Gustav Claims Estimates Reduced
As Hurricane Ike menaces Florida and possibly other areas of the Gulf Coast, insurance industry analysts have re-evaluated Hurricane Gustav. Now that insurers have some preliminary estimates, it appears that the $10 billion valuation of claim severity will be much lower, possibly less than $5 billion. See "Insured losses mount, slowly, as Gustav damage keeps homeowners away," BestWire, 09/03/2008, Carr, Sean P., and "Coast residents file 1,500 storm claims," Clarion Ledger, Ayres, Jeff, 09/05/2008. That is fantastic news. Insurers in the Louisiana and Mississippi markets do not need further justification for raising rates or simply leaving those markets. Re-insurers are important to provide capacity; eight figure catastrophes significantly affect the ability of insurers to purchase reinsurance contracts. Unfortunately, Hurricane Ike may change all that. Working very late on Friday night, I spoke with an opposing State Farm attorney. We agreed that Ike would devastate Mississippi and Louisiana. There is only so much emotional trauma people can take, much less the financial hardships these storms cause.
