National Association of Insurance Commissioners officials said that while the damages from Hurricane Katrina may set record losses, the property casualty industry maintains that adequate capital and liquidity exist to meet the challenge.

State financial analysts are well underway assessing the financial and operational impact of Hurricane Katrina on insurers.

"These financial results demonstrate that insurers are up to the task of making good on the promises that they have made to the American businesses and consumers through their insurance policies," said Diane Koken, NAIC president and Pennsylvania insurance commissioner.

Ms. Koken added that some smaller insurers will experience financial distress, but the overall condition of the industry should remain healthy.

The U.S. P-C industry maintains policyholders' surplus of an estimated $390 billion and holds in excess of $1.3 trillion dollars.

Tim Wagner, chair of the Property and Casualty Committee and Nebraska Insurance Committee, said that computer simulation models are used to develop estimated loss costs associated with catastrophic events, including hurricanes.

Thus, rate-setting has become much more of a science than an art. "As a result, most states should not see homeowners and other property insurance rates rise substantially as a direct result of Hurricane Katrina," Mr. Wagner said.

Early estimates of more than $30 billion place insured losses from Katrina higher than 1992's Hurricane Andrew, which at $22 billion created losses greater that any other U.S. hurricane.

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