Estimates of how many billions of dollars Hurricane Katrina could drain from the insurance industry continued to rise yesterday as flooding and business interruption costs along the Gulf Coast continued to mount, according to industry experts.

Fitch Ratings and Moody?s Investors Services ? both companies that rate the financial strength of companies like the insurers and reinsurers that sell property-catastrophe policies ? revised their estimates for the insurance industry?s total loss up to as high as $25 billion.

And Risk Management Solutions, a risk modelling company, said it expected the total economic loss sustained by the region to top $100 billion.

RMS said its prediction was based on the area having suffered not one, but two catastrophic events: Hurricane Katrina?s hit on Louisiana and Mississippi last Monday, followed by the so-called ?Great New Orleans Flood? after the city?s levee system failed.

Robert Hartwig, insurance economist at New York?s Insurance Information Institute, said the region was in crisis and problems associated with flooding waters being contaminated, an oil spill, uncontained fires and explosions continued to push up costs daily.

?Loss estimates tend to be revised upwards and that looks to be the case here,? Dr. Hartwig said fluctuating estimates this week on what the insurance industry may pay out in recovery costs.

?It will at least be the end of September before we have a reasonable number,? he said.

Dr. Hartwig said it was impossible for claims adjusters to get into the worst hit areas.

?What you are seeing in the area is the slowness of the recovery effort, which is pushing up insured losses, and much more, pushing up economic losses.?

Dr. Hartwig said losses from Katrina would be much steeper than seen from a wave of four serious hurricanes taking a hit on Florida last year, because in those events, job losses were minimal, and much of the damage quickly put right.

?Thousands of people are out of work? in the Gulf region, he said, with large areas under water and closed to all but the military, or those who are stranded there. ?I fully expect US unemployment figures to rise in September as a direct result of this.? (see story this page)

Business interruption policies, which are expected to account for many of the claims that insurers and reinsurers will be receiving after Katrina, do not cover wages, he added.

It could still be weeks before all of Bermuda?s reinsurers and insurers release estimates of what they may have to pay out in claims from Katrina. A few large insurers and reinsurers have made broad estimates public but Dr. Hartwig said those were subject to change because the numbers rely on computer models and assumptions based on the policies sold in the Gulf Coast region, not actual claims.

John Weale, chief financial officer of Bermuda reinsurance company IPC Re, predicted Katrina would turn out to be most costly natural catastrophe ever to be borne by insurers and reinsurers. ?My personal opinion is that it will beat Andrew,? he said.

IPC Re was established by lead investor American International Group Inc. and others after Hurricane Andrew because a number of companies failed, or reached a level where their capital would not support an increase in the reinsurance policies they could sell. The result was a wave of property catastrophe reinsurers setting up in Bermuda in late 1992 and 1993, including IPC.

Andrew devastated parts of Florida in 1992 to become the single most costly storm to date with a pricetag of about $22 billion, in today?s dollars.

Reinsurers are likely to pay out more than they did in Florida last year because deductibles will be fewer, with last year?s claims based on four hurricanes while this is only one event. Reinsurance is insurance bought by insurance companies to spread the risk in policies they have sold.

Dr. Hartwig, who has long tracked the impact of both manmade and natural catastrophes on the insurance sector, said it took four months of analysis before a final number was reached for Hurricane Andrew?s total cost in 1992. He said there was at least a 50 percent chance that the loss borne by insurers and reinsurers would end up beating Hurricane Andrew.

While the reinsurance industry is likely to be badly hit by Katrina, industry experts are not predicting a capacity crunch, like there was after Andrew and the September 11, 2001 terrorist attacks in New York and Washington, because the total surplus capital in the industry far exceeds the $20-odd billion Katrina could cost.

Dr. Hartwig said he could not predict how much of Katrina?s total bill would end up in the hands of Bermuda reinsurers and insurers.

?There will be a substantial impact on Bermuda insurers and reinsurers, that much is obvious because they basically service the North American market.?

Aside from the big Bermuda insurers, he said many large corporate captives based in Bermuda may have to make big pay outs for Katrina-related damages in the Mississippi and Louisiana area.

Mr. Weale said the total cost from Katrina will take time to assess largely because there are so many factors at work.

?There is the hurricane damage, the flooding, the possibility of mould, whether policy exclusions will kick in or if there will be pressure on the industry to pay all claims...the next few months will be very interesting,? he said.

?There are all these different factors? weighing on what the total cost to the industry will be, he said.