With adjusters on the ground across the Gulf Coast, assessing damages from Hurricanes Katrina, Rita and Wilma, carriers continue to battle natural and man-made obstacles to settle claims.

Insured losses from Hurricane Rita were officially estimated last week at $4.7 billion, making it the ninth-worst event in U.S. history, according to figures compiled by the Insurance Services Office Inc. Unlike early estimates from risk modelers, ISO's Property Claim Services division figures are based on a survey of carriers that say they expect some 400,000 claims in the devastated areas.

Rita hit seven states, but damages were not as bad as initially feared, ISO noted. Louisiana had the highest loss at $2.4 billion, followed by Texas at $2.2 billion. ISO said PCS will survey insurers again on Rita losses in 60 days.

Earlier this month, ISO put losses from Hurricane Katrina at $34.4 billion. Another survey should come in early December.

Mississippi Insurance Commissioner George Dale called recovery efforts "very stressful," as homeowners who have yet to be visited by a claims adjuster want to know when their damages will be assessed. He said he believes the industry is doing the best it can, but even if 100 more adjusters were added to the considerable force already on the ground, there would be nowhere for them to stay to do their work.

He added that even those homeowners who received a settlement must now wait to find a contractor to do the work, with demand outstripping supply. "The size of this [catastrophe] makes it a slow process," he observed.

To quicken the process, he recommended that insurers pay "slab" losses (where nothing is left but the foundation) as a covered wind loss. Instead, insurers are bringing in structural engineers to examine foundations and determine what caused the loss--water or wind. This is a controversial subject, since wind but not flood damage is covered under standard homeowner policies.

"The companies say they are bringing in engineers so they know which customers to pay," explained Mr. Dale. "The customers say the companies are bringing in the engineers so they don't have to pay."

He added that insurers are not routinely paying claims for slab losses, further aggravating some policyholders.

So far, there have been no insurer insolvencies as a result of this year's storms, unlike 1992's Hurricane Andrew, which caused 10 insurers to go under--but the department is keeping a careful watch, noted Mr. Dale.

With the claims process continuing, he said he worries whether carriers will remain in the market if building codes are not improved for reconstruction. From a political perspective, he questioned whether legislators would institute improved building standards for homes to better withstand another hurricane, because homeowners would object to the added cost.

"I don't see how you can make an insurer write coverage [along the Gulf Coast] if you keep the current construction standards," he noted, adding, "They could just leave."

The fallout from Hurricane Katrina is continuing in Louisiana as well. Indeed, adjusters have done little to assess insurance losses in New Orleans due to political infighting and safety concerns, while in outlying parishes it will be months before they finish their estimates, according to Louisiana Insurance Commissioner J. Robert Wooley.

Claims adjusters are systematically working through a grid established by the Louisiana insurance department. There are a total of 25 grids of 1,000 homes, Mr. Wooley explained, in which adjusters work north to south. The grids start on the west and work east.

The advantage of this system, he pointed out, is that it allows local officials to plan their next move, if condemnation is necessary, knowing the property owner's insurer has completed the claims work.

At this rate, however, it will still be six months before the work is complete, and work has yet to start in full in New Orleans itself, he noted.

In St. Bernard and Plaquemines, the need for demolition may not be as extensive as originally feared, Mr. Wooley said. He related that on a recent inspection he saw a number of homes where the owner painted "Do Not Demolish" on the house, fearing once the adjusting was complete, it opened the door to demolition. However, he said, there is a very extensive process involving local government and the homeowner before any demolition is launched.

In New Orleans, he said, the claims process is plagued by political infighting between Mayor Ray Nagin and the City Council, as well as safety concerns, with adjusters requiring local authorities to provide escorts before they enter certain areas. In addition, Mr. Wooley said there are not enough adjusters, adding: "Resources are stretched pretty thin."

He said carriers are trying to keep adjusters in the state, but have had to pull some out to handle claims in Florida from Hurricane Wilma.

While Wilma paled in comparison to Hurricane Katrina, it still could rank as the fifth-costliest catastrophe in U.S. history and has put new strains on the already struggling Florida insurance market, according to Fitch Ratings. The firm said it does not believe Florida insurers have received an adequate return since Hurricane Andrew in 1992 and have not recovered from the grand slam of hurricanes that hit the state in 2004.

"As a result, there is little incentive for a well-capitalized insurer to remain in the market or for a start-up insurer to capitalize well," said a Fitch representative, Ken Reed.

Caption for Hurricane Shot:

Insurers have adjusters investigating claims from Hurricanes Katrina, Rita and Wilma at the same time, stretching human and material resources to the limit.

Big number chart

Flag: Stat Watch

Head: What's The Damage?

$34.4 Billion

Insured damages estimated from Hurricane Katrina, the worst U.S. loss ever.

$4.7 Billion

Latest estimated insured loss from Hurricane Rita, ninth-worst in U.S. history.

$10 Billion?

Worst-case estimate for Hurricane Wilma, which would make it the fifth-worst ever.