Covering the storm like never before

ATLANTA — High-tech charts and up-to-the-minute data meticulously track Hurricane Frances as employees run storm simulations that pop out specific damage estimates for certain zip codes.

The office is not run by a federal disaster agency, it’s an extension of the Benfield Group, a London-based reinsurance brokerage firm. Essentially, when insurance companies look to hedge their bets on massive claims for catastrophes like hurricanes, they turn to companies like Benfield to link them with reinsurers.

Reinsurance brokers, already dealing with the $5 billion to $7 billion estimated insured damage from Hurricane Charley, got no reprieve this week.

This is, after all, crunch time for their industry, and employees at the Benfield office in Atlanta — the closest to the storm’s path — expect more 18-hour days, more hurried meals and more exhausting efforts to hammer out late-night deals.

Hurricanes mean big money and crucial decisions to Benfield’s clients, household-name insurance companies that rely on the firm’s data to determine how much money they reserve for storms.

The team of 60 researchers and scientists working out of Benfield’s Hazard Research Center in London — what they call the insurance industry’s version of the U.S. Weather Service — narrows down estimates to even particular locations so their clients can make preparations.

“We can look at maps and say, ‘You’ve got five risks at that zip code, and if the storm hits there, these could be your losses,”’ said Rod Fox, CEO of Benfield’s U.S. operations. “If the storms are 140 miles per hour, we understand what damage could do to different types of construction.”

At least, reinsurance brokers say, you can predict the path of hurricanes.

“The two perils nobody can do anything about in our business are earthquakes and terrorist attacks,” said Lou Estrema, a vice president of John P. Woods Co., a New Jersey-based reinsurance broker.

Although Estrema’s employees are working nonstop running clients’ properties through computer simulations of the storms, much of the work can’t even be started until Frances actually makes landfall.

“There’s nothing you can do about it for your clients until it’s over,” he said. “All we can do is tell you what losses you can expect.”

Judging by at least $5 billion worth of damage that Frances is expected to cause, the brokers warned the hurricane season could jolt what was a fairly soft market for homeowners insurance premiums.

After Hurricane Andrew wracked the coast in 1992, premiums gradually decreased, but Fox said the damage from this year’s storms will likely reverse that trend.

“If this is a big loss, you’re going to see that finding coverage will be more difficult,” Fox said. “I think cost of coverage will go up given the potential size of the losses.”