Katrina Damage Estimates Now $25B

Would Make Devastation More Costly Than Hurricane Andrew's Record

(CBS/AP) 
Major insurance companies — already dealing with the fallout from Katrina in southern Florida, where the storm passed late last week — on Monday began turning their attention to Louisiana and Mississippi.

The largest property and casualty insurance companies operating in the southern states are State Farm Insurance Cos. of Bloomington, Ill., and Allstate Corp. of Northbrook, Ill.

Phil Supple, spokesman for State Farm, said the company has teams ready to move into New Orleans and Gulf Coast cities after Katrina passes to begin processing insurance claims.

"We have to wait for civil authorities to open areas so we can get in and assess damages," Supple said.

Allstate, the No. 2 home insurer in those states, also has teams prepared to move in after the storm. Spokesman Mike Trevino said the company has mobile units fitted with generators and satellite dishes so they can deal with claims in hard-hit areas where electricity and phone service isn't available.

"At this early stage, our advice to everyone is to stay safe," Trevino said. "And once people are able to get back into the area, they need to be very careful about going into homes, especially if there appears to be structural damage."

Investors worried about potential damage payouts sent insurance companies stocks down Monday.

Robert Hartwig, chief economist with the Insurance Information Institute in New York, said that "what we're looking at is one of the top two or three most expensive storms in U.S. history." The III is a research center supported by property and casualty insurers that provides information about home, auto and other insurance products to the public.

He said damage from Katrina was harder to project than that of earlier hurricanes because New Orleans has a significant number of businesses, such as tourist hotels and restaurants, that could suffer both physical damage as well as so-called business interruption losses.

Hartwig said that in the four hurricanes that hit Florida last year, one-third of the insured losses were for commercial properties that suffered physical damage or were shut down for an extended period for repair.