Insurers loss from Ike seen from 5 billion to 10 billion pounds

By Lilla Zuill

NEW YORK (Reuters) - Hurricane Ike, which blasted the densely populated Texas coast and swept through Houston on Saturday, could trigger insurance claims between 5 billion and 10 billion pounds, according to early estimates of the damage.

Tom Larsen, a senior vice-president with EQECAT Inc, which helps insurers model catastrophe risk, told Reuters that from data he had seen so far, the cost of damage was likely to fall in the middle of that range.

Another risk modelling firm, AIR Worldwide, said the expected loss to insurers from onshore damage was around $10 billion.

Ike, a massive hurricane that idled more than a fifth of U.S. oil production, came ashore at the barrier island city of Galveston as a strong Category 2 storm in the early hours of the morning with heavy rains and sustained 110 mph (175 kph) winds, the National Hurricane Centre said.

But initial reports were that damage was not as extensive as initially feared, with the Galveston and Houston ship channels spared the worst.

Based on the estimates, Ike will not be anywhere near as costly for insurers as Hurricane Katrina three years ago, but at the high end of the estimate could rank as the country's fourth most expensive disaster.

The size of the storm could mean widespread damage.

Peter Dailey, AIR Worldwide's director of atmospheric science, said wind damage was expected to extend "not only along the coast, but ... well over 200 miles inland from Galveston."

BLOW-OUT

Insurers face a welter of claims from businesses and homeowners in the low-lying areas around Houston, the country's fourth-largest city.

EQECAT's Larsen said windows in Houston high-rises blown out by Ike's strong winds were alone expected to result in costly claims.

"That is expensive, it is a significant cost once salt water gets into the buildings," he said.

Most standard homeowners policies exclude flood damage, and many homeowners across the country do not opt for separate coverage. However, commercial properties do generally carry it.

Larsen said it was likely there would be extensive roof damage for homeowners, and water damage, as a result.

Galveston County, a centre of oil refining and shipping 50 miles (80 km) southeast of Houston, was all but destroyed by a hurricane in 1900.