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Initial loss estimates following Hurricane Georges' path along the U.S. Gulf Coast indicate the destruction could have been far worse.

Although the hurricane ripped through the Caribbean, killing nearly 400 people and destroying thousands of buildings and homes, Georges was blamed for only four storm-related U.S. deaths and largely sidestepped New Orleans.

Georges battered the Florida Keys Sept. 25 with winds of 100 mph, uprooting trees, knocking out electricity and flooding the Overseas Highway. The storm made landfall again last Monday, stalling over Florida's Panhandle and flooding the coastal areas of Alabama, Mississippi and Louisiana with torrential rain.

Because the storm marched through the less-populated Mississippi and Alabama rather than bearing down on New Orleans and Florida Gulf Coast, most insurers consider U.S. damage to be minimal.

Insured property losses from Georges in the Caribbean and United States may reach $2 billion, the Insurance Information Institute estimates. III's figure is based on an early combined estimate prepared by Boston-based Applied Insurance Research and Menlo Park, Calif.-based Risk Management Solutions.

The Insurance Services Office Inc.'s Property Claim Services unit expects to make its estimate this week.

Florida Insurance Commissioner Bill Nelson said the state sustained about $300 million in insured property damage and last Thursday estimated additional uninsured damage at $75 million to $100 million. South Florida accounted for $200 million of the insured losses and $50 million of the uninsured losses.

State officials estimate that about 1,780 dwellings in the Florida Keys had suffered some damage as a result of the storm, with about half either destroyed or heavily damaged. Preliminary estimates of exterior structural damage in Key West stood at $19 million late last week, with loss estimates certain to rise as interior damage is assessed. Key West is closed to tourism until Oct. 9.

The Mississippi Insurance Department expects to have property damage estimates from the six largest insurers in the state this week.

A majority of claims filed so far are personal lines, though insurers anticipate more business interruption claims due to power outages.

As of Thursday morning, Travelers Property Casualty Corp. had received 1,200 homeowner claims, 40 personal auto claims, 251 commercial property claims and seven commercial auto claims. Most claims were from Mobile, Ala., and Pensacola, Fla.

"This is not a huge event," said Ray Stone, catastrophe manager for Travelers, who surveyed U.S. damage last week.

It was hard to determine whether the wind or rain caused more damage, he said. Food spoilage due to extended power outages and additional living expenses for displaced residents were some of the problems he anticipated. "You're going to have a lot of business interruption due to loss of power," he noted.

An Allstate Corp. spokesman who also toured the disaster area said he saw the worst flooding and storm debris around Pascagoula, Ala. "You can tell when you're coming into a bad area because the outdoor billboards are just splintered," he said. "Some of the trees look like they were prize fighters. . .splayed out on the ground."

As of Thursday afternoon, Allstate had received about 12,000 claims in Mississippi, Alabama and Florida.

State Farm Group, the largest homeowners insurer in Florida and the Gulf Coast region, estimated last Wednesday that it would process 35,000 to 40,000 claims at a cost of $125 million to $135 million. As of noon Thursday, 20,000 homeowners claims and 1,500 auto claims had been filed.

David Odeh, a vp at Impact Forecasting L.L.C., the Chicago-based catastrophe modeling unit of Aon Corp., said the three insurer clients he ran models for would sustain the most damage in the Mobile area; two insurers should expect total losses of about $1 million each and the third should expect losses of up to $60 million from homeowners and commercial clients.

Hurricane Georges "could have been much worse," Mr. Odeh said. "We were initially looking at it coming to New Orleans. If it had, the numbers would have been much higher in terms of losses," he said.

"Obviously, Georges does not compare to Andrew," said John Walsh, vp-field operations for the Southeast zone for Gallagher Bassett Services Inc. in Fort Lauderdale, Fla., referring to the 1992 storm that caused about $15.5 billion in insured losses. "The last hurricane in the Panhandle was Hurricane Opal. While Opal had higher winds, it was a drier storm," he said. "What we see with this storm is that flooding is the primary culprit."

The area between Pensacola and Mobile received four to 15 inches of rain, he said.

Milton, Fla., received 25 inches of rain, and the towns of Crestview and Niceville received 20 inches and 19 1/2 inches, respectively, according to Florida's Department of Community Affairs.

While early reports indicate most of the insured U.S. damage was personal lines, Georges did wreak havoc on businesses.

A spokesman for Mississippi Power Co. in Gulfport, for example, said 120,000 of the utility's customers were without power at the height of the storm last Monday but that by 9 a.m. Oct. 1, only 2,759 remained without power.

Mississippi Power had sustained considerable damage to its distribution system and at its Chevron generating facility in Pascagoula, where the main control section of the plant was under about six feet of water, he said. The generating facility was still off-line late last week, and the utility did not know when it would be back up, the spokesman said.

He said the utility had slightly more than $10 million in losses from 1985's Hurricane Elena and estimated the "price tag is obviously going to be pretty high" for damage caused by Georges.

A spokeswoman for Atlanta-based Holiday Inn Hotels provided a list of properties in the hurricane zone, noting that the properties are franchised hotels and that she did not have insurance information on them. The hotel in Pensacola Beach will be closed until at least January owing to water damage to ceilings of all guest rooms and public areas. The parking lot was also damaged by high winds and erosion. Both Key West locations are closed.

The Holiday Inn in Gulf Shores, Ala., was also closed until further notice because of substantial damage, with water level approximately one story high. In addition, several other Gulf area Holiday Inns are closed temporarily to provide housing for emergency crews.

In New Orleans, Hurricane Georges caused significant waterfront damage at Lake Ponchartrain but spared most of the city. Mayor Marc Morial said in a press conference as residents were beginning to clean up that the city escaped "without any major losses of life, without any significant property damage."

At Lake Ponchartrain, however, high winds tore apart the landmark Bruning's Restaurant. Part of Fitzgerald's Restaurant, which had been closed for some time, was heavily damaged.

Around 70 privately owned "fishing camps" along the lake were destroyed. The camps generally are small houses built along Louisiana waterways to serve as getaways for some fishermen and homes for others.

The Orleans Levee District sustained around $10 million in damage to its property at the lake front. The district owns the Lakefront Airport, a marina, docks and other facilities in the area.

Planes at the Lakefront Airport were swamped and waters flowed from the lake into airport buildings.

"All along the lakefront, it's a mess," said Gary Benoit, senior counsel for the district. He said water at the airport was five to seven feet deep in some areas.

The Levee District has $50 million in property coverage for buildings and contents written by Reliance National Insurance Co. The coverage, placed by Eagan Insurance Agency in Metairie, La., carries a $25,000 deductible.

The insurance will pay for damage caused by wind but not flooding, said Marc Eagan, president of Eagan Insurance Agency. The district has submitted damage estimates to the Federal Emergency Management Agency and hopes federal aid will contribute to the cost of repairing property damaged by flooding.

Meanwhile, many Caribbean islands devastated by Georges were still picking up the pieces.

Claims adjuster McLarens Toplis, in a report issued last week, said total insurance losses caused by Hurricane Georges in the Caribbean could reach $5 billion. The company has deployed 45 adjusters and support staff and set up bases in Antigua, the U.S. Virgin Islands, St. Kitts, Puerto Rico and the Dominican Republic. In the Caribbean, "major reported losses have included hotel chains, condominiums, public utilities, schools, hospitals, prisons, government buildings, airports, commercial and industrial sites," the report said.

The biggest individual claims McLarens Toplis has seen so far are from the St. Kitts government for in excess of $50 million; the Puerto Rico Department of Health, also in excess of $50 million; and the Puerto Rican Public Building Authority for more than $20 million.

Juan Antonio Garcia, Puerto Rico's insurance commissioner, put his best "guesstimate" of insured damage a few days after the storm at about $1 billion on the island (BI, Sept. 28).

In Puerto Rico, "we have lots of clients with lots of damages," said Bernhard Schroeder, national property claims consulting leader for J&H Marsh & McLennan Inc. in Parsippany, N.J. "The primary issue is lack of power," he said. "Certain areas are up, but there are lots down. Estimates say power could be down for another three to four weeks."

The average loss from Georges in Puerto Rico is between $3 million and $10 million, Mr. Schroeder said, adding that a couple of clients sustained damages as high as $50 million.

"Damages were minimal" in the U.S. Virgin Islands, according to Kenneth Mapp, lieutenant governor in St. Croix. The islands are expecting about 700 insurance claims to be filed due to the storm, most of which will not exceed deductibles, Lt. Gov. Mapp said. "If (total insured damages) exceed $5 million, I will be surprised."

Hardest hit by the hurricane appears to be the Dominican Republic, where Dominican officials are being blamed for discounting information from the National Hurricane Center and for opening shelters to residents after the storm's 110 mph winds hit the island two weeks ago.

According to press accounts, more than 200 people were killed and 100,000 were left homeless. Dominican officials have estimated that damage to the country's infrastructure and agriculture losses would surpass $1.2 billion, excluding commercial losses.

In the United States, however, disaster preparedness plans are being lauded for the relatively light losses.

Not only were mandatory evacuations in Key West and along the Gulf Coast credited with saving lives but businesses also took precautions.

Marriott International Inc. in Bethesda, Md., for example, credits structural improvements with the hotels' ability to weather even fierce storms.

Two Marriott hotels in Puerto Rico and one in St. Thomas sustained structural and water damage due to the storm, while The Marriott Grand Hotel in Point Clear, Ala., had minimal damage but is temporarily closed because of service interruption, said Arnold L. Davenport, senior vp-risk management for Marriott.

Mr. Davenport said when Marriott remodels existing buildings, as it did with properties in St. Thomas and San Juan, it does so "because we're looking at the risk factors involved. We have better windows, window frame and roof fastening. Basically, they're being built to higher wind standards."

He noted that what is now the Ritz Carlton in St. Thomas was damaged severely in two previous storms when it was under prior ownership. "When we took it over, we prescribed new windstorm standards for it, and they performed very well" in the fury of Hurricane Georges, he said.

Steven W. Sachs, the senior vp of Atlanta-based Hobbs Group L.L.C. who acts as risk manager for The Rouse Co., a Columbia, Md.-based commercial real estate developer and operator, was prepared for the worst when he joined two members of his "quick response team" in Houston Sept. 27 to prepare for Georges' possible strike on New Orleans.

Preparations in New Orleans included sandbagging and "taking down anything that could move," such as awnings, but it did not end there, said Mr. Sachs. He also made sure that Rouse would have access to contractors in the event that New Orleans sustained major damage. The aim was assuring that Rouse had the "contractors and resources to go in and start moving toward the resumption of business" as quickly as possible after the storm.

Mr. Sachs and a regional manager and construction manager met in Houston. There they made arrangements through contractors to use helicopters and, if necessary, power boats to get in and assess the situation, he said. Fortunately, the plans did not have to be executed because New Orleans escaped the brunt of the storm.

Associate Editor Michael Bradford contributed to this report.