Newspaper article The Christian Science Monitor

Riot Damage Adds New Bills to Insurers' Existing Burdens

Newspaper article The Christian Science Monitor

Riot Damage Adds New Bills to Insurers' Existing Burdens

Article excerpt

THE Los Angeles rioting is expected to have a broad negative impact on the property/casualty insurance industry in the United States. The riot losses - which are expected to be more than twice as high as the losses in the 1965 Watts riot in Los Angeles ($208 million in 1992 dollars) - come at an especially difficult time for property/casualty insurers.

The industry already faces substantial claims from a string of recent catastrophes, including a severe hailstorm that pummeled the Fort Worth, Texas, area last month; flooding in downtown Chicago; and terrorist bombings in London. Losses in the London bombings alone may exceed $1 billion. The Chicago flood is expected to lead to claims of well over $300 million. Now, the Los Angeles riot losses might be as high as $500 million, according to Business Insurance, a weekly magazine covering the insurance industry published by Crain Communications Inc.

"We're seeing all kinds of figures bandied about on insurance losses, but we don't have a definitive estimate as yet," says Patricia Lombard, who heads the Los Angeles office of the Western Insurance Information Service. That organization is the West Coast arm of the Insurance Information Institute, the main trade group for property/casualty insurers.

Farmers Insurance, Ms. Lombard says, reckons that its riot losses will probably be in excess of $70 million; State Farm estimates losses between $30 million and $50 million; Allstate Insurance, around $20 million. Yet, as high as the numbers are, some perspective is needed, Lombard says. "Most of the damage involved loss to commercial property, rather than homes, apartment houses, or private property, such as automobiles." Noncommercial losses could have significantly boosted claims. And even the commercial losses remain well under the magnitude of claims stemming from recent natural disasters. …

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