New Orleans residents return to ruined homes as insurers say Katrina will cost them $34bn

Almost all of storm-ravaged New Orleans was open yesterday for displaced residents to return to inspect the wreckage of their homes, but the city can still only be described as crippled as the insurance industry announced claims for property in the wake of Katrina are likely to top $34.4bn (about £20bn).

Only small sections of the impoverished Ninth Ward, parts of which remain inundated more than a month after Hurricane Katrina slammed into the Crescent City, remained out of bounds for residents last night. Many of the buildings there have already been condemned as unsalvageable by authorities.

Officials have now formally declared that the search for bodies is over, even though teams remain on stand-by. The death toll in New Orleans has now been put at 972 ­ a harrowing number, but much lower than originally estimated. In the days after the storm, the mayor, Ray Nagin, suggested that the final count could reach as many as 10,000.

The misery of many survivors is being made worse by long delays in the city's ability to identify the dead and turn over their remains for burial. So far, the state has released 61 bodies, while the names of only 32 victims have been made public, The New York Times reported. Residents are returning to the city, where the public hospitals are unsalvageable and will remain permanently closed.

"Charity and University Hospital buildings were issued their 'death warrant' by Katrina and the cataclysmic floods it spawned," said Donald Smithburg, the chief executive of the Louisiana State University's healthcare services division.

Charity Hospital, which sustained $340m damage, was built in the 1930s and was in desperate need of repair before the storm. But it had a crucial role to play as the only free hospital in New Orleans, and doctors have expressed fears that poor patients will go untreated while a replacement is built, a process that will take years. The USNS Comfort, a naval medical ship, is already receiving patients who, prior to the devastation wreaked by Katrina, would have been admitted to Charity. Only three hospitals are now operating in New Orleans: East Jefferson, West Jefferson and the Ochsner Clinic.

Mr Nagin acknowledged that axing about 3,000 of City Hall's workforce was causing him "great sadness", as the city has lost its revenue streams. Even though most of the streets are now dry and most broken levees have been patched, the fiscal crisis in City Hall is only another reminder of the extremely long journey faced by New Orleans as it attempts to rebuild its infrastructure, its housing stock and its shattered economic base.

While some schools on the fringes of town were starting to reopen this week, those inside the city will remain closed at least until November, officials said. Former president Bill Clinton expressed shock after visiting parts of the city, as well as shelters in nearby Baton Rouge on Tuesday. "I saw things I never thought I'd see," he said after entering the Ninth Ward, which remains a tangle of sodden timbers and collapsed bricks.

Mr Clinton, with former president George Bush Snr, is overseeing a disaster fund to victims worth $100m. He attempted to reassure evacuees in a still-cramped shelter in Baton Rouge. "My concern is to listen to you ... and learn the best way to spend this money we've got," he told those inside.

The delay in identifying and releasing bodies stands in awkward contrast to neighbouring Mississippi. That state lost 221 people and has identified 196 of them already. Louisiana officials cite Hurricane Rita as one of the reasons for the delay.