Allstate predicts $3.68-billion Katrina loss

Allstate estimates its Hurricane Katrina catastrophe claims and claims expenses will amount to $3.68 billion.
“Catastrophe claims and claims expense estimates include losses from approximately 216,000 expected claims, of which over 175,000 claims have been reported as of October 13 on our standard auto, non-standard auto, homeowners, commercial and other products,” the company reports in a press release.
“The destructive and devastating effects of Hurricane Katrina significantly overshadowed Allstate’s strong underlying performance trends in the quarter,” Edward M. Liddy, Allstate’s chair and CEO says. “This unprecedented hurricane is the United States’ costliest catastrophe in history, surpassing Hurricane Andrew by a wide margin.
“For Allstate, pre-tax catastrophe losses, including claims from Hurricanes Katrina, Rita, Dennis and Ophelia, were more than $4.7 billion net of reinsurance in the quarter. This represents nearly a ten-fold increase from what we would normally expect in catastrophe losses in a quarter.
“For Hurricanes Katrina and Rita, the company expects to handle more than 300,000 claims from customers primarily in Louisiana, Mississippi, Alabama, Florida and Texas,” said Liddy.
As many as 4,000 Allstate claim professionals are working along the gulf coast, the company said. More needs to be done to mitigate catastrophic losses, Liddy says.
“It is clear to Allstate that how this country prepares for and offers protection against mega-catastrophes must be re-thought and changed,” he says. “We have all seen on our television screens that the current system is inadequate. America cannot continue to look into the rear-view mirror to manage catastrophes such as hurricanes and earthquakes.”
Absent the impact of the hurricanes, Allstate Protection said, the company showed underwriting growth in what otherwise would have been a good third quarter. Net written premiums were up 2.9% and Allstate brand standard auto and homeowners premiums written grew 4.7% and 6% respectively. Allstate brand standard auto and homeowners policies in force grew 3.6% and 4.4% respectively.