Insurers are braced to pay out at least $5 billion in claims for devastation caused by Hurricane Charley, making the storm the second most costly after Hurricane Andrew (search), industry and government officials said on Monday.

That could lead to higher premium rates in the affected areas, or fewer price cuts, as insurers look to claw back from losses, Wall Street analysts said.

Hurricane Charley killed 16 people and left thousands homeless as it swept over southwest Florida on Friday, with winds topping 145 mph.

Risk Management Solutions, which uses computers to measure risk, estimated $5 billion in insured losses, said Kyle Beatty of the Newark, Calif. firm.

It was too early to issue anything more than loose estimates on losses from Charley, insurers said, but Germany's Munich Re (search), the world's largest reinsurer, said the storm would cost insurers $7 billion to $14 billion overall, based on its own research.

That would make Charley the most expensive storm to hit the United States since Hurricane Andrew ripped up parts of the Greater Miami area in 1992, causing $20.3 billion in insured losses, in today's dollars, according to Insurance Services Office Inc., which tallies claims for the insurance industry.

Munich Re's estimate may yet prove too high, as the Florida Division of Emergency Management said Sunday that Charley's destructive rampage through Florida would cost $15 billion or more total in economic losses. Insured losses are usually only a fraction of total economic losses.

"Some elements of the storm are not insured, such as flood-related losses, while some involve the temporary closure of business such as hotels or theme parks, said Robert Hartwig," chief economist of the Insurance Information Institute.

Wall Street focused on the upside for insurers.

"It's a sizable storm and a sizable loss for the industry, but it is not unmanageable," said analyst Mark Lane with William Blair & Co. He added that Charley might help stabilize recently pressured property and casualty prices in the affected areas.

Allstate Corp. (ALL), the No. 2 U.S. home and auto insurer, said potential losses stemming from Charley could hurt its current results. However, the Northbrook, Illinois, company said it did not expect losses to have a material effect on its financial condition overall.

State Farm, the U.S. No. 1 car and home insurer, with the largest market share in Florida, said Sunday it received 19,454 homeowners and 1,552 auto claims related to Charley and expected the total to rise.

State Farm expects the number of claims to rise, particularly when customers are better able to report damage after utilities become more operational in the area, said spokesman Fraser Engerman.

Florida insurer 21st Century Holding Co. (TCHC) said it will record a $1.25 per share charge against third-quarter earnings due to claims from Charley losses. The company also cut its 2004 earnings outlook to $2.50 per share.

Allstate shares rose 43 cents to $46.36 Monday on the New York Stock Exchange (search), while 21st Century lost 80 cents, or 4 percent, to $18.95 on Nasdaq.