Hurricane Katrina could cost insurers as much as $25bn (£14bn), experts say, although the financial impact may be less severe than first thought.
Experts say insurance claims from Katrina could be as high as $25bn
Katrina has left a trail of destruction in its wake, with hundreds feared dead and a million homes left without power.
It has caused millions of dollars worth of damage in Louisiana and Mississippi.
Predictions of the final cost to insurers range from $9bn to $25bn, making it potentially more costly than the 2001 World Trader Center attacks.
Insurers say it could take weeks before they get a firm idea exactly how much Katrina could cost them given that large areas ravaged by the hurricane are still under water.
Much will depend on the underwater damage to ports and seaways, according to Peter Zeihan of Stratfor, an economic and political consultancy based in Austin, Texas.
The US is the biggest grain exporter in the world, and most of those exports travel down the Mississippi.
"The big question is how much the rivers and ports have been silted up. It could be fixed in two days; it could be two months. If it's the longer end, we're going right into the grain harvest," said Mr Zeihan.
Some analysts say it is possible that Katrina could be as expensive as 1992's Hurricane Andrew - which at $21bn was the most expensive in US history.
Although the storm was downgraded from category five to three, winds reached up to 155mph (250k/ph), causing substantial damage across Louisiana, Mississippi and Alabama.
US insurers have put the likely cost of claims at up to $25bn while Munich Re, the world's top reinsurer, estimated a slightly lower figure of $15bn-$20bn. It has said the costs would not impact its profits.
Analysts at JP Morgan estimate that Hannover Re will have to pay out about $198m, while they believe Swiss Re may face a $490m bill.
"Katrina is in a range comparable to Andrew, cost-wise," David Bresch, head of the Atmospheric Perils Group at Swiss Re, said.
Lloyd's of London has said it is braced for big claims, mostly from offshore energy installations, damage to property and costs of lost business.
Meanwhile, Allianz, Zurich Financial and Axa have yet to speculate on their likely exposure to Katrina.
However, experts also said Katrina's path - which took it around the most densely populated areas - may have lessened its financial impact.
"Projections that this is going to be the worst ever are probably off... we're probably looking at something that's in the top five," said Robert Hartwig, chief economist at the Insurance Information Institute.
MOST COSTLY US HURRICANES*
Andrew - 1992 - cost $21bn
Charley - 2004 - $15bn
Ivan - 2004 - $14.2bn
Frances -2004 - $8.9bn
Hugo - 1989 - $7bn
*Source: National Oceanic and Atmospheric Administration (adjusted for inflation)
Analysts have also played down the possible impact on insurance premiums.
Only if the cost of Katrina grew so large that it could threaten to drive some insurers out of business would it force the industry to increase rates across the board, said analysts at US group Fox-Pitt Kelton.
It would take a "devastatingly large loss" of $50bn or more to push all non-life insurance premium rates upwards, said Fox-Pitt.
Only storm-affected liabilities - such as property in the south-eastern US - would see insurance premium rates increase, it added.
Insurance consultancy Eqecat has already reduced its estimate of damage-related claims from an initial $15bn-$30bn to a maximum of $16bn after the eye of the storm veered away from the centre of New Orleans.
Eqecat said its estimate did not include damage to oil rigs in the Gulf of Mexico - many of which are more than 25 years old - and warned that predicting damages could be tricky.
"We do know the storm path went through an area where there are a number of production platforms," said Rick Clinton, Eqecat's president.
"When you start looking at the older platforms, built prior to 1980 and 1970, that will have a dramatic impact."
Oil price fears
However, aside from the insurance market, the huge storm could have other knock-on effects.
If it leads to higher oil prices for a considerable time, that could have a serious effect on some big US airlines who are either struggling to avoid bankruptcy - as in the case of Delta and Northwest - or trying to come out of Chapter 11, like United Airways and US Air.
And Standard & Poor's says that the storm could lower US GDP in the third quarter of the year, as energy and tourism output drops.
But the company says that economic growth will recover as spending on rebuilding would boost growth.