Hurricane damage estimates reduced

NEW YORK — Insured losses from Hurricane Ivan are expected to hit $4 billion to $10 billion, analysts estimated on Thursday.

Earlier estimates that reached up to $20 billion were lowered since the storm’s eye didn’t directly hit Mobile, Ala. as originally projected. Ivan’s reach into New Orleans, which was also initially expected to be battered intensely, was minimal. That also reduced the cost projections.

Fitch Ratings estimates Ivan will cost insurers between $4 billion and $10 billion, but noted that a noteworthy portion of the damage will come from flooding, which is not covered by commercial insurers. Flood insurance is offered by the federal government. That should soften the blow to commercial insurers, said Michael Barry, Fitch’s managing director.

Barry added that reinsurance companies were likely to take a bigger hit from Ivan than either Hurricane Charley or Hurricane Frances because Alabama does not have a state program to help insurers pay claims. After Hurricane Andrew struck South Florida in 1992, the state established a hurricane catastrophe fund to help insurers pay claims.

Fitch estimates that Charley will cost insurers $6.8 billion while Frances will cost $2.5 billion. Hurricane Andrew was the most expensive storm ever, costing insurers $19.9 billion.