Andrew's lessons help reinsurers deal with impact from Charley.

For at least a year, reinsurers had been saying--with fingers crossed--that their bottom lines had been strengthening steadily, thanks in part to a lack of major natural catastrophes. Then Charley came along.

Hurricane Charley, which swept through Florida on Aug. 13, and up the coast of the Carolinas by Aug. 14, may cost the insurance and reinsurance industry between $7 billion and $14 billion when all is tallied, according to a spokesman for Munich ReGroup, the world's largest reinsurer. Munich Re's Florian Woest said the reinsurer's own possible losses could be in the "low three-digit million-dollar range."

While Munich Re apparently expects big reinsurance losses, most other reinsurers said they can't even begin to estimate Charley's impact. But industry observers are getting a chance to note how the property catastrophe industry has changed since Hurricane Andrew blew everyone away in 1992.

Two major developments since Andrew have pushed the reinsurance exposure upward in cost triggers--the creation of the Florida Hurricane Catastrophe Fund and the tendency of primary insurers to retain more of their risks, said Charles Hewitt, executive vice president in the Boston office of reinsurance broker Benfield Group. The catastrophe fund has taken much of the private reinsurance industry out of a median range of hurricane loss exposure--between roughly $4.5 billion and $10 billion in losses, said Hewitt.