America will eventually face a natural disaster such as a hurricane, earthquake or flood with property losses in excess of $50 billion, say researchers, due to the increasing population density and value of property in vulnerable areas, as well as inflation. They warn that some property insurance companies will fail. Furthermore, due to recent disasters and state and federal policies, disaster insurance is more expensive and more difficult to obtain.

More than 70 million people live within 50 miles of the U.S. coastline, and the value of insured property in these areas exceeds $2 trillion.

• In the last decade, there have been eight disasters with damages of more than a billion dollars, and insured losses from catastrophic events from 1989 to 1995 totaled $75 billion.

• Estimates of losses from an earthquake of 7.5 or more on the Richter scale range from $15 billion to $135 billion for San Francisco and from $50 billion to $145 billion for Los Angeles.

• But since many people don't purchase earthquake coverage, insured losses would range from $5 billion to $45 billion in San Francisco and $20 billion to $60 billion in Los Angeles.

Concerned about affordability, disaster-prone states have heavily regulated and capped the rates charged by insurers. Florida imposed a limit on the proportion of policies insurers could refuse to renew -- as a result, other insurers are reluctant to enter a market they might not be able to leave.

At the federal level, tax policy prevents insurers from accumulating surplus funds as a reserve against disasters. Moreover, Congress is considering creating a federal reinsurance program. Reinsurance -- which insurance companies now purchase from private firms -- reduces risks by spreading them across a wider pool. However, the Congressional Budget Office says the federal program would likely underprice reinsurance premiums, meaning the risk would be transferred from policyholders to taxpayers nationwide.