Aug. 29 (Bloomberg) -- Hurricane Katrina may cost U.S. insurers such as Allstate Corp. as much as $30 billion, making it the most expensive storm to ever hit the U.S., storm modeler Eqecat Inc. said.

Katrina's center, the storm's most powerful part, had a 46 percent chance as of 5 p.m. New York time yesterday of coming ashore over New Orleans, the National Weather Service said.

A direct hit on the area's $150 billion of insured property may lead to $30 billion in claims, making it more costly than 1992's Hurricane Andrew, said Eqecat, which uses computer models to estimate losses.

``We expect waves to be up to 28 feet above normal,'' said Tom Larsen, a senior vice president at Oakland, California-based Eqecat, the only modeler to make an estimate as of yesterday. ``That would overwhelm a lot of flood defenses.''

Insurers paid a record $22.9 billion last year for four Florida hurricanes. Storm-related payouts almost erased third- quarter earnings last year at Allstate, the biggest publicly traded auto and home insurer. Andrew produced about $20.8 billion in claims when it tore through southeast Florida.

Katrina was upgraded yesterday to a Category 5 hurricane, the most severe on the Saffir-Simpson scale, and is forecast to strike the U.S. Gulf Coast today. Only three Category 5 storms have ever hit the country. Katrina is so powerful that even landfall in less populated areas east of New Orleans may generate $15 billion in insured losses, Eqecat said.

Teams on Standby

Bill Mellander, a spokesman for Northbrook, Illinois-based Allstate, said it's too early to estimate insured losses from Katrina, which was packing winds of 165 mph. The insurer has deployed claims adjusters throughout the southeastern U.S. to assess damage in affected areas once the storm passes, he said.

Hartford Financial Services Group Inc., a property and casualty insurer based in Hartford, Connecticut, said in a statement yesterday that it has a catastrophe claim team ready to move into damaged areas to begin processing claims.

State Farm Mutual Automobile Insurance Co. won't make claims assessments until ``well after the storm hits,'' said Dick Luedke, a spokesman for the Bloomington, Illinois-based company. State Farm, owned by its policyholders, is the largest U.S. auto and home insurer.

Risk Management Solutions Inc., another storm modeler, said a strike near New Orleans may generate more claims than previous storms because the city has more insured property. Hurricane Camille, in 1969, caused almost $9 billion in insured losses and 1965's Hurricane Betsy produced more than $8 billion, according to Newark, California-based Risk Management, which hadn't issued a claims estimate for Katrina as of 9:30 p.m. New York time yesterday. Both figures are adjusted for inflation.

Mandatory Evacuation

New Orleans Mayor Ray Nagin ordered a mandatory evacuation yesterday after thousands of residents had fled Louisiana. Much of the city, 100 miles upriver from the Gulf of Mexico, lies below sea level. New Orleans will probably lose electricity service and the storm surge from Katrina may ``topple'' the city's levee system, Nagin said at a news conference.

Katrina is the second named storm to strike the U.S. this year. The first, Hurricane Dennis, caused about $900 million in losses last month, according to Insurance Services Office Inc.

President George W. Bush issued emergency declarations in both Louisiana and Mississippi, freeing federal disaster aid. The National Weather Service issued a hurricane warning yesterday for a more than 280-mile swath from Morgan City, Louisiana to the Alabama and Florida border.

Storm May Veer

The size of the warning area underscores the inability of forecasters to precisely predict Katrina's landfall. If it veers east, coming ashore near Mobile, Alabama, insured losses would be about $10 billion less than a direct strike on New Orleans, according to Eqecat. Katrina may have already generated from $1 billion to $2 billion in claims after slicing through southern Florida on Aug. 26, the storm modeler said.

More than 65 percent of the $2 billion in claims paid out to energy companies from last year's Hurricane Ivan stemmed from policies covering oil production in the Gulf, according to Risk Management.

``The amount of oil that can be produced each day can actually be insured,'' said Kyle Beatty, a Risk Management meteorologist. ``Katrina is forecast to make a more direct hit on those offshore platforms than Ivan.''

Crude oil and natural gas soared to records in New York yesterday after Hurricane Katrina moved into production regions of the Gulf, the source of 30 percent of U.S. oil output and 24 percent of the country's natural gas. Oil climbed above $70 a barrel in electronic trading in New York.

Chevron Corp. and Exxon Mobil Corp. shut offshore oil and gas production and evacuated staff. The Louisiana Offshore Oil Port closed its onshore pipeline to refineries.

To contact the reporter on this story: Jesse Westbrook in Washington at Jwestbrook1@bloomberg.net.

Last Updated: August 29, 2005 01:01 EDT