ICS Magazine

Insurers Face $100 Mln Bill for Tornado

May 9, 2003
NEW YORK (Reuters) - Insurers State Farm, Farmers Insurance and Allstate Corp. will foot most of the $100 million or more industry bill for a tornado that swept through an Oklahoma City suburb on Thursday, according to local officials.

The three insurers cover 60 percent of the state's cars and homes, according to the Oklahoma Insurance Department, followed by smaller state mutuals like Oklahoma Farm Bureau and Shelter Mutual. The same companies also insure about half the private cars in the state.

The tornado, which touched down in Moore, about 15 miles south of Oklahoma City, just after 5 p.m. local time on Thursday, destroyed at least 300 homes and damaged another 1,500. A General Motors Corp. plant was damaged, along with other local businesses.

”My initial guess (of the insured damage) is over $100 million,” David Meuser, public information offiicer with the state insurance department, told Reuters. “I'd be surprised if it was over $200 million.”

General Motors said it was still assessing the damage from the tornado, and that it was too early to estimate the cost.

Insurers paid out $600 million four years ago, when Oklahoma was hit by the strongest U.S. tornado on record. Overall, insurers paid out $1.6 billion in claims for that tornado, which hit 18 states in May 1999.

The most expensive U.S. storm was 1992's Hurricane Andrew, which cost insurers more than $20 billion, adjusted for inflation.

Earlier this week, tornadoes that swept across Arkansas, Kansas, Missouri, Nebraska, South Dakota and Tennessee caused damage that will cost insurers at least $325 million, according to the Insurance Information Institute, an industry-sponsored organization.