Hurricane Rita’s Claims Total $5.8B in Texas and Louisiana

March 6, 2007

The final tally for the cost of claims from Hurricane Rita in both Louisiana and Texas came to $5.8 billion. Hurricane Rita’s 120 mile per hour winds plowed into the Texas/Louisiana border on Sept. 24, 2005, one month after Hurricane Katrina.

The overwhelming majority of claims in Texas came from the storm’s damaging winds that toppled power lines and trees, many of which smashed into homes, businesses and automobiles. The lack of power, the shortage of gasoline and the blockage of many roads leading to affected neighborhoods all played a role in slowing the recovery for southeast Texas residents affected by the storm.

“Windstorm coverage insures for losses from wind damage including damage from flying debris or falling trees,” said Mark Hanna, a spokesman for the Insurance Council of Texas. “Despite the sweltering heat and lack of utilities, adjusters reached the hardest hit areas and helped homeowners and business owners get back on their feet as quickly as possible.”

The Texas Department of Insurance received 1,928 complaints from Hurricane Rita victims who filed 220,641 claims amounting to $2.8 billion. The complaints represent less than 1 percent (.87 percent) of the consumers who filed claims.

In Louisiana, 201,157 claims totaling $2.6 billion were filed and only 895 complaints were registered with the Louisiana Department of Insurance. Louisiana’s complaints represent less than a half percent (.44) of the consumers who filed claims.

The Federal Emergency Management Agency (FEMA) said the total number of flood claims for both states reached 14,700. Louisiana suffered much more flood damage than Texas registering $375 million in claims compared to Texas’ $53 million. Flood losses from Hurricane Rita amounted to $428 million. The average flood claim was $47,110.

“Hurricane Katrina served as a reminder to the insurance industry that we must be prepared for the worst,” said Hanna. “Our response to Hurricane Rita showed we responded quickly and brought in as much help as we could find. The numbers point to the fact that insurers did their job right.”

Hurricane Rita also alerted the Texas Legislature that the state needed to take action to properly fund the Texas Windstorm Insurance Association (TWIA), which provides windstorm coverage for homeowners along the Texas coast. TWIA currently has $1.3 billion set aside to handle the claims from a hurricane, while its exposure is expected to reach $65 billion by the end of this year.

Source: Insurance Council of Texas

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