Insurance softens hurricane’s blow

CHICAGO — Insured losses from Hurricane Charley could total as much as $10 billion to $14 billion, according to industry estimates released Monday as insurers fielded thousands of claims from hard-hit Florida residents.

Home, auto and commercial insurers sent teams to assess the damage and were taking claims at temporary centers set up at venues ranging from Wal-Marts to the Daytona International Speedway.

Both State Farm Insurance and Allstate Insurance, the nation’s two biggest insurers, are facing steep losses from Charley, which killed at least 17 people and left 25 counties declared federal disaster areas. But the blow will be eased somewhat by the Hurricane Catastrophe Fund which Florida established in the wake of devastating Hurricane Andrew in 1992.

State Farm said its losses would be limited to no more than $200 million because of the Florida fund and reinsurance contracts. Reinsurers provide backup for primary insurance companies, enabling the system to spread risk so it can cover losses from major disasters.

Allstate said it would pay the first $289 million of catastrophic losses in Florida, but the company had not actually estimated losses yet. The nation’s biggest publicly traded insurer said it does not expect the storm to have a material impact on its operating results or financial condition.

Neither Illinois-based insurer would project the total number of claims expected to be filed.

“There are lots of areas that people haven’t been able to get into yet, so we’re still trying to figure it out,” said spokesman Kip Diggs at State Farm headquarters in Bloomington, Ill. “Our greatest concern is for the safety of the folks down there.”

Munich Re, the world’s largest reinsurer, estimated the total value of damage caused by Hurricane Charley at about $20 billion and put total losses covered by insurance at between $7 billion and $14 billion. Munich Re estimated its own exposure to be in “the low three-digit-million dollar range,” spokesman Florian Woest said.

Another estimate was slightly lower. AIR Worldwide Corp., a Boston-based risk modeling company that helps corporations assess catastrophe risk, pegged insured losses at $6 billion to $10 billion.

Both figures are preliminary, with reports of storm damage still being assesses. Another advisory company that gives disaster and catastrophic estimates, Insurance Services Office Inc. of Jersey City, N.J., said at least another week is needed to compile a reliable estimate.

State Farm, Florida’s largest home insurer, has about 23 percent of the residential market in hardest-hit Charlotte County, nearly three times the share of Allstate. The company had received 19,454 homeowners’ claims and 1,552 auto claims as of 3 p.m. Sunday, Diggs said.

Adjusters from both those companies and others were combing the area Monday. State Farm said it had brought in several hundred catastrophe claims representatives and set up six temporary claims processing centers in the affected area — two at Wal-Marts, others at Target and Publix stores and one at the Daytona speedway.