Nicholas Balcombe, chief executive of Balcombe Group, a firm of loss assessors, said his 'best educated guess' of the total cost was dollars 15bn. Speaking late yesterday afternoon, he said the hurricane had severely damaged three well-to-do residential areas, including Key Biscayne. The eye of the storm had moved out into the Gulf of Mexico, picking up force, and might be moving to hit land again near Galveston in Texas.
However, the big British insurance companies were playing down the hurricane's significance. Their initial estimates suggest they face claims of no more than a few million pounds each.
But hurricane fears helped drive insurance shares lower. Royal Insurance fell 18p to 145p, Sun Alliance 15p to 225p and General Accident 8p to 417p.
Lloyd's of London also suggested US insurance companies stood to bear the brunt of the cost. George Lloyd-Roberts, chairman of the Lloyd's Underwriters Non- Marine Association, said Lloyd's was more able to cope with a hurricane of this size than it was three or four years ago. US insurers were retaining more of their liabilities because catastrophe reinsurance had become so expensive. The market for the reinsurance of reinsurers had virtually disappeared.
Royal said it had only 0.67 per cent of the Florida market with just 1,800 policies in the southern region that is most at risk. Roy Randall, a spokesman, said the company would have to be 'very unlucky' to receive sufficient claims to take it up to the dollars 30m level at which its reinsurance cover comes in.
He said Hurricane Andrew had come ashore in an unoccupied area south of Miami beach. 'We are probably talking about somewhere about dollars 10m.'
General Accident said it had a 0.5 per cent share of the Florida market, representing only 1 per cent of its total premium income. Nelson Robertson, chief general manager, said: 'The feeling is that it's not quite as bad as originally suspected.' Although unwilling to estimate GA's share of the eventual cost, Mr Robertson said his company had reinsurance cover above dollars 40m, so capping the maximum loss at about pounds 20m.
Guardian Royal Exchange, Commercial Union and Eagle Star said they had very little exposure in Florida. Farmers, the US insurance subsidiary of BAT, does not operate in Florida.Reuse content