The storm may nevertheless prove less costly than feared because it weakened overnight, and its eye veered slightly east of low-lying New Orleans, by far the most populous city in Katrina's path. Mississippi and Alabama were hard hit on Monday, as was Louisiana.
Eqecat Inc. of Oakland, California on Monday afternoon cut its forecast to $9 billion to $16 billion, after earlier estimating as much as $30 billion.
"We expect the bulk of damage to be wind-related, but there is significant flood risk to commercial insurers," said Thomas Larsen, Eqecat's senior vice president. He said the storm's more eastward tack "relieved some pressure on New Orleans."
Air Worldwide Corp. of Boston estimated a $12 billion to $26 billion payout, while Risk Management Solutions Inc. of Newark, California estimated $10 billion to $25 billion.
Fitch Ratings said Katrina will probably be the costliest single event for insurers since the Sept. 11 attacks.
The higher estimates would make Katrina more costly than Hurricane Andrew, which resulted in $20.9 billion in claims, after adjusting for inflation, when it slammed into Florida in 1992, the Insurance Information Institute said. Insurers last year paid out $22.8 billion for four Florida hurricanes.
Katrina came ashore Monday morning about 65 miles south-southeast of New Orleans as a Category 4 storm, with winds of 140 miles per hour (225 kph), the National Hurricane Center said. By mid-afternoon it had been downgraded to a Category 1 storm.
Among insurers, Allstate Corp. fell 77 cents to $57.18; Hartford Financial Services Group Inc. dropped $1.08 to $73.63, and St. Paul Travelers Cos. fell 47 cents to $44.27.
Shares of the two largest reinsurers, which provide insurance to insurers, fell in Europe. Munich Re fell 0.5 percent and Swiss Re fell 0.4 percent.
'SIGH OF RELIEF'
While regulators often let insurers boost premiums after they make big payouts, Merrill Lynch & Co. analyst Jay Cohen in a report said that might not happen this time.
"Events that caused a shift in pricing in the past took insurers by surprise," he wrote. "Katrina does not appear to have such a surprising, unique nature to it."
Several insurers said it was too soon to estimate losses, which can take days or weeks after a major storm to determine. Katrina may have generated $2 billion in claims after tearing through Florida on Friday, analysts said.
Bob Hartwig, the insurance institute's chief economist, said payouts to homeowers may top those for business interruptions, "given that the eye did not go over New Orleans."
Ray Stone, vice president of catastrophe operations at St. Paul, said: "A lot of people are breathing a little bit of a sigh of relief because it weakened slightly, and kept New Orleans on the weak side of the storm." St. Paul expects to be able to assess losses no sooner than Wednesday.
Andrew came ashore as a Category 5 storm, the most serious on the Saffir-Simpson scale. It caused about $26.5 billion in damage -- including damage not covered by insurance -- before inflation, US government data show. Only three Category 5 storms have hit the United States.
'GOING TO BE BAD'
State Farm Mutual Automobile Insurance Co. is the largest insurer of homes in Louisiana and Mississippi. "Once we get clearance from authorities, we'll begin assessing damage, said spokesman Fraser Engerman. "We know it's going to be bad."
Allstate, American International Group Inc., the Louisiana Farm Bureau Mutual Insurance Co. and St. Paul are the next largest in Louisiana, while Mississippi Farm Bureau Mutual Insurance Co. and Allstate follow in Mississippi.
Bill Mellander, an Allstate spokesman, said the largest publicly traded US auto and home insurer is deploying claims adjusters near where it expects the worst damage.
Losses from the four Florida hurricanes nearly wiped out Allstate's third-quarter earnings last year.
Hartford adjusters are preparing to enter affected areas and may begin assessing damage within a week, company spokeswoman Victoria Gallant said.
(Additional reporting by Chris Sanders and Dan Wilchins in New York and Douwe Miedema in Zurich)
Story by Jonathan Stempel
