Hurricane Katrina may be the most expensive hurricane ever to hit the United States and could cost insurers up to $26 billion.
The storm may nevertheless prove less costly than some had feared because it weakened overnight and its eye veered slightly east of low-lying New Orleans, by far the most populous city in Katrina's path.
"We expect the bulk of damage to be wind-related, but there is significant flood risk to commercial insurers," said Thomas Larsen, senior vice president at one modeler, Eqecat Inc. of Oakland, California. "The track shifted east 25 miles, which relieved some pressure on New Orleans."
Air Worldwide Corp. of Boston estimated a $12 billion to $26 billion payout, just above Eqecat's $12 billion to $25 billion forecast. Risk Management Solutions Inc. of Newark, California estimated a $10 billion to $25 billion payout.
The higher estimates would make Katrina more costly than Hurricane Andrew, which resulted in $20.9 billion of claims, after adjusting for inflation, when it slammed into Florida in 1992, the Insurance Information Institute said.
Eqecat cut its forecast for Katrina from as high as $30 billion after the storm tracked east of New Orleans.