Insuring disaster.

When Hurricane Andrew swept through Florida in 1992, whole towns were ripped apart, and insurance companies were slapped with a decimating $16 billion bill. It was a wake-up call for a once-complacent industry.

In the wake of Andrew, plus $4 billion spent for drought relief in 1988 and another $10 billion for flood damage in 1993, the insurance industry has become increasingly concerned about financial risk from natural disasters.

And now, global warming is upping the ante, making the industry even more wary of writing policies in certain geographic areas. The worry has escalated since 1995, when the Intergovernmental Panel on Climate Change (IPCC), a non-partisan international commission representing 2,500 scientists, reported that, along with a worldwide temperature rise, global warming would bring an increase in "floods, droughts, fires and heat outbreaks.

Christian Patterson of the Washington-based Ozone Action points to studies that predict more intense hurricane activity and a longer hurricane a result of global warming. But such assertions are being challenged by some scientists, including Roger Pielke, Jr. of the National Center for Atmospheric Research, who says that "inflation, changing and growing population patterns in coastal areas, as well as more development are the real factors that can contribute to an insurance nightmare should a big storm strike."

Insurers, facing mounting claims, are not calmed by such talk. Frank Nutter of the Reinsurance Association of America (RAA) warns, "The world faces financial cob lapse due to global warming, and the insurance industry is the first in line to be affected." If there are increased storms, flash flooding, heat waves and other natural disasters, he says, it will trigger billions in claims that will be impossible to meet.

Companies that insure coastal properties have been most active in developing new defenses. After Hurricane Andrew, homeowners' insurance premiums in Florida rose 72 percent. Allstate canceled 50,000 home policies, and CIGNA stopped offering new coverage in South Florida, where most of the damage occurred. And in 1996, Nationwide Insurance Company, the country's fifth-largest home insurer, announced that it would sharply reduce sales along the Eastern Seaboard and Texas coast.

Flood and windstorm insurance has also become difficult to obtain, shifting the burden of disaster relief to the Federal Emergency Management Agency (FEMA), which supplies emergency aid to uninsured catastrophe victims.

The industry has become increasingly outspoken about the threats of global warming. The RAA recently authored a formal statement, signed by 62 insurance companies from 23 countries, advocating the reduction of greenhouse gases, while expressing concern about the effects that global warming might have on the industry.

"They have become the counterweight to the oil and gas industry claims that there is no link between greenhouse gases and climate change," say Christopher Flavin of the Worldwatch Institute. CONTACT: Reinsurance Association of America, 1301 Pennsylvania Avenue NW, Suite 900, Washington, DC 20004/[phone].