Lili: 'It Could Have Been Worse'

By Mark E. Ruquet

NU Online News Service, Oct. 4, 4:15 p.m.EST--With a little sigh of relief, insurers are stillworking to assess the damage in Louisiana after getting hit by asecond hurricane in the region within two weeks.

Hurricane Lili, which hit the state yesterday on the heels ofHurricane Isidore, cut power throughout portions of the Gulf Coastregion and left a number of populated areas flooded. However, sofar there is no reported loss of life.

U.S. insurers could pay $600 million in claims to victims ofHurricane Lili, the first hurricane to strike the U.S. mainlandsince 1999, according to a preliminary estimate by the InsuranceInformation Institute in New York.

The preliminary estimate is based on the Institute's survey ofinsurers, as well as an average of initial estimates prepared byBoston-based AIR Worldwide. AIR, a wholly-owned subsidiary of theJersey City-based Insurance Services Office, Inc., uses acomputer-modeling program to estimate insured losses fromcatastrophes.

The Institute pointed out that Hurricane Isidore, which madelandfall in Louisiana as a tropical storm on Sept. 26, caused anestimated $100 million in insured losses.

"I'm feeling a lot better today than I expected to be onWednesday," said Robert Wooley, acting commissioner of insurancefor the Louisiana Department of Insurance. "We thought we weregoing to have a catastrophe."

Lili, which was a Category 4 hurricane, with sustained winds of140 miles-per-hour, dropped to a Category 2 storm, with sustainedwinds of 100 mph, by the time it hit the state on Wednesday.

"We're just thankful it wasn't a [Category] four," Mr. Wooleysaid, noting only four reported injuries, all of which took placeafter the storm hit. The injuries were to three electrical workersand a sheriff's deputy that occurred in the course of theiremergency work.

New Orleans, which experienced flooding from Isidore, saw thoseareas flooded once again, but should not have suffered any moredamage with Lili, he added.

The Institute noted that the majority of losses from HurricaneLili are expected to affect Louisiana communities in Lafayette, NewIberia, Abbeville and parts of Alexandria. In addition, Arkansas,Mississippi, Tennessee and parts of Texas were affected.

A visual assessment by insurance companies found much of thedamage to personal property was to roofs and automobiles.Approximately half the insured losses were to commercialproperties, including hotels, oil refineries, farms, and retailstores, the Institute reported.

Paul Hulsebusch, vice president of special operations for GABRobins, a third-party administrator headquartered in Parsippany,N.J., who was dispatched to the scene, said they have not seen asignificant number of claims, and that most of them have been fromwind damage. He said reporting is slow, but most of the stormappears to have been through less-populated regions. East of BatonRouge, there have been no significant claims, he said.

Standard business- and homeowners policies will cover winddamage from Hurricane Lili. However, such policies do not coverdamage from flooding, which is covered under policies written bythe National Flood Insurance Program, the Institute noted.

Although the insured losses from Hurricane Lili are modestrelative to recent natural disasters--Tropical Storm Allison caused$2.5 billion in insured losses last year, for example--"the costsfrom this storm further adds to the overall toll of losses fromcatastrophes on the property-casualty industry," the Institutesaid.

In 2001, insured losses from natural disasters totaled $7.5billion. So far in 2002, disaster losses total nearly $4 billion,the Institute noted.

Official insurance industry property loss estimates fromHurricane Lili will be available from ISO in the weeks to come.