Insured losses from Hurricane Rita are estimated to be $4.7 billion, making it the ninth-worst event in U.S. history, according to the Insurance Services Office Property Claim Services division.
Unlike modelers, ISO's figures are based on a survey of insurers who say they expect 400,000 claims from policyholders in the devastated areas. The claims will consist of damage to personal and commercial property, autos, boats and yachts.
The storm hit seven states, but not as bad as initially feared, ISO noted. Louisiana had the highest loss at $2.4 billion, followed by Texas at $2.2 billion, with three of the state's Gulf Coast communities–Beaumont, Orange and Port Arthur–suffering extensive wind damage.
Demand surge–the cost for supplies and labor to make repairs in the long term–will affect payments, ISO noted.
ISO said PCS will re-survey insurers in 60 days.
Earlier this month, ISO put losses from Hurricane Katrina at $34.4 billion. Modelers had put estimates for the worst storm in U.S. history on the high end at $60 billion. Another survey should come in early December.
The recovery continues, with concerns over what the market will look like in the future in Mississippi.
The state's insurance commissioner, George Dale, called the situation "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 today, 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 to speed up the process. 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.
Money is going to become an increasingly critical problem for the state, with revenues non-existent from such sources as casino gambling, as Katrina wiped out the entire gaming industry along the Gulf Coast. Missing as well are residents who worked in the industry who lost their homes in the storm.
Only the city of Biloxi, Miss., has any revenue available because it took out a $10 million business interruption policy. Mr. Dale said such coverage was recommended to other cities, but only Biloxi took the advice.
Mr. Dale said a request for funding help for the insurance department filed with the Federal Emergency Management Agency is still pending.
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 if 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 coast] if you keep the current construction standards," Mr. Dale noted, adding, "They could just leave."
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