Uninsured losses from Hurricane Harvey could match those from 12 years ago after Katrina leveled New Orleans, Farmers Group CEO Jeff Dailey told CNBC on Monday.
Katrina caused upward of $150 billion in estimated total economic damage, with about a third of that coming from insured losses.
"Unfortunately, the penetration of the National Flood [Insurance] Program is not that huge," Dailey said. "The typical homeowners policy does not cover flood. For our own book of business, maybe 1 in 4 of our homeowners actually selects the [National] Flood Insurance Program. I think you'll see an awful lot of uninsured losses."
The National Flood Insurance Program already owes $24.6 billion to the Treasury, most of which covered claims from Katrina in 2005, Superstorm Sandy in 2012 and severe floods last year, according to the Federal Emergency Management Agency, which administers the program. Claims from Harvey are expected to significantly increase what is owed.
Dailey explained that his company is "a servicing carrier for the National Flood [Insurance] Program. So our adjusters will be involved in those claims," but the bulk of the work at Farmers will be claims for damaged cars and trucks. "We will have a significant event for flooded vehicles as automobiles flooded will be covered by their automobile policies."
Although estimates vary and are still early to assess the damage, JP Morgan predicted eventual insured losses from Harvey could be as much as between $10 billion and $20 billion, making it one of the 10 most costly hurricanes to ever hit the United States.
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