Damages could reach $5bn, but doubts over insuring hurricanes rebuffed by Beazley
Loss adjusters in New Orleans have warned that Hurricane Rita's impact will be a huge drain on already depleted claims resources.
The hurricane barrelled across the North Atlantic before crashing to land on the Louisiana coast as a category three hurricane.
Bud Trice, vice president for catastrophe services at Crawford & Company, said: "Preliminary loss assessments are all over the place.
"Loss adjusters now face the challenge of trying to set up operations in badly hit areas with no electricity and housing."
Jayanta Guin, vice president of research and modelling at Air Worldwide, added: "We expect to see significant damage to residential and commercial properties near and to the east of Rita's track."
The company predicted that the hurricane would cost between $2.5bn and $5bn in insured damages.
Beazley's chief executive Andrew Beazley spoke of the need to reassess the rating of natural catastrophe risks at the Houston Marine insurance seminar last week.
He described Hurricane Katrina as a "market-changing event" that, in many instances, revealed prevailing premium rates to be wholly inadequate.
But Beazley disagreed with views that such risks were fundamentally uninsurable.
He said they were instead "more costly to insure and the size of exposures difficult for the domestic and world markets to digest."
Beazley said losses from Katrina, currently estimated at between $40bn and $60bn would "test the appetite of many" for such risks, but he added that Lloyd's underwriters "will not run for the hills".
Risk Management Solutions said that losses from Hurricane Rita would fall between $4bn and $7bn.
Eqecat updated its initial estimate to give a figure of between $3bn and $6bn.
Lloyd's said it was too early to comment on Rita's impact, but said it believed Katrina's impact on the Central Fund would be "immaterial".