Global Insurance

Although it is true that Hurricane Gustav represents less of an economic disaster than was expected, analysts are still estimating insured damages of at least $2 billion and possibly as high as $10 billion. But Gustav is only one of many storms that could cause great damage to the U.S. this year.

Robert Hartwig, who is the president of the Insurance Information Institute says that even though it appears that Gustav is not as bad as was expected, it's still going to be an expensive event, and this is only one of several possible major hurricane events.

Even if Gustav is to reach the possible higher limit of $10 billion -- the upper limits that have been projected by risk-modeling firms -- that still would represent only a fraction of the $41 billion loss which was caused by Hurricane Katrina in 2005. The above estimates, however, do not include flood damage, which in the case of Katrina, added another $16 billion in losses.

If the results for Gustav were to fall in the middle of analysts' estimates, Gustav would still be ranked as being among the 10 costliest hurricanes that ever hit the United States. It is projected however, that it will take weeks, if not months, before the full extent of the overall damage is known.

In the mean time however, the National Weather Service is watching four other storms that could make landfall in the next few days. These include Tropical Storms Hanna, Ike and Josephine in the Atlantic and in the Pacific, Karina.

As increasing numbers of peoples continue to move to coastal areas, analysts expect a surge in insured losses from disasters upcoming years and as the number, and strength of storms increase. Last year, total insurance coverage on coastal properties came to $8.9 trillion. This was an increase of 24% over 2004, according to the risk-modeling firm, AIR Worldwide. Florida and New York with more than $2 trillion per state, have the highest amount of insured coastal properties.

According to a spokeswoman for Nationwide, Elizabeth Stelzer, a large insurer in Mississippi and Texas, the majority of insurance claims filed a day after Gustav hit, have been related to rain damage. This is usually covered under homeowners' policies insurance.

But until they can return home and assess the damage, many homeowners won't be able to file claims. Both the insurers and the homeowners are hoping to avoid the legal problems that arose after Katrina concerning whether or not damages should be covered by homeowners' or flood-insurance policies.