Long Process To Tally Frances Damage Seen

By Steve Tuckey

NU Online News Service, Sept. 8, 4:23 p.m. EDT?Efforts to put a dollar figure on insured losses from Hurricane Frances will take a lengthy period due to the storm's wide impact and duration, according to a spokesman for AIR Worldwide modeling firm.[@@]

Mike Gannon, speaking for AIR Worldwide in Boston, said the process could take several weeks.

As of Monday, State Farm reported 16,920 claims. The Hartford Financial Services Group reported 4,200 claims while Nationwide said that they have received 8,100 claims stemming from Frances.

As the largest homeowners' insurer in Florida, State Farm has suffered the brunt of both Charley and Frances, with the company reporting $1.3 billion in insured damage loss for Charley.

With prolonged heavy rains, a great deal of the Frances damage will stem from flooding, according to insurance experts. Those losses will be covered through the National Flood Insurance Program run under the aegis of the federal government.

Despite the one-two punch of Charley and Frances, Standard & Poor's analyst Thomas Upton said the damage will fall below that of Hurricane Andrew in 1992.

"Given the nature of Hurricane Frances, we expect that a greater proportion of damage will be attributed to flooding than was the case with Charley, a risk that is borne by some extent by federal flood insurance, serving to mitigate the exposure of the private sector," Mr. Upton said.

Observers are keeping a sharp eye on Hurricane Ivan, now in the Caribbean heading toward Florida, while continuing to weigh the effects of the magnitude of the losses of typhoons and earthquakes in Japan.

For Mr. Upton another important factor will be the political ramifications of the public's perception of the performance of the insurance industry in the wake of such catastrophes.

There is also the question of whether the gross losses of the primary homeowners' writers will exceed the coverage provided by the Florida Hurricane Catastrophe Fund. If that is the case reinsurers might have to rethink their approach to modeling catastrophes to give greater weight to more frequent occurrences.

Prudential analyst Jay Gelb does not see any market dislocations from the Charley-Frances combo.

"We do not expect the commercial property [re] insurance market to tighten due to Frances since the insured damage to the total p-c market is likely to be less than $15 billion," Mr. Gelb wrote this morning. "Whether tightening will occur as a result of damage from Ivan remains to be seen."

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