Insurance adjusters seeking to survey the damage in states devastated by Hurricane Katrina were kept at bay by flood waters and blocked roads in many areas today, insurers said.

Meanwhile, the Boston-based AIR Worldwide catastrophe modeling firm refined its estimate of Katrina's damage and said the storm could cost the insurance industry between $17 billion and $25 billion. Yesterday, the company put the number at from $12 billion to $26 billion.

At $25 billion, Katrina would be the most costly natural catastrophe in U.S. history, surpassing the $15.5 billion of insured losses from Hurricane Andrew in 1992, which would be $20 billion in today's dollars.

"Of the more than $500 billion of insured property in the State of Louisiana, over 35 percent is in coastal counties impacted by Katrina. In Mississippi and Alabama, over 10 percent of the total value of insured properties is in coastal counties," said Jayanta Guin, AIR's vice president of research and modeling.

Joe Annotti, spokesman for the Des Plaines, Ill.-based Property Casualty Insurers Association of America, said insurers are poised to get into the devastated areas but are being held back by the flooding.

He noted that the major objective will be to determine how much of the damage was caused by wind or flood. Flooding is not covered by primary insurers but by the National Flood Insurance Program.

Under the program, as of Sept. 30, 2004, there were 376,681 policies in place in Louisiana; 41,946 in Mississippi, and 41,336 policies in Alabama--the three most heavily affected areas.

"This is a major catastrophic loss," observed Mr. Annotti.

Katrina made landfall yesterday on the Louisiana coast as a Category 4 hurricane and slashed into Mississippi and Alabama. More than 70 have been reported dead so far.

Flooding had not receded in many areas today, and there were reports of levies breaking around New Orleans as efforts to rescue persons stranded by the flood waters continued.

Mr. Annotti said Jack Anderson, a contact at the Southern Farm Bureau, which insures a significant portion of Mississippi's homes, autos and farms, sent PCI an e-mail listing his assessment of the devastation. He said evaluating the extent of the damage is a very slow process due to the extensive flooding.

Calculation of the damage is awaiting adjusters getting into the field, which may not happen until the weekend, said Mr. Anderson. However, it is assumed this will be the largest loss in Southern Farm Bureau's history in the state.

Most of the losses, he added, will be to homes and autos, and not commercial, since little of the flooded area was near agriculture.

Determining the number of claims overall, Mr. Annotti said, is going to be a slow process.

He reiterated yesterday's assessment that insolvency is not an issue for insurers affected by the storm.

Standard & Poor's said that because industry damage estimates are hovering between $12 billion and $15 billion, outstanding hurricane-related catastrophe bonds would not hit their respective attachment points and the rating agency would not place any insurers on CreditWatch.

New York-based S&P also said that the effects of Hurricane Katrina are not expected to affect the ratings in the U.S. oil and gas sector, but it is still too early to assess infrastructure damage.

Production of oil and natural gas in the Gulf has been stopped and there have been some reports of rigs becoming displaced.

Today, Lloyd's of London issued a statement saying it expects "significant insurance claims" as a result of the hurricane, primarily related to offshore energy installations in the Gulf, property damage and business interruption.

Lloyd's said it is asking all of its insurers to supply details of the "likely impact on their businesses by Monday, Sept. 12," which will allow the market to give more information on its exposure.

"Despite the severity of Katrina, the Lloyd's market is well equipped to manage the financial impact of a catastrophe on this scale," Lloyd's said, adding that its primary priority is to settle claims and help with reconstruction.

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