NEW YORK — Despite media reports and an apparent lack of progress in some of the harder hit areas, the insurance industry has a different take on Hurricane Katrina.
According to the Insurance Information Institute, one year after Hurricane Katrina, nearly 95% of homeowners insurance claims have been settled in Louisiana and Mississippi.
I.I.I. estimates that more than 993,000 homeowners insurance claims have been settled in the two states, totaling nearly $15.5 billion. Homeowners insurers ultimately will pay more than one million homeowners claims totaling $16.4 billion from Hurricane Katrina.
In Louisiana, insurers have settled 658,700 homeowners claims or 94.8% of expected homeowners claims from Hurricane Katrina, totaling $10.3 billion. In Mississippi, 334,800 or 94.3% of expected homeowners claims, totaling $5.2 billion, have been settled. Some 99% of 305,000 claims from damaged vehicles totaling $2 billion have been settled in both states.
A settlement means that the policyholder and the insurance company have agreed on the extent of the covered damage and the likely cost of repair. A separate analysis performed by the Property and Casualty Insurers Association of America shows that in spite of a range of obstacles to the rebuilding process, the influx of insurance claims payments is contributing significantly to the recovery in the region.
While significant problems persist–including severe damage to public infrastructure and reduced population continue to present challenges–the billions of dollars in claims paid to date are helping fuel an increase in residential building finds the I.I.I. Permits have risen by 4% in Louisiana and 32% in Mississippi, compared to a 4% decline nationally in the same period.
In addition, a new poll conducted by IPSOS Public Affairs also found 89% of homeowners in Louisiana and 93% in Mississippi are satisfied with their insurance company. The survey reported that 82% in Louisiana and 80% in Mississippi who filed a hurricane-related claim are satisfied with the way it was managed by their insurer.
The I.I.I. estimate did not include claims filed with two government entities: Louisiana Citizens Property Insurance Corporation, the state-owned property insurance company of last resort, or claims for flood damage filed with FEMA's National Flood Insurance Program. According to I.I.I. standard homeowners insurance policies typically do not cover losses from flooding, such as storm surge generated by hurricanes.
"Despite the attention focused on lawsuits seeking payments for flood damage under homeowners policies where no coverage exists, the number of claims in litigation accounts for a very small percentage of the total number of claims filed," said Dr. Robert Hartwig executive vice president/chief economist of the I.I.I.
The property/casualty insurance industry will pay out an estimated $40.6 billion on some 1.7 million claims in six states for Hurricane Katrina alone. Overall insured losses for damage to homes, vehicles and businesses damaged in 2005 by Hurricanes Katrina, Rita, Wilma and Dennis are estimated at $57 billion. A total of 3.3 million claims are expected.
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