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Home > Home Insurance News > Insurers to Pay Hurricane Rita’s Victims $4.7 Billion for Insured Property Losses
Insurers to Pay Hurricane Rita’s Victims $4.7 Billion for Insured Property Losses
JERSEY CITY, N.J., Nov. 1— U.S. property/casualty insurers will pay an estimated $4.7 billion for insured property losses to residential and commercial policyholders affected by Hurricane Rita, according to preliminary analysis by ISO’s Property Claim Services (PCS) unit.
Rita hit homes and businesses hard in seven states, though not as severely as initially feared. Louisiana sustained the highest losses—$2.4 billion, which accounts for nearly half the catastrophe’s total price tag. Texas came second with $2.2 billion in losses, with the state’s three Gulf Coast communities—Beaumont, Orange and Port Arthur—suffering extensive wind damage.
Insurers expect more than 400,000 claims from policyholders in the affected states for damage to personal and commercial property, automobiles, and boats and yachts.
“Demand surge” will be a factor affecting insurers’ ultimate payments to policyholders along the entire Gulf Coast region. The recovery process is likely to be prolonged because construction personnel themselves from the region were displaced or forced to evacuate. Higher material and labor costs are also expected to exacerbate the rebuilding process, as is the prospect that many property owners might choose not to return to or restore their properties.
PCS will resurvey insurers in 60 days as more claims are filed and existing claims are closed. PCS resurveys are standard procedure for all catastrophes that exceed $250 million in insured losses or whenever specific circumstances require additional analysis.
ISO’S PCS unit defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of policyholders and insurers.
PCS estimates represent anticipated insured loss on an industrywide basis arising from catastrophes, reflecting the total insurance payment for personal and commercial property lines of insurance covering fixed property, personal property, vehicles, boats, related property items, business interruption and additional living expenses. The estimates exclude loss adjustment expenses.
About ISO
ISO is a leading provider of products and services that help measure, manage and reduce risk. ISO provides data, analytics and decision-support solutions to professionals in many fields, including insurance, finance, real estate, health services, government and human resources. Clients use ISO’s databases and services to classify and evaluate a variety of risks and detect potential fraud. In the U.S. and around the world, ISO’s services help customers protect people, property and financial assets.
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