MEXICO CITY, Nov 8 (Reuters) - Huge floods that forced tens of thousands of Mexicans from their homes will cost insurers $700 million, the most costly disaster since a storm devastated beach resort Cancun, an industry group said on Thursday.

The Mexican Insurers Association said the floods were the most expensive insurance payout in Mexico since Hurricane Wilma, the strongest Atlantic storm ever recorded, tore through Cancun in 2005.

"The magnitude of this catastrophe...could be compared to the dimension of what happened in New Orleans," said president of the group Jose Morales, referring to Hurricane Katrina, which flooded the Louisiana city in 2005.

The flood waters in the banana growing state of Tabasco have begun to recede, but tens of thousands of residents are still in shelters.

Three people died when the waters rose and the government is now worried about possible outbreaks of cholera and dengue fever.

Morales said most of the cost would come from damaged properties and 23,000 vehicles that were swamped when major rivers burst through sandbags in the oil-rich Gulf state.

(Reporting by Luis Rojas, editing by Vicki Allen)

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