THE American and - to a much lesser extent - British insurance industries face a $60 billion (£32.6bn) bill in the fallout from the Gulf of Mexico hurricane disaster whose epicentre was New Orleans.
Sources within the Lloyd’s of London insurance market told The Scotsman yesterday that as a matter of course it ran "realistic disaster scenarios" covering potential major payouts on natural disasters.
One insider said: "We model 19 different scenarios including an earthquake in Japan or California, a hurricane hitting the Gulf of Mexico, and a terror attack in lower Manhattan.
"And the figure we came up with for a hurricane, with Houston, Texas as its epicentre, was $60 billion."
As a consequence of the insurance payouts for the devastation and carnage wrought by Hurricane Katrina, it is believed businesses also face huge hikes in premiums down the line.
Lloyd’s say that at this juncture, though, it is too early to say definitively how much the industry’s or its own exposure to Katrina will be.
One Lloyd’s source said: "Currently there is little consensus over how much it will cost anybody. We have seen a range of forecasts from $9bn to $50bn."
Some reports have suggested Lloyd’s itself is expecting a hit of between £1bn and £2bn from the hurricane.
But a spokesman said later: "It is too early to say. We are asking our 42 business [underwriting] syndicates to report back to us by 12 September."
Insurance companies with the highest exposure are believed to be Munich Re, Swiss Re and AIG.
However, a spokesman for one of Britain’s biggest insurers, Prudential, said: "It would be hard to say there would be nothing at all, but it would be minimal. We don’t do commercial insurance there."
A spokesman for the Association of British Insurers said: "We don’t think any of our members have significant exposure to Katrina."
