Storm impact big, but maybe not long-lived

Rebuilding ravaged areas will take years, but experts don't see Andrew-style impact on insurance system.

After Florida took a pounding from three hurricanes, there were fears about the long-term effects: tourists would book elsewhere; the nation would run out of oranges this winter; and, everything from insurance rates to the price of plywood would skyrocket.

Now, even though many communities are still shifting through the debris, it's beginning to look as if the impact of the costly hurricane season may not be as long-lasting as originally feared.

Tomatoes and peppers for this winter's salad bowls are already being replanted. Oil and gas production in the Gulf of Mexico is being slowly turned back on even as massive oil rigs are towed back to where they belong. And, experts believe those vulnerable beachfront communities will be rebuilt near where they were when massive waves broke over them.

This is not to minimize the damage to individual communities and Florida and Alabama, which have suffered the most. It will take years to rebuild roads and bridges. There are waiting lists for skilled tradesmen. The cost to individuals could be titanic as a lifetime of memories and savings are wiped out.

But, the hurricanes don't seem as though they will have much of a lasting impact. After hurricane Andrew, the entire Florida insurance industry had to be reorganized, and insurance rates and premiums rose sharply. Today, the industry says it was prepared for the three major storms. The industry has socked away $15 billion in a separate reinsurance fund for wind damages. Higher deductibles mean that homeowners will be paying for a larger amount of the damage. And high-risk properties - notably those on the beach - are covered by a separate state-run insurance company.

"Certainly the combination of storms in a single season has put pressure on property [insurance] prices but it does not mean they will necessarily go up," says Loretta Worters, a vice president at the Insurance Information Institute.

After major storms, there is often a debate about the merits of building on barrier islands or exposed beaches. But few expect a pullback to higher ground.

"Beaches are what lure people to the coast," says Peter Muller, a geography professor at the University of Miami. "And very little of it is undeveloped. So we are not talking about closing the barn door. The horse already escaped long ago." He says hurricanes usually result in tougher building codes and better preparedness, but rarely rebuilding restrictions.

That's because cities have become more adept at cleaning up after hurricanes and insurance companies are structured to replace lost goods. Instead of restricting building, cities and counties will no doubt intensify beach restoration projects to accommodate rebuilding, says Gregory Stone, director of the coastal studies program at Louisiana State University in Baton Rouge.

The storms also smashed through some of Florida's prime citrus country. The USDA estimates the state lost 20 percent of its citrus crop after Charley ripped through. Frances caused yet more damage to the $1 billion a year industry.

One of the farmers who suffered fruit losses is Tom Hammond, president of the 1,200-acre Hammond Groves just west of Vero Beach. As 100-mile-per-hour winds whipped through his Indian River orchards, he estimates his grapefruit trees lost anywhere from half to all of their fruit. And Hammond says the quality of the fruit this season was exceptional. "What fruit we have left on the trees will be a premium piece of fruit, larger and better tasting," says Mr. Hammond who exports a significant amount to Japan.

Thanks to high inventories of juice, however, the nation won't feel the effect at breakfast tables this winter. The fresh vegetable crop is also expected to recover. Hurricane Frances hit Palm Beach County about a week after the tomato plants had been planted. But the farmers will just replant, says Ray Gilmer, a spokesman for the Florida Fruit & Vegetable Association.

The ever-volatile oil market, however, is feeling the effects of the recent hurricanes, with prices rising almost $2 a barrel. At the height of the storm, Ivan shut down 83 percent of the oil production in the Gulf and 53 percent of the natural gas. In addition, tankers coming into Louisiana to drop off imports were halted and several offshore oil platforms and rigs were sunk or found miles from their moorings. But overall, the industry weathered the storm as well as could be expected, says Rick Mercier, director of the Offshore Technology Research Center at Texas A&M University in College Station.

Florida tourism officials are still trying to ascertain the longer-range impact of the hurricanes, yet say customers seem to understand that so many storms is unusual even for Florida.

"We've found that talking to our clients they are amazingly resilient," says Marc Pujalet, president and chief marketing officer of Noble House Hotels and Resorts. Even though the company's hotel in Daytona Beach was damaged, Mr. Pujalet says the company still likes being on the water. "If you are not on the water in Florida, you are nowhere," he says.

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