Insurance adjusters had good reason to feel unsettled before Gustav washed ashore Monday.
Hurricane Katrina, three years ago, represented the industry’s single largest insured loss ever. Companies paid $41 billion in property losses, and the government’s flood insurance program paid an additional $18 billion.
Analysts say Gustav’s punishing blow to the Louisiana coastline Monday will cost nowhere near as much — partly because the storm appeared weaker than Katrina and partly because of the hard lessons the region learned three years ago.
Eqecat, a company that models risk, estimated on Monday that losses from Gustav could range from $6 billion to $10 billion.
In the wake of Katrina, major insurance companies reduced their exposure to hurricanes by sharply raising premiums, adjusting the insured value of homes, and declining to insure some coastal properties. Property owners affected by Gustav will find themselves paying more out of pocket as a result.
Katrina, a Category 3 storm at landfall, resulted in 1.2 million homeowner claims and 500,000 commercial claims. Gustav, a Category 2 storm at landfall, was “not a comparable event,” Robert Hartwig, president of the Insurance Information Institute, and industry trade group, said.
Perhaps remembering the public relations shellacking that the industry received three years ago, insurance companies prepared for Gustav — and eagerly promoted their groundwork — well in advance of the storm.
State Farm, one of the top insurers in Louisiana, said that 1,700 “catastrophe claims specialists” were moving into the region.
To a degree not possible in the aftermath of Katrina, they will be connected to their home offices using satellite-equipped vehicles and wireless-enabled laptop computers.
Allstate , another leading insurer in the state, said it had activated more than 1,000 claims adjusters and 15 “mobile response units” ahead of the storm.
The industry is still grappling with what was a painful surprise for some homeowners in the wake of Katrina: the fact that standard property insurance does not cover flood damage. Some residents of the Gulf Coast did not have separate flood insurance.
Mr. Hartwig said Katrina and two other hurricanes in 2005, Rita and Wilma, prompted a significant rise in sales of flood insurance policies. (The number of flood insurance policies in Louisiana increased substantially, from 385,000 in 2005 to 499,000 in 2007, according to the National Flood Insurance Program.)
But up to 25 percent of the policies purchased following Katrina were not renewed by the policy-holder in the second year, Mr. Hartwig said.
“There is the potential for some complacency to have settled in,” he said. “By and large, though, the people of the Gulf Coast are far more aware” than they were three years ago.
Some homeowners challenged insurers’ coverage decisions in court, and the companies were widely perceived as having tried to escape liability for flood damage. Some Katrina-related lawsuits still linger, said Donald Thorpe, a senior insurance analyst for the credit agency Fitch Ratings. But the industry’s position has largely been upheld.
“It was a lesson for the insurance industry that it’s not really good for business to have a large number of unhappy customers who don’t understand their coverage,” Mr. Thorpe said. “I definitely see an effort underway to improve that.”