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Riot damage claims expected to top $1 billion

By DAVE McNARY, UPI Business Writer

LOS ANGELES, May 4, 1992 (UPI) - Claims for damages from arson and vandalism during the deadly Los Angeles riots -- expected to top $1 billion -- poured into insurers Monday as the region began returning to a semblance of normalcy.

''We have gotten 200 claims so far and we think that the number could eventually go to 800 or 1,000,'' said John Millen, a spokesman for Farmer's Insurance, the largest commercial multiple peril insurer in California.

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''We don't think we have even scratched the surface yet,'' said Richard Donegan, a spokesman for Allstate Insurance, which had received more than 70 claims on policies. ''We expect to have a lot more coming in.''

County officials have estimated that property damage from the riots, which erupted from Wednesday to Friday following the acquittal of four white police officers in the beating of a black motorist, is more than $700 million. That figure does not include losses from widespread looting, expected to be several hundred million dollars.

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The Koreatown area alone suffered an estimated $200 million in damage to businesses from arson fires and looting.

The death toll from the riots reached 50 on Sunday night when a man was killed by National Guardsmen after he tried to run them down with his car.

Representatives of the insurance industry, in a news conference Monday, sought to provide reassurance that the claims would be paid off quickly. State Farm Insurance said it already had sent 70 claims adjusters and special personnel to the riot areas.

They also disputed contentions that most of the businesses in the affected areas were not carrying insurance. ''It's impossible to say how much was covered, but we believe that saying the most of them had no coverage is inaccurate,'' said Patricia Lombard, a spokesman for Western Insurance Information Services.

Lombard said that the California state insurance pools, called FAIR plans and created following the riots of the 1960s to provide coverage to businesses in low-income areas, currently has over 15,000 policies in force. The annual average premium for such a policy is less than $900, according to a representative of the plan.

''Commerical insurance in the area is both available and affordable,'' said Brenda Smith of State Farm.

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The industry representatives said the final damage figure from the riots would not reach the level of the 1989 Loma Prieta earthquake that rocked Northern California and caused between $7.5 billion and $10 billion of destruction.

But the region, which had already been hit hard from the recession, faces a daunting task of rebuilding at a time when business has been leaving the region.

Early estimates place the amount of lost business from the four nights of dusk-to-dawn curfew at $1 billion and another $500 million from job losses. The cost of extra law enforcement was estimated at $5 million per day.

Peter Ueberroth, highly regarded as head of the 1984 Los Angeles Olympic Organizing Committee and later as baseball commissioner, was named by Mayor Tom Bradley late Saturday as point man in a public- private effort to rebuild South Los Angeles.

''If you look at the impact of major events like earthquakes, the major damage is done for about a year,'' said Lynn Reaser, chief economist at First Interstate Bancorp in Los Angeles. ''It could be somewhat longer this time unless the efforts by people like Ueberroth are very successful.''

Tourism will be impacted for about a year, Reaser said. ''People will think twice about coming here, and then after this year, that negative image could start to wane if we do not have a recurrence,'' she said.

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South Central Los Angeles will be hurt for even longer as a place for investment, even though there has been an up-tick in recent years. ''It's going to be a difficult process to restore that momentum,'' Reaser said. ''Government support will be necessary to restore investment and confidence.''

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