LOS ANGELES -- Property damages appear likely to reach hundreds of million of dollars from a strong earthquake that rocked the nation's second-largest city Monday, early indications showed.
'It looks as if this is going to be fairly significant in terms of the amount of damage,' said Mary Crystal, a spokeswoman for trade group Western Insurance Information Services. 'This is obviously going to be very large.'
Crystal said the trade group would have a damage estimate in a day or two as insurance adjusters begin to assess specific damage from the quake, which led to more than 20 deaths and knocked down several freeway overpasses and dozens of structures. The damage toll was amplified by fires started from broken power and fuel lines.
The temblor, measuring 6.6 on the Richter Scale, struck hardest in the northern San Fernando Valley, the same area hit by a 1971 earthquake that caused $553 million in damage and measured 6.4 on the Richter Scale.
The damage figure was topped only by the 1989 Loma Prieta earthquake, which reached 7.1 on the Richter Scale and caused $7 billion in property damage in the San Francisco Bay Area. The last major temblor to hit Southern California came in 1987 when the Whittier Narrows quake caused $358 million in property damage.
Ray Remy, president of the Los Angeles Chamber of Commerce, said the quake would also cause large amounts of short-term economic damage from the closing of transportation arteries, particularly heavily used north- south route Interstate 5, which was closed. Parts of Interstate 405, Interstate 10, State Route 14 and State Route 118 also sustained enough damage to be closed.
'The disruption costs from the freeway collapses will be extremely significant,' Remy said. 'There really aren't any alternate routes for I-5 coming into and leaving Los Angeles. It's a very sensitive umbilical cord.'
Lynn Reaser, an economist with First Interstate Bank, said the freeways appeared to have sustained the most significant damage from the quake. She said the rebuilding of freeways will give the region a short- term economic boost, but that will probably be offset by further slackening in the still-weak housing sector.
'Housing is the area that's most vulnerable from an earthquake,' Reaser said. 'For some people, it will be the last straw that forces them out of the area.'
Remy noted that tightened city codes for seismic saftey and property owners moves to install earthquake-proofing, spurred by the 1971 and 1987 quakes, may have limited the damage Monday.
Crystal said between 20 percent and 25 percent of California homeowners have earthquake insurance, while the range for owners of commercial structures is between 30 percent and 40 percent. The annual premium on earthquake insurance for homeowners runs about $150 to $300.
The quake has come at a time when Southern California appears to be slowly moving out of a four-year recession with most economists saying in their most recent forecasts the region will need several more years to recover fully.
The Los Angeles area has also been trying to recover from a pair of man-made disasters over the past two years -- the 1992 riots and last fall's brushfires, which caused about $2 billion damage cumulatively.
'We in Southern California have been struggling and the earthquake obviously does not help,' Remy said. 'But I think the region has shown resiliency and will keep on doing so.'
Remy said the area's tourism industry, which saw spending drop off by about $1 billion in the year following the riots, will suffer from the effects of the quake, just as San Francisco did following the 1989 temblor.
'It took San Francisco about a year to get over the effects of Loma Prieta, so it will hurt us,' Remy said. 'We're not quite as reliant on tourism.'
Remy said the region's large economic base and the passage of NAFTA and GATT trade agreements will keep the economic outlook positive. 'The earthquake will be a setback, but not a monumental one, except to those directly affected,' he said.
Reaser said the quake's short-term impact will hit hardest at the real estate and retail sectors. 'Longer term, it will not be too negative if the rebuilding is handled efficiently and we do not have another quake in next year or two,' she said.
The economist also noted San Francisco has been one of the few areas of the state to recover from the recession. 'The bottom line is the memories of that earthquake did fade,' she said. 'San Francisco is an excellent example of people's willingness to recover.'
David Hensley, an economist with Wall Street brokerage Salomon Bros., said one of the toughest adjustments residents have to make after the quake will be changing their commuting patterns.
'I know people will find a way, but it will be a long-term headache, ' he said.'It will be a few days before people get back to normal and try to go back to work but the commute will be bad. Maybe we'll see the same spirit people had when they adjusted to staggered work hours at the 1984 Olympics.'
Hensley, who used to head the UCLA Business Forecasting Project, helped formulate the most recent forecast saying that the state would start to rebound later this year. 'I think we're going to stay with our story that the state was stabilizing and will see job growth in second half,' he said.
Although structural damage was extensive, it was not expected to match the 1992 forecast of as much as $80 billion in direct and indirect costs from a major Los Angeles quake.
Peter Gordon and Harry Richardson of USC, in a report issued at a Congressional hearing on earthquake insurance, estimated that 40 percent of the losses in post-quake business activity would come from firms not being able to conduct their normal business.