Katrina unlikely to affect Missouri insurance rates

Despite estimates by the world’s three largest reinsurance companies – Munich Re, Swiss Re and Hannover Re – that total insured damages may exceed $40 billion, State Farm Insurance spokesman Gary Stephenson said local rates would remain unchanged.

“Katrina should not affect insurance rates in Missouri,” Stephenson said, adding that insurance companies use region-specific historical models to determine rates, so a catastrophe in one part of the country doesn’t raise rates in another part. “Insurance companies do not set rates to try to make up for last year’s claims or losses,” he said. “Rates are forward-looking.”

Stephenson said rates could experience minimal and indirect effects if prices on raw materials such as lumber increases.

Sydney T. Croxdale, owner of insurance agency Bohrer, Croxdale & McAdoo Inc., 601 South Ave., sees a slightly different picture.

“I think it will raise rates across the country in some lines of business,” said Croxdale, specifically noting property and auto insurance. “Not very much, but I think there’ll be a bump up.”

Chuck Chalender, an American Family Insurance agent with an office at 4140 S. Fairview, said no one would have an accurate picture of Katrina’s impact on rates until adjusters have a chance to further evaluate the situation. He echoes Croxdale’s analysis that rates may increase slightly.

“We’ll still be feeling the effects probably two years from now,” Chalender said. “This is going to be a very interesting time in the insurance industry trying to determine the difference between flood coverage and hurricane coverage.”

Springfield businessman Robert Low owns the heavily damaged Palace Casino Resort in Biloxi, Miss. John Hancock, a senior manager at Prime Inc., another Low-owned company, said the insured loss for Low’s casino remains unknown.

“The casino appears to be pretty much a loss and the hotel is buttoned-up, but we don’t know the actual cost or time frames. There’s no word (on) what’s ultimately going to happen,” Hancock said.

While adjusters are unable to start the sifting process in Louisiana, Mississippi and Alabama, insurance agents from all parts of the country have traveled to the Gulf Coast to help their colleagues address claims. Of State Farm’s 17,000 agents nationwide, about 900 have office in those three states.

Mike Breeding, a State Farm agent located at 1855 S. National, spent Sept. 14-21 in Slidell, La., with two other local agents.

Breeding, Doug Baker, 548 N. Business 65 in Branson, and David Dupree, 1204 N. Bryan in Republic, worked on their cell phones in temporary tents, handing out $2,500 checks to help State Farm policyholders with living expenses until their claims could be processed.

“It made us feel good that we could help people in dire need,” Breeding said.

As of Sept. 21, State Farm received more than 300,000 claims resulting from Katrina, the cost of which is unknown.

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