As residents of Texas and Louisiana either fled or braced for the arrival of Hurricane Andrew yesterday, insurers in Maryland and around the nation began to fear the worst from one of the most destructive storms of the century.
Emergency workers in south Florida, which suffered the first hit Monday, have estimated the damage there from Andrew will run between $15 billion and $20 billion, compared to $10 billion in damage from Hurricane Hugo in 1989.
Insured losses could reach $4 billion in Florida alone, claims adjusters predicted, about the same amount of insured losses Hugo caused in its entirety.
Meanwhile, insurance industry members advised homeowners, even in inland areas such as Baltimore, which have been relatively safe from hurricanes, to take precautions for the future. "Scientists say we're entering a 20-year cycle of bad hurricanes," said Timothy Dove, a consultant with the Insurance Information Institute.
Mr. Dove advised homeowners to make sure their insurance policies are fully valued and to look into coverage for flood damage from tidal surges, which isn't included in a typical policy.
Maryland insurers, including GEICO Corp. of Chevy Chase, and Maryland Casualty Corp. and USF&G Corp., both in Baltimore, said they have established emergency locations in south Florida and sent teams of insurance adjusters to the devastated areas.
"We have received several hundred claims already for homeowners and auto," said Carroll Franklin, GEICO's investor relations chief. He added that it's too early to estimate the total costs.
The stock market frowned yesterday on most property/casualty insurers, sending USF&G's price 62.5 cents lower, to $11.25 a share, while GEICO fell 12.5 cents, to $57 a share.
ZTC Mr. Franklin said GEICO's exposure in Texas and Louisiana is much lower than in Florida. GEICO paid out about $10 million in claims from Hurricane Hugo.
Likewise, USF&G has reduced its exposure in Texas and Louisiana in the past two years, declaring a moratorium on new policies in those states because of the risk of major weather-related losses, said spokeswoman Kerrie Burch-Deluca.
USF&G paid $34 million in the third quarter of 1989 alone, mostly as a result of Hugo, which left 89 people dead when it swept through the Caribbean and into the Carolinas.
The company, which lost more than $700 million in 1990 and 1991, can ill afford another catastrophic year. In the two quarters of this year, it essentially broke even after paying dividends.
"Hurricane Andrew, coupled with insurance claims generated by the riots in Los Angeles, may make 1992 our worst year for catastrophe losses," Maryland Casualty Co. said in a statement released yesterday.
But because most of the company's customers live inland, away from "ground zero" in Florida, the company said it doesn't expect record losses from the first phase of the storm's visit. The total damages "still depend on what Andrew does next and what happens through the rest of hurricane season."
"What we're seeing with Hurricane Andrew . . . is it's going to be at least the second worst, and maybe the worst" hurricane in history, said Mr. Dove of the insurance institute.