(AP) – September 2, 2008 -- Residential and commercial damages from Hurricane Gustav will trigger an estimated $4 billion to $10 billion in insurance claims, a third of which could affect the energy industry.
While Gustav's force paled in comparison to Hurricane Katrina, which cost insurers $41 billion, oil workers, utility crews, fishermen and other business owners fanned out across the Gulf Coast Tuesday to assess the damage. Retailers began restocking their shelves in anticipation of the cleanup effort, and power crews worked to restore electricity to more than 1 million customers across the region.
"We will be addressing our hardest-hit policyholders first," said Elizabeth Stelzer, spokeswoman for Nationwide Mutual Insurance Co. "Those homes with a tree through a wall, an exposed roof, or other claims in which the home has become uninhabitable are the priority."
Power outages from Hurricane Gustav continued to grow Tuesday with utility giant Entergy Corp. now saying it has the second largest number of outages in the company's 95-year history, trailing only the devastation wrought by Katrina three years ago. The loss of power brought down cellular and Internet service in parts of Louisiana.
Residential and land-based commercial losses were expected to total between $3 billion to $7 billion and oil-drilling damage at about $1 billion to $3 billion, Newark, Calif.-based Risk Management Solutions Inc. estimated. Catastrophe risk-modeling firm AIR Worldwide Corp., based in Boston, placed preliminary losses on land ranging between $2 billion and $4.5 billion.
"It's still really early and we're definitely evaluating the damage that happened," said Matt Bordonaro, spokesman for The Travelers Group. "We are seeing more of a wind event, than a flood event."
Insurance industry analysts warned that computerized data on insurance losses may understate actual costs because the figure don't include damage to uninsured property or destruction caused by actions excluded from some policies, such as flooding. Total losses won't be known for months.
Katrina, which struck three years ago last month, was the single largest natural disaster loss in the history of the insurance industry. Insurers paid $41 billion arising from 1.7 million claims for damage to homes, businesses and vehicles to policy holders in six states. Hurricane Andrew - the previous record holder - produced $15.5 billion in losses in 1992 and 790,000 claims.
Preliminary indications were that Gustav caused little damage to the region's abundance of onshore and offshore oil facilities, though the full impact of wind and wave damage to platforms and pipelines likely won't be known for a couple of days.
The price of oil tumbled nearly $7 a barrel on the New York Mercantile Exchange, suggesting traders were confident that the energy complex suffered only a glancing blow.
Port of New Orleans spokesman Chris Bonura said damage appeared to be light, and that the Mississippi River was already open to some traffic Tuesday morning.
"Our transmission system has had massive damage," Entergy spokesman Mike Burns said, noting damage to 191 transmission lines and 210 substations that affected 825,000 customers, mostly in Louisiana.
Eastbound traffic on Interstate 10 toward Louisiana picked up considerably as people who had evacuated started to make their way home, and retailers began to reopen stores.
Home improvement chain The Home Depot Inc. said more than half of the 31 stores closed because of Gustav will reopen Tuesday and Conn's Inc., which operates a chain of appliance stores in Texas and Louisiana, also began reopening stores Tuesday.
Lowe's Cos. Inc. and Home Depot said hundreds of trucks carrying generators, chain saws, bleach, brooms, tarps and roofing supplies were moving into the region.
In Mississippi, regulators say the 11 casinos along the Gulf Coast will remain closed until crews finish cleaning up from the storm and an adequate number of employees return to work. Larry Gregory, executive director of the Mississippi Gaming Commission, said Tuesday that none of the casinos suffered any structural damage from Gustav.
Insurers estimate Gustav claims as high as $10 billion
September 2, 2008