A year and a half after Hurricane Katrina devastated the Gulf Coast, profits at the nation's major property-casualty insurance companies soared and are expected to be strong again in 2007, according to estimates by the A.M. Best rating agency.

The headline numbers were eye-popping: Allstate reported a record US$5 billion (?€3.7 billion) profit for 2006. State Farm Insurance's profit climbed 65 per cent for the year.

St. Paul Travelers' earnings rose sixfold in the fourth quarter, American International Group's rose eightfold.

Shorting the people

Critics charge that the insurers are doing well financially by shorting the people who bought their products - including hundreds of consumers who still have not got settlements for their Katrina claims.

The industry, in turn, denies taking advantage of consumers, crediting its growing profitability instead to fewer storms last year and improved business procedures.

For consumers, the situation is both frustrating and financially burdensome.

Joyce Ridgeway, whose four-family house in the Esplanade Ridge neighbourhood of New Orleans was damaged when Katrina hit in August 2005, is still waiting for a final settlement from British-based insurer Lloyd's. She has so far received just US$30,000 toward the US$85,000 needed to cove living expenses and to repair the roof, gutters and wood siding wrecked by the storm.

Ridgeway, a52-year-old public health worker, is frustrated that she is still living on the property in a trailer provided by the Federal Emergency Management Agency. Tenants are back in just two of the units.

"I've been doing bits and pieces as I can to get repairs done," she said. "I took my savings, I take my paychecks - and I have a good contractor who is working with me."

But, she added, "I've waited so long. It just doesn't seem fair."

A Lloyd's spokesman said that if a claim could not be resolved locally, it could be referred to the company's dispute resolution department. He added: "We have not received any formal complaint on this matter so are unable to comment any further."

Industry experts argue that the property-casualty insurers did amazingly well in handling Katrina - the most costly catastrophic event ever in the United States - and the other hurricanes in 2004 and 2005.

Fewer storms

Robert Hartwig, president and chief economist with the New York-based Insurance Information Institute, points out that the industry has so far "paid US$41 billion on 1.74 million claims for Katrina alone - and for the combined 2004-2005 hurricane season, we paid about US$81 billion in insured hurricane-related losses."

The industry's profits rose in 2006 in part because there were far fewer storms, Hartwig said.

And, he added: "But the good results have more to do with the fact that insurers saw good results in auto insurance, workers comp and a variety of other areas and in states that don't have a coastline."

Rating agency A.M. Best estimates that the property-casualty industry earned US$68 billion in 2006, up from $49 billion in 2005, and that profits could total $62.2 billion this year if the storm season is relatively benign.

- AP