Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!tamsun.tamu.edu!mtecv2!americast.com!americast.com!usa-post From: usa-post@AmeriCast.Com Newsgroups: usa-today.bonus,americast.usa-today.bonus Subject: bonus Fri, Aug 28 1992 Message-ID: Date: 28 Aug 92 08:57:03 GMT Organization: American Cybercasting Lines: 148 Approved: usa-post@AmeriCast.com 08-28 0000 BONUS: Assessing Andrew's damage USA TODAY Update Aug. 28-30, 1992 Source: USA TODAY:Gannett National Information Network Hurricane Andrew was still swirling out in the Caribbean on Sunday. It hadn't even blown over its first Florida palm tree. And already, CNN was releasing estimates of expected damage: $10 billion to $15 billion. Then, as Andrew plowed through south Florida on Monday morning, new numbers began to surface. Some came in as low as $3 billion. Dade County officials were saying costs could hit $15 billion to $20 billion, the range that's been picked up and repeated by most newspapers. DOES ANYONE KNOW THE AMOUNT OF DAMAGE? Let's face it: When forecasts range from $3 billion to more than $20 billion, chances are that no one really knows how much damage was done. If nothing else, the numbers spewed out in Andrew's wake only show that putting dollar figures on disaster damage is about as scientific as looking for water with a divining rod. The first reasonably reliable estimates aren't likely to show up until next week, when officials from the respected Property Claims Division of the American Insurance Services Group finish sorting through the devastation in Florida and Louisiana. HOW MUCH PROGRESS HAS BEEN MADE? "We have been screaming at everyone not to rely on damage estimates yet," says Peg Malloy, spokeswoman for the Federal Emergency Management Agency. "We have just begun making damage assessments on site." This wouldn't be the first time that wildly inaccurate numbers have emerged from the rubble of a natural disaster. When San Francisco was hit by an earthquake Oct. 17, 1989, USA TODAY initially reported damage estimates at around $1 billion. Other reports pegged it as high as $12 billion, recalls Ted Gibson, economist for the California Department of Finance. The real cost totaled somewhere between $5.6 billion and $7 billion. WHERE DO EARLY ESTIMATES COME FROM? But even now, nearly three years after the quake, no one knows for sure what the final tally is. So where do those early damage estimates come from, anyway? Smoke and mirrors, mostly. Look at Dade County's figures of up to $20 billion in damages from Hurricane Andrew. Kathleen Hale, Dade County's emergency-management director, told Ted Koppel on "ABC News Nightline" on Wednesday that the figure was reached by estimating conservatively that 10% of the county's $250 billion worth of insured property was destroyed by the hurricane. ARE FIGURES ACCURATE? Wouldn't 10% of $250 billion be $25 billion, not $20 billion? Oh, never mind. Dade County officials, reeling from a devastating hurricane, had better things to do than come up with a perfectly accurate estimate of damage. "During the height of the storm or earthquake or fire, when you're trying to deal with lives and homeless people, it's very difficult to really think very much about the dollar costs," says Gibson, who's dealt with plenty of disasters in California. "We tend to clean up first and tote up the real costs afterward." WHO WANTS NUMBERS IMMEDIATELY? There is always an immediate demand for some kind of damage estimate. Reporters, maybe by nature, always seem hungry for some kind of official statistic to wrap their stories around. Local officials hate to say they don't have an answer. So even when it's obvious it's too early to calculate the real costs of a disaster, "reporters ask, officials answer. It's human nature," Gibson says. WHO ELSE NEEDS NUMBERS? Government officials need estimates, no matter how tentative, to get some idea where to spend money and deploy relief workers in hard-hit areas. Publicly traded insurance companies need to give shareholders some idea how much the insurance claims are going to cost. So damage estimates are born - and often take on lives of their own. Also contributing to the bad information: Local officials, often stunned by the disaster, tend to overestimate costs. WHY ARE ESTIMATES SO OFF BASE? When Hurricane Hugo hit the Southeast nearly three years ago, the wildest cost estimates came from officials in the small coastal town that were hardest-hit, recalls South Carolina Insurance Commissioner John Richards. "They are living in the catastrophe, and their estimates aren't based on scientific projections like the formulas used by the insurance industry," Richards says. "It's hard to see how people can get a scientific number right away," agrees Sean Mooney, economist at the Insurance Information Institute. WHAT ARE THE COST FIGURES? Early estimates often blur distinctions between different kinds of costs. Essentially, two separate cost figures emerge from disasters: One measures the damage to insured property. The other totes up total damages, including indirect economic costs such the revenue retailers miss out on. The two numbers can differ wildly. For instance, the insurance industry has pegged losses on insured property from Hurricane Hugo at $4.2 billion. And FEMA has put Hugo's total economic cost at $10 billion. HOW CAN MISTAKES BE MADE? In the early stages of the disaster, the two numbers can get confused. The media often focus on the highest number. Assessing costs is just hard work. It's easy to make mistakes toting up the cost of disasters. When fires swept through Oakland Hills, Calif., in October, for instance, some reporters calculated damages by multiplying the average cost of homes there by the number of homes destroyed by the fire. Seems to make sense, right? Wrong. The reporters forgot that housing prices include the cost of the land beneath the houses. And, bad as the fires were, the land survived. IS EVERYTHING INCLUDED IN ESTIMATES? Media estimates of fire damage reached as high as $4 billion, four times the real cost, Gibson says. What's more, damage to large buildings and public property is often overlooked in initial damage assessments. Cracks in the foundation of skyscrapers or bridges may not show up for months. And how do you put a price on, say, Homestead Air Force Base, which may not reopen after Hurricane Andrew? Indeed, some things are impossible to put a value on. CAN INSURANCE COVER EVERYTHING? Linda Gruhler-Subock of Cutler Ridge, Fla., says one of her neighbors, a career military man, lost all his war memorabilia in the hurricane. She can't find the wreath she wore in her hair on her wedding day. And the poetry she wrote with her husband is missing, too. "There's no way to replace that," she says. Then there's Marvin Mossberg of Perrine, who spent six months building a model ship, which he then hung up on the wall. Hurricane Andrew swept it all away. "The insurance company will never give me enough to pay for all the hours of work I put in," he says. WAS ANDREW REALLY THAT BAD? Despite the uncertainties, no one doubts that the hurricane was devastating. "Just the Cutler Ridge Mall, that was completely destroyed," says appraiser Michael Slade. "That's $75 million to $100 million right there. And I saw probably 20 to 30 quarter-million-dollar boats cracked up just on one pier. So you start adding up the numbers, and they get pretty big pretty fast." Bonus Editor: Beth Mann. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM