WASHINGTON--Rapidly expanding coastal development in high-riskareas means continued problems for the nation's property-casualtyinsurance market "for years to come," an insurance economist haswarned Congress.

Robert P. Hartwig, president and chief economist for theInsurance Information Institute, made his comments yesterday whiletestifying on the availability and affordability of p-c insurancebefore the U.S. Senate Committee on Banking, Housing, and UrbanAffairs.

Of equal concern, he said, is that state-run insurers of lastresort have offered little short-term property insurance raterelief to hurricane-prone regions of the country and may end upshifting the long-term risks of hurricane-related losses topolicyholders and taxpayers who do not live near the coast.

"Despite the well-known vulnerability to hurricanes and rapidlyescalating property values, coastal development in high-risk areascontinues at a furious pace," Mr. Hartwig said.

Specifically, he noted, 15 new condominium projects, with atotal of more than 2,100 units, will be completed by year-end 2009in South Miami Beach, Fla.

"Rapid build-ups are also observed in many other coastal areas,including Galveston Island, Texas; Hilton Head and Myrtle Beach,S.C.; the Maryland shore; eastern Long Island; and Cape Cod," Mr.Hartwig noted.

Florida, he said, has the highest population growth amonghurricane-prone states and is expected to gain 12.7 million newresidents between 2000 and 2030, according to the U.S. CensusBureau.

Florida is the most storm-vulnerable state in the country, byfar, accounting for 27 percent of all hurricane-exposed property,"Mr. Hartwig said.

Adjusting for growth since 2004, insured coastal exposure in thestate now exceeds $2 trillion, he said.

Although New York is a close second, it is statistically lesslikely to be hit by major hurricanes than Florida, Mr. Hartwigsaid. "It is expected that the value of insured coastal propertywill double within the next decade as coastal populations andproperty values continue to soar," he said.

The major focus of the hearing was the soaring cost of insurancein coastal areas in the wake of Hurricanes Katrina and Rita.

Mr. Hartwig said that the price of insurance is determinedprimarily by the degree of risk assumed by the insurer.

"Hurricane Katrina revealed that too many U.S. coastalstructures are unable to withstand the forces of a major hurricane,the importance of prudent zoning and land-use management, and thatprivate-sector insurers provide by far the fastest, most efficientmeans of economic recovery for communities affected by disaster,"he said.

Mr. Hartwig said insurers paid more than $40 billion to 1.7million U.S. policyholders in six states after Hurricane Katrinastruck in August 2005.

According to Mr. Hartwig, state-run insurers of last resort haveoffered little short-term property insurance rate relief tohurricane-prone regions of the country and may end up shifting thelong-term risks of hurricane-related losses to policyholders andtaxpayers who do not live near the coast.