The issues facing the insurance industry in the wake of Hurricane Katrina could prove to be far more complex and extensive than what the industry faced in the aftermath of Sept. 11, 2001, industry observers said.
Aaron Davis, vice president of the property syndication group for the insurance broker Aon, said Hurricane Katrina would be a market turning event for commercial property insurance.
Because insurers do not have access to a public-private reinsurance fund, as they did last year in Florida, and damages could rise to as much as $35 billion, insurers could easily "blow through" their reinsurance treaties and have to tap surplus. Insurers expense will also increase because of the need to purchase new reinsurance caps, he said. All these expenses, he said, would eventually be passed on to commercial property consumers.
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