making it the costliest insured natural disaster in history. But assessing the financial damage caused by the violent storm two weeks ago is proving difficult and provoking some concern among the ratings agencies which provide crucial assessments of insurers' credit-worthiness.
Lloyd's of London, the City's major insurance market, was warned over the weekend by ratings agency Standard & Poor's that it risked a downgrade to its credit-worthiness because the potential losses of the 62 syndicates which make up its market are unknown.
Lloyd's has demanded that the syndicates - which sell insurance for losses caused by the hurricane for things such as damage to oil rigs, ships, property and business disruption - make estimates of their exposure to Katrina's devastation by today. Lloyd's is not expecting to be able to give a first estimate for some time.
The FSA admitted it had been in touch with the insurance industry as part of its normal supervisory work. As well as the financial regulator, insurers pay particular attention to the demands of the rating agencies whose measures of their credit-worthiness are crucial to their ability to win business.
Lloyd's was one of 10 major insurers affected by the decision by S&P to react to the uncertainty about the scale of the industry's losses.
Insurers are finding it difficult to make accurate projections as they have not been able to send loss adjusters to the region because of the disaster's ongoing scale.
In addition, the amount of water that flooded New Orleans and the surrounding area is unusual. "This is a loss that is still ongoing. That is unusual for a hurricane. Usually you get short, sharp damage," said Julian James, head of worldwide markets at Lloyd's of London.
"I can't over-state the uncertainty and complexity about this loss. We have never seen a hurricane loss that involves this extended amount of human suffering," Mr James said.
S&P warned Lloyd's of a possible downgrade because of the "uncertainty of the scale of the impact of Hurricane Katrina on Lloyd's, the specialisations of which include the insurance and reinsurance of offshore energy installations, property damage and business interruption".
However, S&P has made it clear to Lloyd's that it does not have concerns about the underlying solvency of the market. Any downgrade to its A rating is likely to be only one notch - the smallest increment possible.
Lloyd's pointed out that S&P had to place it on negative creditwatch - the rating agency's possible precursor to a downgrade - because it was not in a position to update the agency on the financial impact on the market.
That will only happen when it has time to assess the projections it receives from the syndicates by the end of today.
But Lloyd's is confident S&P will not proceed with any downgrade. "Lloyd's models this type of catastrophe to ensure the market can withstand it, and is well-equipped to handle this type of event," a spokeswoman for Lloyd's said.
Fresh estimates about the potential losses caused by Hurricane Katrina may emerge in the coming days from Monte Carlo where the world's major insurers and reinsurers, which provide insurance to the insurers, are getting together for their annual meeting.
The threat of downgrades - and actual downgrades - by rating agencies as a result of Katrina has already had an impact.
Alea is trying to find a buyer after the rating on its debt was downgraded while Lloyd's insurer Goshawk was warned that one of its subsidiaries risked being downgraded because of its exposure to Katrina losses. Goshawk said it was considering fresh capital to maintain the rating.
