Hurricane Katrina seems likely to become the most expensive natural catastrophe in U.S. history, but unless insured damages go far higher than the current high-end estimate of $35 billion, the insurance industry should be able to pay the claims without threat to its own solvency, industry experts said yesterday.

Because of the nature of the storm and the type of damage inflicted, private insurers will probably bear only a fraction of the total losses suffered in Louisiana, Mississippi and Alabama -- estimated at more than $100 billion by Risk Management Solutions Inc., a California firm that does computer modeling of damages from catastrophes.

But taxpayers, insurance ratepayers and others are likely to be feeling the economic effect of the giant storm for years to come, they acknowledged.

And some risk experts are starting to raise the question of how -- or if -- houses or other buildings in low-lying areas such as New Orleans should be rebuilt.

"There is a lot of variability" in loss estimates so far, said Robert P. Hartwig, chief economist at the Insurance Information Institute, an industry group, adding that insurers are expecting more than 1 million claims. Adjusters are already at work in some areas, though not yet in New Orleans.

But "the industry approached the '05 hurricane season in a position of financial strength," following eight months of very strong earnings, he said.

Insurers "were able to bear the $23 billion [in losses] from last year's four storms" in Florida with no significant insolvencies, and "that situation will remain the same this year," Hartwig said.

The $100 billion loss figure includes damages covered by private insurers, those covered by the federal government's National Flood Insurance Program and those not covered by any kind of insurance, often because the owners couldn't afford coverage or because they self-insured. Many municipalities self-insure with roads, bridges and other infrastructure, on the ground they can simply fix anything that goes wrong.

Laurie Johnson of RMS said the company is analyzing satellite images to try to determine how much of the flooding coincided with the coverage area. "When we know much of that flood exposure" was actually flooded, she said, "we will see the loss."

But ultimately the numbers suggest that $60 billion to $70 billion in property losses from Katrina will have to be absorbed by taxpayers, through government programs and repairs, and by owners of homes and businesses.

The storm will push insurance rates up for some consumers. "It always does, because in the end, who else is there to pay the bill except ultimately the consumer?" said Tom Upton, a financial services analyst with Standard & Poor's in New York. But the Insurance Information Institute's Hartwig said the impact should be confined to hurricane-prone areas. "It does put upward pressure on rates as to higher risk areas," he said. "That's been the case in Florida. But those effects are isolated to the states likely to be impacted."

A key reason is that rates, at least for personal insurance, are regulated by states, and state officials aren't likely to allow a company to raise rates because of risks elsewhere. Regulators in Minnesota wouldn't approve a company's request to raise rates there because of what happened in, say, Florida, Hartwig said.

However, several experts said Katrina will increase companies' and regulators' awareness of the risk involved in coastal areas.

It could be the largest "housing reconstruction project this country has ever known," involving tens of thousands of units, said RMS's Johnson.

But if that is done, how much protection should new units be given?

"Challenge number one is the decision, not 'do we repair the levees to the preexisting level' but 'what is the design scenario we want them built to,' " Johnson said. Noting that there are 350 miles of levees around Lake Ponchartrain and New Orleans, she said "the cost of bringing that up to a design" that could protect the city from a Category 4 or 5 storm "has to be explored, and a benefit-cost analysis has to be done."

"That will really define the rest of the reconstruction project," Johnson said. "The second major decision that follows," she said, is whether there are "certain parts of the city we are not going to rebuild," where it may make sense to buy out those properties and relocate the people.

There is precedent for such action, though on a much smaller scale. Twice in the 1990s following floods in the Midwest, small communities were partly or totally bought out by federal and state agencies and the residents relocated to higher ground.

But in coastal resort areas, the years following severe hurricanes have also brought into sharp relief the continuing conflict that pits developers and their customers who want to live close to the shore against insurers who don't want to underwrite such risks, at least not at a price the developers and homebuyers find acceptable.

Unwilling to either cut off development or drive out insurers, politicians in Florida and some East Coast states have increasingly allowed insurers to add wind or hail deductibles to their policies. These deductibles, rather than flat dollar amounts, are a percentage of the home's value, such as 5 percent. This shifts more risk to the homeowner.

Also, some states have turned to "pools" and other state-sponsored arrangements to provide coverage that would not otherwise be available. Florida's Hurricane Catastrophe Fund, for example, is funded by insurers but backed by the state.

In Metairie, La., Jamell Hall-Cloy, 35, wipes away a tear as she searches her glove compartment for her insurance records.