Munich Re, the world’s biggest reinsurer, on Tuesday narrowed the range of estimated losses by the world’s insurance industry from Hurricane Katrina to between $15bn and $20bn.
It also became the first insurer to put a figure, of up to €400m ($489m £272m), on its own exposure.
Although experts’ estimates have been gradually falling since the storm made landfall in Lousiana early on Monday, Katrina could still prove the most expensive ever natural disaster, ahead of Hurricane Andrew which in 1992 caused $17bn of insured damage, equivalent to more than $20bn today.
David Bresch, head of the Atmospheric Perils Group at Swiss Re, the world number two reinsurer, said: “Katrina is in a range comparable to Andrew, cost-wise.”
Fitch Ratings said the insured losses from Katrina were likely to be considerably greater than any of the individual losses from the last year’s four major land-falling hurricanes.
At the high end of the range of current estimates, Katrina would exceed the combined insured losses from the 2004 hurricane season, and would represent the largest insured hurricane loss ever. This will be material to both the primary insurers located in the US and to the reinsurance industry, much of which is domiciled outside the US, Fitch said.
AIR Worldwide, a risk modelling and technology company, estimated on Tuesday that Hurricane Katrina would cost the insurance sector between $12bn and $26bn. Reinsurers will bear the brunt of the cost, and proportionally more than they did of last year’s €35bn four-hurricane season, because on that occasion, reinsurers left primary insurers to pick up “deductibles” on each of the storms.
But analysts cautioned on Tuesday that until flood waters in New Orleans had subsided and a full assessment of offshore oil rigs was complete, accurate loss estimates were impossible.
Analysts said that Hannover Re, which has a heavy natural catastrophe bias, was likely to be the most exposed. Lloyd’s of London, where insurers were being asked to provide impact assessments within two weeks, said it expected to receive significant claims.