Katrina damage estimate hits $125B
NEW YORK (AP) — Hurricane Katrina caused at least $125 billion in economic damage and could cost the insurance
industry up to $60 billion in claims, a leading risk assessment firm said in updated estimates Friday.
That's significantly higher than the previous record-setting storm, Hurricane Andrew in 1992,
which caused nearly $21 billion in insured losses in today's dollars.
Risk Management Solutions of Newark, Calif., said its revised damage figures reflect, in part,
the ravages of heavy flooding in New Orleans, which has prompted officials to try to evacuate
the city.
"About half of the economic losses would be attributable directly to the flooding," said Laurie
Johnson, an RMS vice president.
She added that the flooding also makes it harder to project final losses.
"The longer these flood waters sit there and toxic deposits build up that need to be cleaned up
... the longer the recovery line," Johnson said.
She estimated damage to infrastructure such as roads and bridges and the utility system in
New Orleans alone at more than $10 billion.
Economic losses include projections of property damage to homes, cars, ports, refineries and
public property as well as the disruption of businesses in the disaster area, which extends
from Louisiana to Mississippi and Alabama, Johnson said.
Johnson said RMS sent assessment teams into the area on the ground and by air. The latest
RMS report put insured losses in a range of $40 billion to $60 billion.
A week ago, RMS had estimated total economic losses in excess of $100 billion and insured
losses in a range of $20 billion to $35 billion.
Two other risk firms said Friday they were holding to earlier estimates until more information
is available.
AIR Worldwide, a risk-modeling firm based in Boston, has estimated insured losses in a range
of $17 billion to $25 billion.
AIR Worldwide, which had three damage survey teams on the ground in the affected states
last week, said its estimates cover wind and surge damages but include very little from
flooding.
Jayanta Guin, AIR Worldwide's vice president for research and modeling, said that "with
Katrina, things are very unusual because of the degree of flooding in New Orleans."
Guin said it could be "well over a year" before final figures for the damage are available,
noting that data are still coming in from the four hurricanes that hit Florida last year.
The four hurricanes last year — Charley, Ivan, Frances and Jeanne — together caused nearly
$23 billion in insured losses in Florida and neighboring states, according to figures from the
Insurance Services Office, an actuarial company based in Jersey City
Another risk-modeling firm, Eqecat, which is based in Oakland, has projections of $14 billion
to $22 billion for insured losses from Katrina.
Earlier Friday, Europe's biggest insurer, Allianz, said it could pay out as much as $583.6
million in claims from Hurricane Katrina.
The company, headquartered in Munich, Germany, estimated total claims from the storm,
which hit the Gulf Coast on Aug. 29, at more than $37 billion.
Louisiana Insurance Commissioner J. Robert Wooley has estimated the insured losses in his
state alone at $19 billion. The Florida insurance commissioner estimated the total economic
impact from the hurricane at up to $150 billion.