Andrew’s Toll Revised to $18 Billion : Disasters: The latest figure, up from $3 billion, hits hard at an already reeling insurance industry.

The world’s costliest natural disaster got even more expensive Monday.

The toll for insured claims from Hurricane Andrew has gone up to $18 billion from $3 billion, state Insurance Commissioner Tom Gallagher said.

With fresh reports arriving daily from insurers, he broached the new number at a meeting of an American Institute of Banking chapter, expressing worries about the potential impact on home buying.

“In one little four-hour storm, we blew away $18 billion,” Gallagher said. Asked later about the new figure, he said, “We’ve basically interpolated that it could end up going that high.”

By comparison, Hurricane Hugo, the next-worst disaster for insurance companies, produced covered losses of $4.2 billion in 1989.

“It’s not good news, that’s for sure,” said Rhonda Ruch, spokeswoman for the insurance rating organization A.M. Best Co. “It’s going to take a long time for the industry to get itself back on its feet again.”

Total insurance industry profits were 2.7% above its $23 billion in insured losses last year, down from a 14.4% margin the year before, she said.

Back in South Florida, a new hurricane season has started. Some houses damaged by Andrew last Aug. 24 remain skeletonized shells awaiting repairs, their rafters bleached powder gray by the sun.

Insurers, armed with nine months of actuarial data since the storm, have been dropping bombshells on state regulators in recent days, with Allstate asking to cut 300,000 policies, Prudential’s property insurance arm warning of potential insolvency and Travelers cutting agents to reduce its number of policies.

Gallagher expects average Florida homeowners premiums to jump 20% to 25%--when insurers are willing to renew.

Insurers are retrenching to reduce their exposure, which was greatly underestimated before Andrew. More than 50,000 homeowners unable to find private coverage have applied for policies through a 3-month-old, state-backed insurance pool intended as an insurer of last resort.

“We’re on uncharted waters,” Gallagher said. “When you look at it, we don’t have any real idea as to what’s coming next and exactly how to react to it. We don’t have a script to follow. This has never happened anywhere else.”

The long-term solution, in his view, depends on Congress enacting a national catastrophic insurance pool paid for by a surcharge on premiums. He plans to ask the state Legislature for a version at a special session expected this fall.

A yet-to-be-named state commission is to present a report by Sept. 15 with recommendations for bringing the insurance crisis under control.

Gallagher, who serves as both insurance commissioner and state treasurer, concentrated his remarks on insurance even though he was talking to bankers.

For their benefit, he linked the state’s recession recovery--largely a product of Andrew’s insurance money--to the insurance crunch and the housing market.

“What happens in insurance in the homeowners area is going to affect everything that goes on in the Florida economy,” Gallagher said.