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34

Hurricane Gustav Caused $10bn Damage

Hurricane Gustav may trigger insurance claims as high as 10 billion U.S. dollars after lashing Louisiana

Hurricane Gustav may trigger insurance claims as high as $10 billion after lashing Louisiana, according to firms that specialize in catastrophe estimates, making it potentially the fourth-highest total for a U.S. storm.

The hurricane lost power as it headed for shore, on Monday, keeping insured losses on land between $3 and $7 billion dollars and oil-drilling damage at 1 billion dollars to 3 billion dollars, according to estimates from Newark, California-based Risk Management Solutions Inc. That's less than Katrina's record 41.1 billion dollars in 2005.

Gustav is the first test since 2005 of the industry's efforts to reduce losses in catastrophe-prone regions.

Allstate Corp and State Farm Mutual Automobile Insurance Co were among insurers that turned away new policyholders in states along the Gulf of Mexico and East Coast after hurricanes including Katrina, Rita and Wilma caused $61.9 billion in claims.

"This is not a Katrina-sized event," said Claire Souch, director of model management for RMS. "The impact will be in the single-digit billions rather than the tens of billions we saw with Katrina."

Gustav weakened to a Category 2 storm by the time it reached land at about 10 am local time southwest of New Orleans, which was evacuated in advance of the storm. Gustav's winds were close to 110 miles (177 kilometers) per hour as it came ashore and slowed to about 80 miles per hour as of 4 pm yesterday, local time.