NEW YORK, Oct. 7, 1998 — Insurers are expected to pay $2.5 billion to victims of Hurricane Georges, whose homes and business were ravaged by 125-mile-per-hour winds and torrential rain in Puerto Rico, the U.S. Virgin Islands and four Gulf Coast states, according to preliminary estimates by Insurance Services Office, Inc.'s (ISO) Property Claim Services (PCS) unit.
Hurricane Georges is the costliest hurricane this year, and the first billion-dollar catastrophe since Hurricane Fran in September 1996, when North and South Carolina, Virginia, Maryland, West Virginia, Pennsylvania and Ohio suffered insured property damage estimated at $1.6 billion, according to PCS.
Damage to insured personal and commercial property and vehicles from Hurricane Georges totaled $1.7 billion in Puerto Rico; $50 million in the U.S. Virgin Islands; $325 million in Florida; $310 million in Mississippi; $100 million in Alabama; and $15 million in Louisiana. PCS estimates that policyholders will file about 685,000 claims with insurers.
Hurricane Georges, which made landfall near Biloxi, Miss., on September 28, battered a wide swath of the Gulf Coast from New Orleans to Pensacola, Fla. Earlier, it had caused widespread property damage in the U.S. Virgin Islands, Puerto Rico and the Florida Keys. Hurricane Georges was downgraded to a tropical storm as it moved inland.
In the Gulf Coast states, many of the reported insurance claims involve damage to structures by rain entering through roofs and sidewalls. By comparison, direct wind damage was relatively minor. Widespread power outages left many areas without power for up to 72 hours.
ISO's PCS unit defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of property and casualty policyholders and insurers.
The PCS estimate represents anticipated insured loss on an industry-wide basis arising from the catastrophe, reflecting the total net insurance payment for personal and commercial property lines of insurance covering fixed property, personal property, vehicles, boats, related property items and business-interruption losses. The estimates exclude loss-adjustment expenses.