Insurers face $40bn claims after Katrina

[emad]

Richard Wachman and Oliver Morgan
Sunday September 4, 2005
The Observer


BRITISH and American insurance industries face claims topping $40 billion following the devastation in the wake of Hurricane Katrina.

The figure, leaked to The Observer by sources within the Lloyds of London insurance market, is similar to the hit taken by companies following the terrorist attacks in September 2001. As a consequence, businesses face huge hikes in insurance premiums.

According to a document circulating within Lloyds of London insurance syndicates, the devastation left by the hurricane is equivalent to a worse-case scenario sketched out by Lloyds forecasters two years ago. The forecasters published a paper on the effect on the industry of a major hurricane in the Gulf of Mexico - where Katrina wrought havoc last week.

The highly secretive department at the Lloyds market, dubbed Department X, has also prepared estimates of the damage that could be caused by an earthquake along the St Andreas fault line in California measuring nine on the Richter scale. In those circumstances, the bill could be five or six times higher. Lloyds of London is expecting a hit of between £1bn and £2bn following last week's carnage, about 25 per cent less than its exposure after 9/11.

http://observer.guardian.co.uk/business/story/0,6903,1562119,00.html

[kanrok]

1. Next come the calls for "tort" reform

beacuse of the massive payout.

[emad]

2. Air fares to rise after Katrina creates a jet-fuel shortage

Air fares to rise after Katrina creates a jet-fuel shortage
By Jason Nisse and Ben Schneiders

Published: 04 September 2005

British Airways and Virgin Atlantic are set to increase the fuel surcharges on their flights as a jet fuel shortage in the US is threatening to ground flights.

The situation in the wake of Hurricane Katrina is so bad that some airlines - such as Continental - have taken to carrying extra fuel on board because of fears that they will not be able to refuel. Analysts are also predicting the crisis will force more airlines into bankruptcy, including Delta, America's third-largest carrier.

Both BA and Virgin say they have enough jet fuel to keep their transatlantic operations flying but are monitoring the situation closely. They are also reviewing their fuel surcharges - £24 a flight each on long-haul and £8 on short-haul for BA. It is expected that they will increase them this week.

Katrina closed down at least eight refineries on the Gulf Coast, cutting jet fuel production by 13 per cent and pushing prices from $1.90 a gallon to nearly $2.40. A month ago they were under $1.70.

http://news.independent.co.uk/business/news/article310065.ece

[xchrom]

3. have no fears they'll raise their rates.

follow in bushco's steps -- put the squeeze on the middle calss and the working poor.

these two groups will play a huge roll in helping the victims of katrina and rebuilding NO and surrounding areas.

and we will be billed every step of the way for our generocity.

thus further greasing the way for a recession of fairly sizable proportions.

[donco6]

4. Liability insurance rates will climb astronomically.

In my school district, we pool insurance with 4 other districts to get better rates. After 911, we saw our rates climb by about 33% in one year. This impacts many, many areas of business, and will sour many markets as profits dive.

And Bush wants us to shift our retirements to the stock market.

[indepat]

5. Looks like one initial estimate of $9B on the low side was a tad low

[indepat]

6. Jesus, $40B: that amount would put dent in oil company profits

temporarily.

[demodonkey]

7. Insurers can go to hell. Look what they're doing to my 87 yr-old mother.

Developer flooded our family farm 12 years ago; developer's insurance company has been fighting my mother since 1994 rather than pay up. The case is huge and the developer's insurance company has been fiddling around and stalling, IMHO, with the hope that my mother, at her age, will die before it's settled and thus the case will just "go away".

Part of her case is due to FINALLY come to court in December but insurance company will probably now claim poverty from Katrina settlements and lowball my mother on her settlement. (Then, rather than pay up on Katrina damage, they'll probably also fight these poor people to the death too -- the ones that aren't dead already!)

:grr:

[daleo]

8. 40 billion won't even come close.

A major city is under water, and smaller cities have been blown off the map. Multiply that number by 10 at least, probably 20.

But the insurance companies will squiggle off the hook. I think the government will pass a law, with a large deductible at the bottom end and a cap at the top end, to protect them.