Insurance industry losses from Hurricane Katrina could triple what the sector paid out after Hurricane Andrew, according to a leading risk modeller which yesterday revised estimates up into the $40 billion to $60 billion range.

Risk Management Solutions, a Newark, California-based risk modeller, said in a bulletin yesterday that it was boosting its projection for insured losses to between $40 billion and $60 billion, including $15 billion to $25 billion in claims related to the so-called Great New Orleans Flood.

RMS said its estimate for insured losses from flood damage resulting was limited to private insurance coverage, and did not include any expected payments from a federal insurance scheme for flooding damage. It predicted the total economic loss in the Gulf Coast region could be up to $125 billion.

Standard & Poor?s credit analyst Damien Magarelli said he there was scepticism that any of the current estimates were on the mark.

?At this point we can only say with confidence that projected losses have increased sharply? from initial estimates, which stood in the $15 billion range.

Robert Hartwig, insurance economist with the Insurance Information Institute said it was clear that Katrina was going to be a costly event for the industry, but he questioned whether flood claims would pan out in the $15 billion to $25 billion region that RMS predicted.

While there were no similar metropolitan floods to compare the New Orleans disaster with, Dr. Hartwig said flooding had never accounted for such a significant chunk of a catastrophe?s insured losses before.

?The number assumes an enormous amount of commercial flood coverage, which is not all that common,? he said.

Standard commercial and residential policies sold by private insurers generally cover wind damage but exclude flood coverage. (See story on Page 8)

RMS? rising estimate for insurance and reinsurance claims, if proven accurate, would make Katrina the costliest catastrophe to ever hit the sector.

To date, the September 11, 2001 terrorist attacks in New York and Washington carried the biggest bill with estimated insurance losses reaching $34.6 billion.

And Andrew was the most costly natural catastrophe to bear on insurers after it devastated parts of Florida in 1992 to leave a pricetag of about $21 billion in today?s dollars.

Axis Capital chief executive John Charman said, in a company statement last night: ?We believe that Hurricane Katrina will present unprecedented losses to the insurance and reinsurance industry.?

He did not offer an estimate of what kind of loss Axis could sustain, except that given its ?diverse portfolio of severity-exposed specialty business? it would expect a material loss from the event, but not large enough to outstrip its earnings in 2005.

The industry must also steel itself for possible claims from other hurricanes that could develop and make landfall during the remainder of the season, with predictions of up to 11 hurricanes this year. Tropical storm activity in the Atlantic Ocean can occur any time between June and the end of November.

Brokers, who find reinsurance and insurance for their clients to buy, generally put the scope of losses taken by the Bermuda market for any one event that occurs in an area where insurance is commonly sold, at between 20 and 30 percent of total claims.

A number of Bermuda companies have already begun issuing preliminary estimates of how much they may pay out in Katrina-related claims.

RenaissanceRe last night said it expected its losses from Katrina to be equal to about one percent of the event?s total claims. The company, which sustained steep losses in the third quarter last year from the 2004 storms, said it still expected to turn a profit for the year.

PartnerRe said on Thursday its third-quarter losses could shave up to ten percent, or $348 million, off shareholders? equity of $3.48 billion.

Aspen Insurance Holdings said it expected to sustain losses from Katrina in the region of $150 million, after tax, and after reinsurance and insurance reinstatement premiums.

White Mountains Insurance White Mountains Insurance Group, Ltd., said yesterday that its estimate of total net loss from Katrina will be in a range of $150 to $300 million pretax, or $100 to $200 million after tax.

Rosemont Re, a Bermuda reinsurer owned by UK-based Goshawk Insurance Holdings Plc. said on Tuesday it expected Rosemont?s Katrina claims to be between $25 million and $30 million. Bermuda-based Assured Guaranty Ltd., a financial guaranty reinsurer, on Wednesday put its public finance exposure related to Hurricane Katrina at $155 million.

Standard & Poor?s put a number of Bermuda companies on creditwatch negative, or subject to a downgrade. They were several units of ACE Limited, Montpelier Re, Oil Casualty Insurance Ltd. PXRE, and Top Layer Reinsurance (a joint venture between State Farm and RenaissanceRe). Oil Insurance Ltd., a Bermuda mutual insurer, was previously put on watch by S&P.

Portfolio manager Walid Kassem, who manages the $112 million Merrill Lynch Global Financial Services fund, told TheStreet.Com that he held a mix of property insurance stock, including three Bermuda-based companies likely to pay out significant Katrina claims ? RenaissanceRe Holdings, PXRe Group and ACE.

?The property insurers have been affected, there is no doubt about it,? he said.

As is often the case with insurance though, tragedy can have a silver lining and Mr. Kassem sees that possibility in this case.

?On the negative side, you have the direct impact of the catastrophe in terms of the money that has to be paid out to victims. On the positive side, you have the increased premium for future years. The net effect of these two elements tends to be positive.?