Claims from storm could be as high as $800 million

March 16, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,Insurance Information Institute Staff Writer

The insurance industry could be looking at up to $800 million in claims because of the winter storm that buried much of the eastern United States this past weekend. But officials at local insurers said it's too soon to know how much the damage will add up to.

Both USF&G Corp., the state's largest insurer, and Baltimore-based Maryland Casualty Corp. said local agents in areas affected by the storm have not yet called for catastrophe teams of claims adjusters, who race to the scene when disasters overwhelm the companies' local networks.

"A hurricane does a lot of damage," Maryland Casualty spokesman John Anderson said. "Blizzards usually are inconvenient, but don't have the severity of damage that a hurricane does."

John Snyder, A.M. Best Co. senior vice president, told Bloomberg Business News that claims could run up to $800 million, slightly below the expected $1 billion tab for the World Trade Center bombing.

But the toll would be nowhere near the industry total in claims for last summer's Hurricane Andrew, which the Insurance Information Institute put at $10.7 billion.

Jeanne Salvatore, a spokeswoman for the institute in New York, said a storm like this weekend's was more comparable to the nor'easter that hit the East Coast in December, which caused $650 million in insured claims.

But it will take about two weeks before the institute has information it is comfortable with about this storm, she said.

USF&G spokeswoman Kerrie Burch-DeLuca said the Baltimore-based insurer won't know its losses until about Thursday. She said it's more difficult to track the damage from a storm like this weekend's, which affected a large area, than a storm such as Hurricane Andrew, in which the bulk of the destruction was concentrated in South Florida.

Ms. Burch-DeLuca said USF&G received about $80 million in claims arising from Hurricane Andrew.

Ms. Burch-DeLuca said USF&G uses information from selected ZIP code areas to make damage estimates after storms. So many ZIP codes were hit by the blizzard, though, that a ZIP code search can't be done as quickly.

Mr. Anderson said Maryland Casualty has relatively light exposure to business in Florida, where tornadoes caused what apparently was the most severe property damage of the weekend.

Farther north, where snow and wind hit a belt from Alabama to Canada, the damage was expected to be broad but not deep.

"There are going to be a fair number of claims, but we don't expect them to be severe," Mr. Anderson said. "The worst we would expect is a tree fallen on a house or on a car."

A.M. Best, the New Jersey-based insurance rating firm, said companies such as State Farm Mutual Automobile Insurance Co., the Allstate Insurance Co. unit of Sears Roebuck & Co. and Prudential Insurance Co. of America will be hit the hardest by claims arising from the storm.

MOST COSTLY CATASTROPHES

DATE.. .. .. .. .... ..EVENT.. .. .. .. .. .. .. .. .. .INSURED LOSS

August 1992 .. .... . .Hurricane Andrew .. .. .. .. .. .$10.7 billion

September 1989 .. . .. Hurricane Hugo .... .. .. .. .. .$4.2 billion

September 1992 .. .. ..Hurricane Iniki.. .. .. .. ... ..$1.6 billion

October 1991 .. .. .. .Oakland, Calif.,fire .. .. .. .. $1.2 billion

October 1989 .. ... .. Loma Prieta, Calif,earthquake .. $960 million

December 1983.. .. .. Wind, snow,freezing .. .. .. .. ..$880 million

March 1993 .. .. .. .. Blizzard .. .. .. .. .. .. .. .. *$800 million

April-May 1992 .. .. ..Los Angeles riots.. .. ... .. .. $775 million

September 1979 .. .. ..Hurricane Frederick.. .. .. .. . $753 million

August 1983 .. .. .. ..Hurricane Alicia.. .. .. .. ... .$676 million

December 1992.. .. .. Nor'easter.. .. .. .. .. .. .. . .$650 million

July 1990 .. .. .. .. .Hail, tornadoes, Denver, Colo.. .$625 million

*estimate by A.M. Best Co.

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