Losses From Hurricane Lili Expected to be $600 Million

NEW YORK, OCT. 4, 2002 - U.S. insurers could pay $600 million in claims to victims of Hurricane Lili, the first hurricane to strike the United States mainland since 1999, according to a preliminary estimate by the Insurance Information Institute (I.I.I.).

The preliminary estimate is based on an I.I.I. survey of insurers and an average of initial estimates prepared by Boston-based AIR Worldwide. AIR, a wholly-owned subsidiary of Insurance Services Office, Inc. (ISO), uses a computer modeling program to estimate insured losses from catastrophes.

The I.I.I. pointed out that Hurricane Isidore, which made landfall in Louisiana as a tropical storm September 26, caused an estimated $100 million in insured losses.

The I.I.I. noted that the majority of losses from Hurricane Lili, are expected to affect Louisiana communities in Lafayette, New Iberia, Abbeville and parts of Alexandria. In addition, Mississippi, Arkansas, Tennessee and parts of Texas were affected. A visual assessment by insurance companies found much of the damage to personal property was to roofs and automobiles. Approximately half the insured losses were to commercial properties, including hotels, oil refineries, farms, and retail stores.

Standard business and homeowners policies will cover wind damage from Hurricane Lili. However, such policies do not cover damage from flooding. Flood damage is covered under policies written by the National Flood Insurance Program (NFIP).

Although the insured losses from Hurricane Lili are modest relative to recent natural disasters - Tropical Storm Allison caused $2.5 billion in insured losses last year, for example - the costs from this storm further adds to the overall toll of losses from catastrophes on the property/casualty industry. In 2001, insured losses from natural disasters totaled $7.5 billion. So far in 2002, disaster losses total nearly $4 billion.

Official insurance industry property loss estimates from Hurricane Lili will be available from ISO in the weeks to come.

The Insurance Information Institute is an educational, fact-finding and communications organization committed to disseminating information about property/casualty insurance.