Standard & Poor’s Ratings Services says that it is still evaluating the effects of Hurricane Frances, but it appears that the combined effects of Hurricanes Frances and Charley will produce insured losses well below those associated with Hurricane Andrew in 1992.

S&P says, that given the nature of Hurricane Frances, it expects a greater proportion of damage will be attributed to flooding than was the case with Charley, a risk that is born to some extent by federal flood insurance and serving therefore to mitigate somewhat the exposure of the private sector.

“Among those losses that will be covered by private sector insurance we expect to see proportionately more commercial lines losses, particularly of a casualty nature (such as business interruption), than was the case with Hurricane Charley,” it notes.

“If the gross losses of primary homeowners’ writers should exceed the reinsurance coverage provided by the Florida Hurricane Catastrophe Fund, individual companies’ reinsurance programs would be affected. Reinsurers in turn might rethink their approach to modeling catastrophes to give greater weight to the frequency of such events than before,” the rating agency says.

Issues that will ultimately influence Standard & Poor’s view of the effects of these developments on the global insurance industry include: the magnitude of losses associated with the typhoon and earthquakes that struck Japan in the past few days, the ultimate effect of another major storm in a hurricane season that has several weeks to run, the effect on market pricing of all of these events, and the political ramifications of the public’s perception of the performance of the insurance industry in the wake of such catastrophes.

S&P says it will continue to monitor the development of events with respect to the global and domestic insurance industry, as well as the effects it might have on individual members of that industry. At this point, no rating actions are being taken.