Church insurers take hit from Hurricanes Katrina, Rita.

Insurance will help rebuild many houses of worship damaged by hurricanes Katrina and Rita--but at significant cost to individual churches.

In Mississippi, for example, most United Methodist churches in the annual conference are members of the United Methodist Property and Casualty Trust, a captive insurance company established last year. So far, UM Pact has received 148 out of 250 claims that are expected. "Claim totals could reach $31 million just within United Methodist circles in Mississippi," a recent church report stated.

However, in other United Methodist conferences outside Mississippi hit by the hurricanes, there is no mandatory insurance program in place, and coverage is generally inadequate. Total deductibles for damaged or destroyed Methodist church properties in New Orleans Parish, for example, are valued at more than $100 million--costs a church that has lost almost everything would have to assume on its own, said spokeswoman Linda Green.

Further complicating the issue is that many church records were destroyed in the flood, and finding records of insurance and property values will be challenging, it not impossible in some cases, Green said.

In heavily Catholic New Orleans, some of the money for repair and rebuilding will come from diocesan insurance coverage provided by Omaha-based Catholic Mutual, the largest mutual self-insurance fund of the Catholic Church in North America.

Pat O'Meara, a partner with O'Meara, Ferguson and Kearns, which provides consulting and investment management advisory services to dioceses, schools and other organizations related to the Catholic Church, said it's estimated the New Orleans diocese has about $500 million of insurance coverage. "I'd say that would cover only a portion of the reconstruction of the parishes and won't touch the reconstruction of schools," he said.

O'Meara said the cost of rebuilding a single church could range from $4 million to more than $20 million, depending on the structure that has to be rebuilt. Schools could easily top $15 million, he said.

The church eventually would have to rely on donations rather than insurance to reconstruct its Facilities, he said.

"When there is a large natural disaster, like the earthquake in Los Angeles, the hurricanes that hit the Panhandle and what's happening now with New Orleans, there is some federal relief on the educational facilities side. But on the worship space side, the Catholic church has never been fully insured, and donation is always the large portion of the source," O'Meara said.

Deal Hudson, former publisher of the influential Crisis Magazine and former adviser to the Republican National Committee on Catholic issues, says the church's insurance has some significant restrictions.

"Many times, Catholic entities insure their buildings for the replacement cost of the structures above ground," Hudson noted in a recent column. "Katrina will have left the ground of many structures completely unsuited for new construction. Extensive refilling and regrading--as well as infrastructure below ground--will have to be done. In most instances, this work is not covered by insurance carried for Catholic dioceses."

Catholic Mutual's vice president of finance, Doug Yenzer, said he wasn't in a position to comment on terms of coverage, but he said the insurer expects a significant hit from the hurricanes "no different from all the commercial carriers that wrote coverage down there."

Yenzer added, "We have also reported to our London reinsurers that they are going to have to respond to this. It's not going to be any fun, but we will take care of our church and the needs they have to get back up and running."

In recent weeks, various other church leaders and surviving congregations in these heavily religious Gulf states have been gathering little by little to count their blessings--and the millions of dollars worth of damage left by the storms.

It's estimated that Katrina destroyed at least 20% of Gulf Coast Catholic churches, according to the Catholic Diocese of Jackson, Miss. In the coastal city of Biloxi, Miss., 10 churches were destroyed or gutted, and 10 more suffered major damage.

Severe damage to six convents caused nuns to lose all of their personal belongings, according to the diocese.

Close to 90 United Methodist churches in Louisiana were destroyed by Katrina. "They are gone, underwater, disappeared," Green said, adding that those churches wouldn't be able to pay salaries for their pastors.

The number of Southern Baptist churches destroyed or damaged by Katrina is estimated at more than 900 in southern Louisiana, Mississippi and Alabama, according to church officials. And an estimated 36 Presbyterian churches in the South Louisiana Presbytery, most of them in metropolitan New Orleans or on the nearby North Shore, are believed to have been heavily damaged--many destroyed.

The Episcopal Diocese of Mississippi has reported that six churches have disappeared.

Also, several synagogues in New Orleans sustained severe structural damage and flooding, according to the Jewish Federation in Louisiana. One congregation, Beth Israel in Lakeview, remained under water as of Sept. 28.

"It's a big storm for us," said Gerald Whitburn, chief executive officer of Merrill, Wis.-based Church Mutual Insurance Co., the nation's largest church insurer. "We had several thou sand churches and other houses of worship within the path of Katrina. It appears that we'd have losses from all four states."

But Whitburn said recently it's too early to put a price tag on the total losses. "I think it would be several months before we have a real good feel of the ultimate loss. We have in some cases already cut advance payment checks to assist our congregations with initial repairs or start rebuilding."

Church Mutual insures about 95,000 church congregations and religious institutions throughout the country.

West Des Moines, Iowa-based GuideOne Insurance Co., whose commercial business focuses on houses of worship, said it had 2,200 claims by early October as a result of Katrina. Claims from Rita were up to 181, spokeswoman Emily Abbas said.

"Most of the claims have been paid out, except for certain areas in New Orleans where it is still too dangerous for our adjusters to visit," Abbas said.

For Church Mutual, 2004 was the worst hurricane year in its 108-year history, resulting in $115 million in gross losses. Nearly 2,000 of Church Mutual's insureds suffered damage.

Gulf Church Losses By the Numbers

20%

The estimated percentage of Gulf Coast Catholic churches destroyed by Hurricane Katrina.

10

The number of Catholic churches destroyed or gutted in the coastal city of Biloxi, Miss. The same number of churches suffered severe damage.

6

The number of Biloxi convents to suffer extensive damage that caused nuns to lose all of their personal belongings. The same number of churches reportedly disappeared in the Episcopal Diocese of Mississippi.

90

The number of united Methodist churches in Louisiana that were destroyed by Hurricane Katrina.

900+

The estimated number of Southern Baptist churches destroyed or damaged by Katrina in south Louisiana, Mississippi and Alabama.

36

The estimated number of Presbyterian churches in the South Louisiana Presbytery, most of them in metro New Orleans or on the nearby North Shore, that are believed to have been heavily damaged or destroyed.

Sources: Various church sources.