Hurricane Katrina: One Year Later
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- Hurricane Katrina was the most costly catastrophe on record, causing an estimated $40.6 billion in total insured losses arising from 1.7 million claims. One year after the disaster, nearly 95 percent of homeowners claims and 99 percent of auto insurance claims have been settled and insurers stand ready to respond to future catastrophes.
- Nearly 95 percent of Katrina homeowners insurance claims have been closed. In Louisiana, some 658,700 homeowners claims have been settled at a value of $10.3 billion, bringing the settlement rate to 94.8 percent. In Mississippi, the settlement rate is 94.3 percent, with 334,800 homeowners claims settled at a value of $5.2 billion.
- Approximately 99 percent of the 305,000 private passenger auto claims arising from Katrina in Louisiana and Mississippi have been settled, accounting for about $2 billion in claim payments. Overall, insurers received nearly 682,000 claims for vehicles damaged or destroyed by 2005’s storms, costing them $3.2 billion.
- The magnitude of the disaster and the volume of claims filed have added to the complexity of the claims process. However, only a small percentage of the total claims filed are in dispute, either mediation or litigation. Fewer than 2 percent of homeowners claims in both Mississippi and Louisiana are in dispute.
- Mediation programs set up by the states of Louisiana and Mississippi to handle disputed Katrina-related claims have handled just a small proportion of overall claims and achieved high success rates. In Louisiana, just over one percent of homeowners claims (1.1 percent) have been brought to mediation, while in Mississippi, less than one percent (0.79 percent) of claims have been brought to mediation.
- According to the Louisiana Insurance Department, approximately 3,473 insurance claim mediations in the state have been settled, bringing the overall settlement rate for the program to 77 percent. The Mississippi Insurance Department also reports that some 1,669 cases in the state’s mediation program have been settled. Approximately 2,800 requests for mediation had been filed by August 11, 2006, and the program’s success rate stands at more than 80 percent.
- Despite heightened publicity over lawsuits seeking payments for flood damage under homeowners policies where no coverage exists, the number of claims in litigation accounts for a small percentage of the total number of claims filed. It is estimated that just several thousand Katrina-related claims are in litigation.
- Record homeowners insurance claim payments from the 2005 hurricanes equaled 25 years of Louisiana homeowners premiums and 17 years of Mississippi homeowners premiums.
- Homeowners insurers in Louisiana are expected to pay $12.7 billion in claims from Hurricanes Katrina and Rita, an amount equal to all homeowners insurance premiums paid in the state since 1981.
- Homeowners insurers in Mississippi are expected to pay $5.5 billion in claims from Hurricanes Katrina and Rita, an amount equal to all homeowners insurance premiums paid in the state since 1989.
- Insurers’ financial capacity to pay claims increased by $13 billion or 3 percent to $440.1 billion at March 31, 2006, from its year-end 2005 level of $427.1 billion. However, it is important to remember that the frequency and severity of catastrophic events worldwide is expected to increase. The industry’s capital also backs dozens of lines of insurance written across hundreds of millions of policies in all 50 states.
 Download/View File: Hurricane Katrina: One Year Later (WORD file) (49 K) | |
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