Counting the cost: Munich Re, the world's biggest reinsurer, yesterday narrowed the range of estimated losses by the world's insurance industry from Hurricane Katrina to between $15 and $20 billion.
It also became the first insurer to put a figure, of up to €400 million on its own exposure. Although experts' estimates have been gradually falling since the storm hit Louisiana on Monday, Katrina could still prove the most expensive ever natural disaster, ahead of Hurricane Andrew which in 1992 caused $17 billion of insured damage, equivalent to more than $20 billion 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." AIR Worldwide, a risk-modelling and technology company, estimated yesterday that Hurricane Katrina would cost the insurance sector between $12- $26 billion.
Reinsurers will bear the brunt of the cost, and proportionally more than they did of last year's €35 billion four-hurricane season, because then, reinsurers left primary insurers to pick up "deductibles" on each of the storms. But analysts cautioned yesterday that until flood waters in New Orleans had subsided, and a full assessment of offshore oil-rigs was complete, accurate loss estimates were impossible.
Neil Manser, analyst at Fox-Pitt, Kelton, said: "With Hurricane Ivan last year, the real problems came from the destruction of pipelines after mudslides in Mississippi, rather than from pure oil-rig losses. This time there could be both."