Gustav Claims Numbers Growing, Say Insurers

Claims losses from Hurricane Gustav continue to grow as the insurance industry braces itself for another blow by the weekend when Hurricane Ike is expected to strike the Texas coast.

While claims dollars are still being tallied, the number of claims appears to be running into the thousands.

On Friday, Bloomington, Ill.-based State Farm, the number one personal lines insurer in the four states declared catastrophe losses by the Insurance Information Services' Property Claim Services, said it had received more than 23,000 homeowner and 2,800 auto claims.

Besides the four states PCS declared catastrophes (Louisiana, Alabama, Arkansas and Mississippi), State Farm said it also received Gustav-related claims from Texas and Florida.

Jeff McCollum, a State Farm spokesman, said today that the numbers increased to a total of 41,827 homeowner and 5,800 auto claims. While the claims are coming in from six states, 99 percent were from Louisiana, he said.

At Northbrook, Ill.-based Allstate, the second largest personal lines insurer in the four catastrophe-declared states, Mike Siemienas, a company spokesman, said the company is seeing a variety of claims from minor damage to homes to trees falling on top of houses.

He said the company is responding in force and is prepared to respond to Ike and multiple hurricanes with claims personnel and mobile claim units. He did not give claims figures.

At St. Paul, Minn.-based Travelers, the top insurer for commercial risk in the four catastrophe-declared states, Ray Stone, vice president of catastrophe operations, said the claims from Gustav "are about what you would expect"--primarily from wind damage ranging from food spoilage to large trees splitting homes in half.

He said while there are some severe claims, the overall picture is not severe. The company is seeing both personal and commercial lines claims, and a minimal amount of auto.

The company is in the process of pre-staging resources in anticipation of Hurricane Ike and is ready to deliver the services needed.

According to Highline Data (a Summit Business Media Company, which also owns National Underwriter) the top five companies affected by Gustav in personal lines in the four catastrophe-declared states are State Farm (28 percent of the market), Allstate (12 percent of the market), Southern Farm Bureau (6.2 percent of the market), Alfa Insurance Group (6 percent of the market) and Progressive Group (5.9 percent of the market). The total direct premium written is $11.78 billion.

On the commercial side (property and auto), Travelers is the number one insurer in those four states, followed by Zurich Insurance Group, State Farm, Progressive Group and American International Group. Direct premium written totals $3.22 billion.

Jersey City, N.J.-based ISO declares a catastrophe when losses are expected to exceed $25 million in insurance claims or affect a significant number of policyholders.

According to catastrophe modelers, losses from Gustav could range from a low of $2 billion to as much as $10 billion.

Meanwhile, attention is turning to Hurricane Ike, a killer storm that took four lives in Cuba yesterday.

The National Hurricane Center's model suggests that as Ike heads toward the Gulf Coast, winds--which have dropped to 75 mph, a Category 1 storm on the Saffir-Simpson scale--are expected to intensify once more.

As it hits the Texas Gulf Coast on Saturday morning the forecast has the storm reaching Category 3 status of 115 mph.

AIR Worldwide said the storm track is exhibiting "considerable uncertainty," indicating it could land anywhere between Galveston and Corpus Christi, Texas. Some models indicate the storm could hit Mexico, AIR said.

Steven E. Smith, president of Property Solutions, Carvill ReAdvisory in Chicago, said as Ike moves across the Gulf it will likely be a major hurricane when it makes landfall. He added that tract makes it "increasingly unlikely that Ike will impact the Gulf oil field or the northern Gulf Coast."

State Farm's Mr. McCollum said that "wherever [Ike] lands, we are going to be ready" with claims personnel.