WASHINGTON (Bloomberg) ? Hurricane Katrina?s estimated cost for insurers was cut to $9 billion to $16 billion by storm modeller Eqecat Inc. after the storm veered away from New Orleans.

Katrina is on track to be the second most-expensive hurricane to hit the industry after Andrew caused $20.8 billion, adjusted for inflation, of insured losses in 1992. Earlier, Eqecat forecast claims as high as $30 billion.

The storm came ashore yesterday just south of Buras, Louisiana, with winds of 140 mph after weakening on Sunday night, the National Hurricane Center said. Risk Management Solutions Inc., another modeller, predicted $10 billion to $25 billion. AIR Worldwide Corp. estimated $12 billion to $26 billion.

?People are breathing a sigh of relief that the storm has lost strength and that New Orleans appeared to be on the weak side of the storm,? said Ray Stone, vice president of catastrophe operations at St. Paul Travelers Cos., the second-largest US commercial insurer.

Insurers paid a record $22.9 billion last year for four Florida hurricanes. Storm-related payouts almost erased third-quarter earnings last year at Allstate, the biggest publicly traded auto and home insurer. Hurricane Andrew produced about $44 billion in total damages when it tore through southeast Florida in 1992.

Katrina was downgraded yesterday to a Category 1 storm after coming ashore as a Category 4. Sunday night, it was a Category 5, the most severe on the Saffir-Simpson scale. Only three Category 5 storms have ever hit the country.

?The hurricane tracked somewhat east of downtown New Orleans and the western side of the storm showed evidence of weakening as it moved inland,? said Kyle Beatty, a meteorologist at Newark, California-based Risk Management. ?Both of those served as positives for New Orleans.?

Fitch Ratings said Katrina will probably be the most costly single event for the insurance industry since the September 2001 terrorist attacks. The attacks produced losses in excess of $20 billion and spurred the federal government to provide as much as $100 billion to help insurers in future attacks, according to the Insurance Information Institute.

Shares of St. Paul, Minnesota-based St. Paul Travelers fell 47 cents to $44.27 in New York Stock Exchange composite trading. Allstate shares fell 77 cents to $57.18. Hartford Financial Services Group Inc., a property and casualty insurer based in Hartford, Connecticut, slipped $1.08 to $73.63.

Among publicly traded US insurers, Allstate has the biggest market share in the affected areas at 15.7 percent, according to Banc of America Securities analyst Brian Meredith. St. Paul Travelers has the second-largest at 6.9 percent, Meredith said.

Bill Mellander, a spokesman for Northbrook, Illinois-based Allstate, also said it?s too early to estimate insured losses from Katrina. The insurer has deployed claims adjusters throughout the southeastern US to assess damage in affected areas once the storm passes, he said.

Hartford Financial said in a statement yesterday that it has a catastrophe claim team ready to move into damaged areas to begin processing claims.

State Farm Mutual Automobile Insurance Co. won?t make claims assessments until ?well after the storm hits,? said Dick Luedke, a spokesman for the Bloomington, Illinois-based company. State Farm, owned by its policyholders, is the largest US auto and home insurer.

?It will take at least a couple of days for them to get adjusters and experts down there to get an assessment,? said J. Paul Newsome, an insurance analyst with A.G. Edwards & Sons Inc. in St. Louis.

?The estimates will improve as time goes on.?

Henner Alms, a spokesman for Swiss Reinsurance Co., the world?s No. 2 reinsurer, also said it was too early to gauge the damage.

Allianz AG spokesman Ashraf El Sharkawy, Axa SA spokeswoman Rebecca Le Rouzic and Hannover Re spokeswoman Gabriele Handrick also said it was too soon to comment.

Destructive storms often lead to increased sales of insurance among homeowners and businesses. Fox-Pitt Kelton Inc. analyst Bill Yankus said Katrina won?t spur enough demand to reverse falling prices for property and casualty insurance policies. Rates started dropping last year after three years of increases swelled profits and attracted new competitors into the marketplace.

?It would likely take a devastatingly large loss? of at least $50 billion to stem the decline in prices, Yankus said in a note to clients today.

Fitch Ratings said in a report that it expects reinsurers to pay a bigger share of the claims from Katrina than insurers, a reversal from what happened after last year?s four hurricanes. Reinsurers share in losses once the deductibles of insurers are exceeded. Since Katrina is a single event, insurers will pay one deductible before their reinsurance kicks in, compared with four deductibles last year, Fitch said.

Katrina is the second named storm to strike the US this year. The first, Hurricane Dennis, caused about $900 million in losses last month, according to Insurance Services Office Inc.

The size of the warning area for Katrina underscored the inability of forecasters to precisely predict Katrina?s landfall. The hurricane may have already generated from $1 billion to $2 billion in claims after slicing through southern Florida on August 26, Eqecat said.