Hurricane Katrina And Insurance: Two Years Later $40.6 Billion In Insurance Claim Dollars Aid Recovery

Post by palado

Of More Than One Million Homeowners Claims 99 Percent Are Settled;

Few Remain in Dispute

Disaster Losses Along Atlantic and Gulf Coasts Likely to Escalate in Coming Years

NEW YORK, August 6, 2007 — The single largest loss in the history of the insurance industry occurred two years ago this month when Hurricane Katrina struck the Gulf Coast, causing$40.6 billion in insured damage. Nearly two years later, the overwhelming majority of claims have been settled.

The magnitude of Hurricane Katrina triggered a reexamination of how the United States deals with the financial consequences of natural disasters among insurers, reinsurers and public policymakers, which continues today, according to the Insurance Information Institute (I.I.I.).

Despite the attention focused on lawsuits filed following this catastrophic storm, the number of claims in litigation accounted for a very small percentage of the total number of claims filed and most of those are no longer in contention. The I.I.I. estimates that fewer than 2 percent of homeowners claims in Louisiana and Mississippi were disputed either through mediation or litigation.

Insurance companies have paid an estimated $40.6 billion to policyholders on 1.7 million claims for damage to homes, businesses and vehicles in six states. By contrast, Hurricane Andrew, the previous record holder, resulted in $15.5 billion in losses in 1992 ($22.2 billion in 2006 dollars) and 790,000 claims.

Louisiana ($25.3 billion) and Mississippi ($13.6 billion) received by far the most insurance claims dollars to aid in their recovery.

Approximately 99 percent of the 1.2 million homeowners insurance claims from Hurricane Katrina, including those in hard hit Louisiana and Mississippi, have been settled. Claims payments to homeowners in affected states exceeded $16 billion, approximately 93 percent of which went to Katrina victims in Louisiana and Mississippi.

In Louisiana, only 537 out of more than 1,000 suits filed in U.S. District Court remain on the docket. The state-sponsored mediation program in Mississippi has settled 3,034 of 3,687 cases in that state.


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