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"Optimistic models" project that if the avian flu moves from humans to birds and causes a pandemic, it could cause $15 billion to $20 billion in U.S. insured losses, according to a Standard and Poor's analysis.

The New York rating services firm said that overall worldwide losses of $71.3 billion to $200 billion could result and that the heaviest impact could fall on big cities with large transit systems.

The $15 billion to $20 billion figure, based on U.S. Center for Disease Control data, reflects medical advances and containment efforts of the type that restricted Severe Acute Respiratory Syndrome (SARS) in 2003, S&P said.

Whatever the final total, the firm's analysts said a pandemic would cause losses in nearly all insurance sectors: health, commercial insurance, life, life and property reinsurance, and retrocession.

The report said only the auto and homeowner personal lines might not be impacted by a severe outbreak.

S&P noted that while the U.S. property-casualty industry has more than $400 billion in capital, the effect on individual companies would vary depending on geography or business concentrations.

The report said that companies headquartered in major cities or with concentrations in business interruption insurance might find the risks more than they could manage.

S&P analysts said that modeling for an influenza pandemic is a challenge, as record-keeping only began with the 1918 Spanish Flu epidemic, which had a worldwide death toll of at least 40 million.

Prevention and treatment since 1918 have improved vastly, S&P noted. The report said infection or death rates that rise to or above 1918 levels would impair and weaken companies materially. However, the report said currently that does not look likely.

The study said insurers in developed countries are generally well capitalized and have sufficient reserves to cover a significant epidemic, but typical catastrophic reinsurance coverage does very little to protect primary companies from the risk of prolonged epidemics.

According to the report, although an avian flu pandemic is unlikely to surface in a large metropolitan area, those at highest risk if it erupts are populations in areas, especially those with extensive public transportation systems, such as New York City , Chicago , Tokyo , Paris and London .

A pandemic's effects could last for several months, and insurers, especially those with geographic concentrations in such areas, might find themselves exposed to an aggregation of losses not fully protected by reinsurance, S&P said.

Describing a pandemic impact, S&P said closure of movie theaters, shopping malls, sporting events and, especially, public transportation in major cities would all hurt businesses, and, ultimately, the companies that insure them. Distribution of perishable goods by truck also could be jeopardized and cause losses. Stock and bond markets could be negatively affected, as well.

The report added that air travel, for both individuals and packages, carries the most risk, something international courier companies had to deal with during the SARS outbreak.

S&P said claims could spike and large companies that self-insure would also be hit, as they are generally based in large metropolitan areas.

Significant payments under workers' compensation insurance could result if employees could establish that they caught the flu in the workplace, according to the company's analysis.

The report said p-c losses would come from business-interruption claims, especially in tourism, and insurers could see many employees barred from their workplaces at a time when their companies would have much more business to review.

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