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Nearly $1T of insured property in Ike's path

Friday, September 12, 2008

By IEVA M. AUGSTUMS, AP Business Writer

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CHARLOTTE, N.C. — 

As Hurricane Ike churns toward the Texas Gulf Coast, nearly $1 trillion of insured commercial and residential property lies in its path, according to firms that specialize in catastrophes.

The largest concentrations of exposure in Texas are along the northern part of the coast near Houston _ an area that contains about one-fifth of the nation's crude-oil refining capacity and more than 2 million people. While high winds and flooding are of concern for inland properties, a hurricane's strength diminishes as it moves inland.

"Hurricane Ike's large windfield will play a major role in the extent of damage it inflicts both offshore, from winds and waves, and onshore from wind and storm surge," said Christine Ziehmann, director of model management at Risk Management Solutions Inc.

RMS estimates there is more than $70 billion worth of insured exposure bordering Galveston Bay and the outermost Houston Ship Canal. An additional $900 billion of insured properties lies further inland, within Houston's Harris County, the Newark, Calif.-based firm said.

Catastrophe risk-modeling firm AIR Worldwide Corp., based in Boston, said 85 percent of Texas' total coastal exposure lies in Ike's' path, with insured property valued at more than $890 billion.

"The worst case scenario would be Ike coming onshore 30 miles west of Galveston, which is further west than currently forecast, but well within the bounds of possibility," Ziehmann said.

Ike's eye was forecast to strike somewhere near Galveston, Texas, late Friday or early Saturday, but the massive system was already buffeting Texas and Louisiana, causing flooding along the Louisiana coast still recovering from Labor Day's Hurricane Gustav.

Ike, currently a Category 2 storm, could become a Category 3 storm, on a scale of 1 to 5, before hit makes landfall.

Last week, RMS revised its initial industry loss estimate for Gustav, now ranging from $2.5 billion to $4.5 billion, down from an estimated range between $4 billion and $10 billion in damage.

Ike has already wrecked havoc in the Caribbean, with damages in the popular Turks & Caicos Islands and Bahamas estimated to range between $50 million and $200 million, according RMS.

U.S. insurance companies, still working on claims from Gustav, were ready with adjusters and appraisers to assess Ike's damage.

"Once it is safe to do so we are ready to deploy our teams and respond to the impacted areas to assist policyholders with immediate claim needs," said Mike Siemienas, spokesman for the property, casualty and auto insurer Allstate Corp.

Allstate is among the companies with the most exposure in Texas, according to figures compiled by rating agency A.M. Best Co.

Other companies that have significant exposure to the state include State Farm Insurance Cos., Farmers Insurance Group, USAA, The Travelers Cos. and American International Group Inc.

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