Neighboring states like Mississippi, Georgia and Alabama, which didn't take a direct hit from Dennis as it landed near Pensacola, were still assessing injury and damages as the week progressed.

The White House declared a total of 96 counties in Florida, Alabama and Mississippi disaster areas.

The first hurricane to hit the United States this year abated somewhat as it made landfall in Florida on July 10–falling from a Category 4 to a Category 3 with sustained winds of 120 mph. But it may have done its worst damage offshore as it rampaged through oil well platforms, according to Bruce Jefferis, a managing director of Aon Natural Resources in Houston. He said there is concern that Dennis, a Category 4 storm with winds approaching 140 mph when it reached the Gulf waters, could have done significant damage to the Gulf Coast energy infrastructure.

The huge Thunder Horse platform was reportedly listing substantially and could be in some trouble, he said during an interview early last week. Mr. Jefferis added that it is too early to tell how badly damaged it is or what would be done to repair the platform.

“What will happen to it, we don't know. They will probably right it, but [if they can't] it could make for a big loss,” Mr. Jefferis observed, adding that the effect would be to cause underwriters to hesitate in writing such risks in the future.

Separately, a spokesperson for BP in Houston, which operates the platform said to be listing 20 degrees last Wednesday, said that all its operations in the Gulf are self-insured but declined to comment further on coverage or the question of whether there is reinsurance in place for catastrophic losses. Exxon Mobil is a 25 percent partner with BP in the development of Thunder Horse, according to information posted on BP's Web site.

Last season's Hurricane Ivan resulted in $2.5 billion in total insured losses for energy insurers, Mr. Jefferis said. Like Ivan, there may appear to be little damage to oil platforms and riggings, but pipeline damage from undersea shifts in terrain could be another story.

“Dennis took a similar path to Ivan, but a little farther east, which is good,” said Mr. Jefferis, noting that the farther west a storm comes the closer it is to the bulk of the oil fields. “It will be a few more days before we know the initial impact of Dennis on the properties, and maybe a few months before we really know the extent of the damage.”

The major problem in determining the extent of damage is that much of it could be undersea, and inspection requires diving equipment, which is in limited supply.

One lesson for insurers coming out of Ivan is that the extent of connectivity between oil rigs and platforms through undersea pipelines was missed by both clients and underwriters. “It was not understood as well and appreciated,” Mr. Jefferis said. Since Ivan, there is now greater focus and understanding on the ripple effect from a damaged pipeline, both in terms of avoiding business interruption and in forecasting the loss scenarios.

While capacity remains in the market since Ivan, energy production risks have not seen a softening in pricing, Mr. Jefferis noted. Good risks have seen a 20 percent increase in premiums, and clients with large losses have seen “significant” increases.

“Last year was an adjustment in pricing,” noted Mr. Jefferis. “But Dennis could cause a whole other cycle.”

Less concerned about pricing than solvency issues, rating agencies issued warnings about the impact that repeated poundings might have on small, unrated homeowners insurers in Florida.

Fitch Ratings in Chicago noted that Citizen's Property Insurance Corporation, the public-sponsored insurer of last resort, as well as many small Florida-only insurers haven't fully recovered from 2004. While Citizen's can replenish deficits with assessments on insurers, private insurers without direct assessment mechanisms face insolvency. On the other hand, another severe season of back-to-back storms could be a catalyst to raise premiums and attract better capitalized insurers, Fitch said.

At Standard & Poor's, analysts said that while most homeowners would likely get at least the minimal coverage they need, regulations limiting price hikes (to 15 percent without a public hearing) and imposing other requirements might send some insurers packing. Some large insurers cut their exposures last year. (See “New Florida Market,” this page.)

Meanwhile, as recovery efforts from Hurricane Dennis continued in Florida, Alabama and Mississippi, tropical storm Emily was gaining strength in the Atlantic, setting a record as the fifth storm to be given a name so early in the season.

Robby Cunningham, a spokesperson for the Florida Division of Emergency Management, said there were four fatalities in the state caused by Hurricane Dennis. As of Tuesday, some 288 people remained in shelters and evacuation notices were still in effect to some extent in four counties. He added that flooding was still an issue, with concerns that rivers had not peaked and could flood some more.

Bob Lotrane, a spokesperson for the Florida Department of Financial Services, said the worst hit areas were between Milton and Navarre Beach, Fla., east of Pensacola, with major flooding. But the insurance industry should easily withstand the losses involved, he predicted, adding that the state had two mobile consumer units in place to help residents with insurance questions.

Mr. Lotrane said those homeowners who were awaiting repair of their homes will file new claims for new damage. Residents were advised to photograph their homes before and after Dennis to file their claims, he said.

“This is a new season with new deductibles,” Mr. Lotrane said.

In Mississippi, Nash Nunnery, public information officer for the state's Emergency Management Agency, said, “We dodged a bullet.” Thirty-five homes suffered damage–three major, and 16 mobile homes suffered minor damage, he said, adding that five businesses in Jackson City also suffered minor damage. The storm claimed one life in Jasper County, he added.

In Alabama, severe damage appeared limited to the southwest portion of the state, largely from flooding and wind.

Even Georgia had major issues related to rainfall, according to Insurance Commissioner John Oxendine, who said many flooded homes and apartments are located in areas where there is no flood plain–and few holders of flood insurance.

Representatives from State Farm and Allstate, Florida's largest and third-largest home insurers in 2004 based on direct premiums, did not yet have claims estimates as this story went to press, but both had cadres of claims representatives in the state. (Citizen's was the second largest writer in 2004, according to private insurer information from National Underwriter Insurance Data Services and information on Citizen's Web site.)

Bloomington, Ill.-based State Farm sent 200 employees into the affected areas, in addition to employees already living and working in the state, with an additional 400 going in later, a spokeperson said.

Northbrook, Ill.-based Allstate said the company is sending 700 adjusters into the area and eight mobile response units.

Estimates of onshore insured damage for Hurricane Dennis from the modeling firms converged in the $1 billion to $4 billion range, after an early estimate from Oakland, Calif.-based EQECAT–of $3 billion to $8 billion–was revised downward.

EQECAT's latest estimate of insured damage is between $1 billion and $4 billion. Newark, Calif.-based Risk Management Solutions initially estimated $1 billion to $5 billion for the United States, later revising the upper down to $3 billion. And AIR in Boston put its estimate at between $1 billion and $2.5 billion.

EQECAT's initial estimate was made prior to Dennis coming ashore, when it was still a Category 4 hurricane.

In its announcement of a revised estimate released last Thursday, RMS said it is also monitoring damages in the Caribbean and on Gulf offshore platforms, and expects those insured losses to total less than $500 million.

The damage estimates pale in comparison to last year's Hurricane Ivan, which was one of four hurricanes to hit Florida in 2004. Ivan is the third costliest storm to hit the United States, with insured losses of $7.1 billion, according to the New York-based Insurance Information Institute.

According to Atul Khanduri, manager of wind risk modeling for AIR Worldwide, “When prolonged winds occur over a very large geographic area, as in Hurricane Ivan, the number of claims can increase significantly. Losses for Dennis would have been higher had the storm moved at a slower pace.”

Whether BP's listing Thunder Horse platform impacts third-party insurers or not, with the memory of $2.5 billion of insured damages still fresh in the minds of energy insurers, a second hit from Dennis could spur premium hikes.

Infographic:

Flag: A New Florida Market

According to a report released by New York-based Standard & Poor's last week, hurricane exposures have shifted away from some large insurers to newcomers since 2004.

o In May, Allstate Floridian said it would drop 95,000 policyholders, 12.5 percent of its customer base.

o Philadelphia Consolidated is not writing new mobile home business in the state.

o Citizen's Property Insurance Corp. proposed to drop more than 370,000 policies, returning them to small private insurers.

o Florida regulators have approved three unrated companies–Seaside Property Insurance, First Home Insurance Co. and Florida Pennisula Insurance Co.–to pick up the business shed by Citizens.

Infographic:

Flag: Dennis vs. Ivan

Catastrophe modeling firms estimate onshore losses from Hurricane Dennis in the $1 billion-to-$5 billion range, while Hurricane Ivan, which made landfall in the same area of the United States, caused more than $7 billion in losses for insurers.

According to AIR Worldwide, four factors explain the difference.

o Intensity: Dennis and Ivan were both Category 3 hurricanes, but Ivan had sustained wind speeds of 130 mph versus 120 mph for Dennis.

o Size: Dennis' peak winds extended only 10 miles from center, while Ivan's greater swath extended 25 miles.

o Speed: At landfall, Dennis' forward velocity was roughly 21 mph versus 13 mph for Ivan.

o Location: Dennis made landfall just east of Pensacola, Fla., which has less property than the area impacted by Ivan.