Saturday, December 02, 2006
Insurance rants
Scout Prime correctly describes this
latest insurance development as "disasterous to the recovery":
St. Paul Travelers Cos. Inc., Louisiana's largest commercial insurance provider, plans to cancel all its commercial property policies in the New Orleans area next year, sparking fears that other insurers will follow and slow the region's economic recovery.
...
State Insurance Commissioner Jim Donelon, who was tipped off about Travelers' plans Wednesday night by the Business Council of New Orleans and the River Region, said he was stunned by the news. When he met with Travelers on Thursday, he was equally stunned by the stated reason for the company's retrenchment.
"They cited the state of the rebuilding of our levee system as the primary reason for their decision," Donelon said.
Travelers is a huge insurer, and this decision may be the tip of the iceberg in terms of cancellations in South Louisiana. While this country is saddled with an open-ended commitment in Iraq, and a presidential commitment to explore Mars, the Feds have carefully avoided any commitment to Category 4 or 5 protection for South Louisiana-- an indispensable portion of America's "Energy Coast". We are rebuilding to Category 3 strength protection in a way that is unacceptable to the largest business-insurance provider in Louisiana. Here's a couple of reprinted YRHT quotes which encapsulate my current frame of mind:
10/20/05:Metzgar, Forgotston ["A Simple Plan..."], and the LABI rightly say Louisiana needs to reduce taxes, red tape, and corruption. Yes, of course. But without federal help towards protective infrastructure investments, those reforms won't matter a bit. Business growth will not occur in New Orleans if the area is uninsurable. Period.
11/02/05:Without a federal commitment to Category Five levees and world-class flood protection, displaced businesses will not return to Southern Louisiana and insurance costs will quickly become prohibitive. Cutting taxes and red-tape will be meaningless without these essential infrastructure investments.
11/04/05:Rep. [Jim] McCrery stated: "Two things are necessary for people to come back: housing and jobs."
That's wrongfully incomplete. Housing and jobs will not "come back" if the area is uninsurable. All else is secondary to significant federal commitments to rebuild floodwalls, levees and wetlands... even New Orleans' critical housing/labor shortage. This is the precondition for all of the pretty images President Bush described in his nighttime speech in Jackson Square. Yet, curiously, he and his party are "skeptical" of Cat 5 levees and wetlands restoration.
11/17/05:Through Bush, Rove has told Louisianans that we must wait for "solid science" before we can restore the wetlands; and now we must wait to see what "science dictates" as far as category five levees go. We must wait... for science.
...
Almost immediately after the storm, displaced business-owners from New Orleans began demanding a federal commitment to Category 5 levee protection.
...
See, when [Bush] wants to go to Mars, science is at his service. However, when he doesn't want to pay to protect the "gret stet", science becomes a profound obstacle.
One wishes to know: what does Bush regard as "definitive science", anyway? This is a man who believes the "jury is out" on evolution and global warming.
...
And what the hell's the point of a Texan in the White House if all we get is some weak-ass "Well, let's see what science dictates..." posture!! Wasn't Bush the guy who promised "bold action" after Katrina? Well, where is it? I thought Texans were supposed to do the dictating-- not the guys in lab coats. The scientists figure out how to accomplish the big goals that Texans set for them. Right?
---
Tuesday we get the vote in Congress on the offshore oil royalty bill, in order to get a long-term revenue stream to build our own Category 5 flood protection. But, will such legislation matter if South Louisiana is uninsurable until the projects are complete (in 20 years or so)?
---
On a radio interview with WWL 870am, Rep. Bobby Jindal said the bill would pass.
9 comments
DiggIt!
Del.icio.us
9 Comments:
I gave my modest proposal about this at 3:00 this morning.
Well, I second Ashley's fuckmook...you betcha. But their stated reason for abandoning New Orleans is telling: they're abandoning NOLA because the government itself is abandoning NOLA. The government that used NOLA as a financial engine for a significant part of its history, and a government who's projects bear significant blame for the situation in which New Orleans finds itself (not just the levee failures, btw, but the long-term engineering of the river and coast. And, what's amazing to me is that these projects were undertaken at a time when there was less money and less technology. Now, despite having more money and better technology, everyone's suddenly decided to play shrinking violet, and the insurers are using that as an extra excuse for assholery. Nice).
Travelers decided S. Louisiana's flood protection system posed an unacceptable risk.
I guess they weren't impressed with partially armored, Cat 2/3 levees surrounded by rapidly eroding wetlands. Can't say I blame them very much.
So rather than going to war against Minnesota, I would re-energize our lobbying efforts towards the White House and the new Congress.
Maybe, just maybe, this will be the move needed to force the issue on levee protection and wetlands restoration. I'm not hopeful, but I'm looking for anything to move that issue forward. Who knows, maybe even Chad Rogers can move the story up to siren status. I mean, I know it's not as scandalous as the Governor calling officials at the Rose Bowl and Orange Bowl, but I'm sure he can find a way to blame the gov about it.
Time to close the fugging spigot. I say let them have seven dollars a gallon and seventy cents a bushel for Xmas.
Big: I sent Chad an email about how important I thought this story was, but apparently it didn't make the cut.
Anyhow, Go Saints!
all oysters can produce a pearl.
thanks bivalve for the quote below.
"So rather than going to war against Minnesota, I would re-energize our lobbying efforts towards the White House and the new Congress".
That insurance company is lying through its teeth. Bad levees create a flood risk, which insurance companies don't cover.
Very cogent point that so many of us still tend to forget. I'm sure, for example, if the insurance industry were going to use my own particular instance as their "example" as to why they must pull out (or drastically raise rates) they'd be referring not to the couple of thousand dollars I collected on my homeowners policy (which came out of State Farm's coffers) but instead to the "totalled" flood insurance payout (which, of course, was covered by the national flood insurance program rather than costing State Farm anything).
I'm reminded of the big push some years back (underwritten by the insurance industry) for "tort reform", citing their "terrible losses" over a particular period and attributing the losses to bizarrely large jury awards, blaming the personal injury trial lawyers (and easy target to use to sway public sentiment) and using anecdotal evidence of $700 billion awards for hot coffee in the lap. At that time Consumer Reports did an illuminating series of articles on the "insurance industry crisis", pointing the finger less at out-of-control jury awards and more at just plain crappy investment of the premium monies by the companies themselves. Documented quite a few of the "marquee" cases like the "McDonald's coffee" case and showed just how high a percentage of time after a jury had made one of those large awards the industry complains about that the judge reduces the award drastically even without the defendant having to appeal it...and how many others are drastically reduced after the appeal is filed either through a negotiated settlement or through the appeal process itself. And this was using specific cases for which the insurance industry had been using the initial award figure in their advertising.
The associated articles followed some of the "open record" investment choices that had been made by the various companies and showed how often the investments had been made just at the perfect time to lose money on a particular market niche. In other words, the losses the industry was trying to mitigate against by way of higher premiums and changes in legislation making it easier for them to deny coverage and limit their liability were not a function of their primary business (insurance), but rather due to their own poor choices in how to handle their reserves as to maximize their profits. Essentially, not "Congress, save us from our predatory customer base" as they painted it, but rather "Congress, save us from our poor business instincts".
