However, a review of three major hurricanes and two major earthquakes indicates that the cause of demand surge for insurers has less to do with labor and materials and more to do with the way claims are settled, she said.

In her examination of labor and material costs surrounding Hurricanes Hugo, Andrew and Katrina and earthquakes Loma Prieta and Northridge, demand surge did not correlate to price increases in construction materials. In all but Loma Prieta (which experienced no demand surge) the events produced demand surge ranging from 20 to more than 40 percent.

There was also no indication that wages increased from the events or that there were strains on employment since some of these events occurred when unemployment figures were high.

"There was no rise above normal volatility," said Ms. Olsen.

She said there were other reasons for demand surge figures that she contributes to a combination of lack of insurer's resources to settle claims and insurers settling claims for more than the limits.

Insurers did not have enough claims adjusters to properly settle claims. Poorly trained adjusters do a poor job evaluating claims, resulting in higher payouts later.

She also attributed demand surge to insurer's having to payout more than they originally insured a property for because of influential and sophisticated customers who did not the initial settlement and were willing to fight the insurance companies over the claim.

"The expectation of loss cause assumption is wrong on costs," she said.

What this means for insurers in the New York area is that should a hurricane strike, claimants will be willing to fight insurers, and in turn have to make bigger payouts.

Mr. Porter addressed the issue of business interrupt, but in a very wide sense of interruption of "life line" services, such as electric and other utilities.

He said while a business may be prepared to be operational in a few days, because a storm or earthquake can knock-out large sections of vital services, it can take dramatically longer for a business to bet back to operation. In many cases, business were unable to operate for many days or weeks until electricity was restored to begin water flowing and allow businesses to operate.

From his study of other earthquake and hurricane events, he said a category 3 hurricane on the Saffir-Simpson Scale striking the Northeast could cost $113 billion in physical damage and $96 billion in business operations expense. The figures do not reflect insured losses, but over all loss.