The Asymmetric Threats Contingency Alliance sent out the following memo to its private mailing list. I reprint it here with permission. Interesting information for those in the Southeast regarding insurance.
Dear ATCA Colleagues
RE: The USD 100 billion hurricane?
The total costs associated with Hurricane Katrina could top USD 100 billion. That estimate would make Katrina the most costly windstorm ever to strike the US after 1992’s Hurricane Andrew. Risk Management Solutions (RMS) estimates at least half of all losses will result from the flooding that has left New Orleans uninhabitable. Other costs will come from the wind and infrastructure damage, as well as the storm surge and indirect economic impact. The group also estimates that the cost of interrupted economic activity will top 100-million dollars per day. RMS says the total economic impact will depend highly on how quickly authorities can respond to the emergency situation.
Swiss Re, the world’s second-biggest reinsurer, said Hurricane Katrina will cost it about USD 500 million (preliminary estimate). Hannover Re, the fifth-largest, said the storm means it will not meet this year’s profit target. Munich Re, the world’s biggest reinsurer on August 30th put its claims at EUR 400 million (USD 500 million). All preliminary figures are likely to be revised in the coming few days.
Robin Jackson has made another connected comment:
DK,
I was the first to put the estimated insured loss at over USD 30 Billion. I now hear they are talking about USD 100 billion of total insured/uninsured loss.
As the loss goes up the chances are the uninsured loss percentage increases. This will really hit the insurance/ reinsurance industry hard if it goes above USD 40 billion insured. This is in addition to earlier storm losses in US and Central Europe and some still to come hurricanes. The season is not over yet.
Yeah, I understand that it’s the reinsurrance cost that’s going to be the big hit for the insurance companies. The Wall street folks know this stuff. Figure about 5% higher insurance bills for everyone in the U.S. next year, with exceptions for insurers like say “New hampshire Home and Life Insurance Company”.
What drives me crazy is that $50 or $100 million spend on levee construction could have brought it up to Cat 5. An enlightened reformation of Mississippi delta management would be a lasting solution.
But the Bush administration thought it was smart to cut levee spending in order to maximize tax cuts.
When you Google the phrase “Penny wise. Pound Foolish” you should get “Bush Administration” as the first 100,000,000,000 results.
Wow, even an anti-Bush comment in an insurance post. Take a hint from the other lefties that post on here: “The destruction from the hurricane is Bush’s fault.” theme isn’t working.
Back on topic, one of the reasons Andrew didn’t ramp up rates for the rest of the country was that the insurance companies forced Florida officals to improve the building codes. I’d expect a similiar effort, though more focused on the local government, to take place.
Why the local government? Because they’re the ones in charge of their levee, not the federal government. At most they can ask for federal money to help, which their Democrat reps have failed to do so.
Makes for a much better argument than “It’s Bush’s fault! It’s Bush’s fault!”
everybody can gimme USD$100bn
pls lemme know
Frank/Indonesia
call 62 24 70641225
FRANK,
THINK ABOUT IT..
If everyone in 1 country gave you $1…you would be rich.