BOSTON—Hurricane Katrina could be the most costly natural catastrophe in U.S. history, causing insured damage of between $17 billion and $25 billion, Boston-based AIR Worldwide projected Tuesday afternoon.

AIR, a subsidiary of the Insurance Services Office Inc., had predicted Monday that the storm would cause between $12 billion and $26 billion in insured damage. That compares with Hurricane Andrew's 1992 total of about $21 billion of insured damage in inflation-adjusted dollars. Andrew is the costliest natural disaster to date.

AIR's update followed estimates by two other catastrophe modeling firms. Oakland, Calif.-based EQECAT Inc. estimated Monday afternoon that the hurricane would cause between $9 billion and $16 billion in insured property damage. And Newark, Calif.-based Risk Management Solutions Inc. on Monday afternoon estimated that the insured losses would fall in the range of $10 billion to $25 billion.

Meanwhile, reinsurers are likely to bear a larger share of the costs associated with Hurricane Katrina than they did with the four major hurricanes that hit Florida last year, Standard & Poor's Rating Services reported Tuesday.

That would be particularly true if total insured losses reach some of the higher estimates of Katrina's total insured losses, S&P said. But S&P further noted that primary insurers in Louisiana and Mississippi cannot rely on backup from state-run reinsurance programs such as Florida's, which paid primary insurers more than $3 billion to cover last year's losses.

Reinsurance is not the only difference in how Katrina will impact insurers compared to last year's storms, according to S&P.

For example, the Florida hurricanes' damage was heavily residential, but Katrina had a significant impact on commercial property, especially in the energy, chemicals and gaming industries.

S&P also noted that water damage might be a larger component of Katrina' losses, which could lead to coverage disputes.

The report—"Not a Case of History Repeating: Katrina a Very Different Monster Than Last Year's Florida Storms"—is available free of charge at www.standardandpoors.com.