The Insurance Information Institute said today that last year's storm losses wiped out 17 years of homeowners insurance premiums in Mississippi.
Last week I.I.I. said that Louisiana's 2005 homeowners' hurricane losses wiped out premium paid in that state equal to what was paid over 25 years.
The Mississippi loss, the New York-based organization said, will result in a reassessment of risk in the state, as it will in Louisiana.
Homeowners insurers in Mississippi are expected to pay close to $5.5 billion in claims from Hurricanes Katrina and Rita, an amount equal to all homeowners insurance premiums paid in the state since 1989 and nearly nine times the estimated $625 million in homeowners premiums paid last year.
Homeowners insurance in Mississippi was generally unprofitable even before Katrina struck, I.I.I. said. In the 20-year period from 1985 through 2004, homeowners insurers sustained a net loss of $258 million, even after accounting for investment income earned.
Insurers will pay out an estimated $5.475 billion on 355,000 claims to homeowners in Mississippi from Hurricane Katrina and $20 million for 5,000 homeowners claims from Hurricane Rita, according to figures from Insurance Services Office in Jersey City, N.J., I.I.I. added.
Overall insured catastrophe losses in 2005 are expected to exceed $55 billion, occurring primarily in Louisiana and Mississippi.
Robert Hartwig, chief economist for I.I.I., echoed his earlier observations about Louisiana losses, noting that the reassessment of homeowners insurance by primary and reinsurance carriers will be a multiyear process.
Besides premium increases, there may be a capacity crunch and a flight to the residual market for homeowners unable to secure insurance in the primary market, he said.
Mr. Hartwig noted too that hurricane activity is anticipated to be very active over the next 15-to-20 years, and uncertainty over building codes and standards are factors that insurers will be considering in their calculations.
There is also concern among insurers over the liability issues stemming from legal claims by Mississippi Attorney General Jim Hood and others concerning damage that insurers contend is not payable because of flood loss exclusions in policies, Mr. Hartwig noted.
He said the fear is that an adverse decision would force carriers to pay billions for losses which were never reserved for.
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