Shared Risk

our fate_0015

Yesterday Athenae asked who will be next?

One suggestion…read this November 28th LA Times article titled “Insurers learn to pinpoint risks — and avoid them” It discusses how new computer technology including data mining is utilized to develop knowledge which is then sold to insurance companies “to help them decide whom to cover and how much to charge.”

Since Hurricane Katrina last year, those decisions have been running pretty much in one direction.

Based in part on RMS’ predictions, companies like Allstate Corp., the nation’s second-largest property insurer, have gotten out of some lines of coverage altogether. It and other companies have spent the year dropping or paring back policies from Oregon to New York.


“Between hurricanes along the East and Gulf coasts and earthquakes along the West Coast, it is an open question whether the private insurance industry will continue to insure the coastline at all,” said University of Pennsylvania economist Howard Kunreuther, one of the country’s foremost authorities on disaster.

Insurance regulators, economists and consumer advocates question if new these developments will “undermine the very nature of insurance.”

As the industry expands its ability to “slice and dice” customers and applicants, Texas Insurance Commissioner Mike Geeslin, among others, worries that “the risk-transfer mechanism at the heart of insurance could break down.”

If that happens, Geeslin warned, “insurance will stop functioning as insurance.”

There is much more in this article and if you own a home you ought to read it as well as your homeowners policy. If you read the article you’ll understand that last point.

Apart from parsing insurance policies and the shared risk in the private insurance sphere though, what is occurring in New Orleans raises the issue of government and shared risk.

New Orleans is a major port for the US and South Louisiana is a major provider of natural gas, oil and refineries for that oil. The area has assumed great risk (coastal wetland destruction, Mississippi River Gulf Outlet) to provide goods and energy to the country. (for more go here) It all came crashing down on them with Katrina. Particularly the federal levees came down. The Army Corps of Engineers admitted it was their design failure that caused the levees to breach which in turn flooded the city.

The people of New Orleans had assumed they were protected. They weren’t. Having assumed risks to meet the needs of the country they believed there would have been a recovery response equal to the destruction they have endured. It hasn’t. They thought we were all in this together only to be met this past 462 days with neglect and abandonment. Worse they have endured the slings and arrows of the Why Live There, Why Rebuild Below Sea Level crowd and ask are we truly alone in this? Does the rest of the country not realize the importance of our port and off shore resources? Was there not a social contract? Is this not the UNITED States of America?

The questions go unanswered. It ought to frighten us all. If a city of such economic importance, rich in cultural and historical significance can be laid to waste and perhaps laid to rest from lack of will and commitment to make the part whole again, then who among us is safe? The new Congress could go along way in demonstrating we indeed share in the risk and responsibility by addressing the rebuilding of the levees to Cat 5 protection and restoring Lousiana’s wetlands.

12 thoughts on “Shared Risk

  1. Hey scout, while you were posting this, I was leaving a comment on A.’s post downstairs. I am in shock over this. Seriously.
    With rare exception, most of the people we know who went back after Katrina are looking for jobs elsewhere in the US.
    They feel abandoned, because they have been abandoned.
    This is so fucking wrong.
    This is one of the reasons we didn’t return. I mean it. We knew, we just fucking knew that this country was not going to do what it takes to restore the city, to fulfill the social contract you write about.
    If a city of such economic importance, rich in cultural and historical significance can be laid to waste and perhaps laid to rest from lack of will and commitment to make the part whole again, then who among us is safe?
    None of us are safe, scout. Not a single goddamn one of us. The consumer culture, the me-first ethos , the fucking republicans, the pull-yourself-up-by-the-bootstrap mentality, it is destroying this country. The past 6 years have done so much damage. So much. There is no social contract anymore, it doesn’t exist.
    Fuck, I’m pissed. And depressed. This is so unbelievable.
    TJ, pinko commie

  2. i think insurance companies for the most part should be boycotted and we have to start over.
    my car insurance was ok tho. but then i am a good driver. only one skid accident.when its wet, i drive slower on ramps now.

  3. It’s rampant. At our company, the health care “insurance” is now a design-it-yourself plan, where you have to assess your own risks for the coming year and allocate your benefits, premiums, etc. yourself. “Hmm. I don’t *think* I’m going to have a catastrophic illness this year, so maybe I should save a few bucks and reduce my long-term coverage.” The whole concept of shared risk goes out the window, because most people look at their medical costs for the previous year in assessing their risks for the next one — and when the cancer or diabetes diagnosis comes in, they’ll be completely unprepared.

  4. Okay, that’s frightening. Most people, living paycheck to paycheck, are gonna skimp on their health insurance under the scenario you describe in order to feed their kids. And then they’ll be ignoring problems that will turn into long-term illnesses someday, costing everyone more in the long run.
    More and more I’m coming around to the idea that the presidential candidate we nominate in 2008 has got to be one who favors universal health care.

  5. More and more I’m coming around to the idea that the presidential candidate we nominate in 2008 has got to be one who favors universal health care.
    It’s crucial. At the firm I worked pre-Katrina, we had just switched to the “Health Savings Accounts”. At the meeting describing how the new HSAs worked, the insurance rep told us all we should avoid using the HSA money and save it all up for our old age. He basically said we should skimp on preventive care and/or pay for such care out of our own pockets. This of course assumes that everyone will stay healthy throughout their youth and middle age, and no accidents or other catastrophic illnesses.
    The system is a mess. The insurance companies are getting away with murder. Literally.
    We’ve reached the point where if the health care system doesn’t get fixed in the US soon (i.e. within the next ten years), we are going to move to Europe (where Mr. TJ’s family is) for that sole reason.
    TJ, pinko commie

  6. Allstate didn’t want to continue to insure us after the San Diego brushfires, since we have open space behind our home (like many people here do) and they re-designated our area as a “brushfire zone” whatever that means. Heck, all of San Diego is a brushfire zone! So we switched over to Farmer’s. Later Allstate calls back and says, “oh, wait, we’ll insure you after all”, but I just told them to stick it at that point.
    The biggest problem in our country today is these huge companies that no longer want to take risks for reward – the rich CEOs just think they ought to be rewarded no matter what. We absorb all the risk at the lowest levels of society instead.
    Heck yes, the social contract needs to be rewritten. That’s what the whole progressive movement is about. It starts with us, convincing our friends, families and neighbors that the era of me-first America has to end. Before there is yet another tragedy, yet another useless war for oil, yet another city lost.

  7. Even if you’re lucky enough to have “good” insurance, and even if your employer kicks in, the price you pay for it continues to rise. I work for the state and have very good insurance- but it’s more and more out of my check each year, plus co-pays and pharmacy costs have skyrocketed. And that’s with “good” coverage.
    And I know, firsthand, from when my ex had cancer two years ago, that when the “meteor out of the sky” catastrophic illness or injury hits, even with good insurance, unless you’re rich to begin with, you’re broke by the time the crisis has passed. the money we pay for the premiums, and the copays and the RX could go a long way to covering those extra expenses that occur after both spouses have used up all their paid leave and have to take weeks or months of unpaid leave, extra child care, extra fuel costs, hotel bills, durable medical equipment, home health care, etc.etc, and that’s on top of your pre-existing financial responsibilities.
    I have a coworker who was diagnosed with breast cancer last year. Good insurance, yes. But a year later, she and her family are dead broke. they managed to keep all three kids in school but only because they sold most everything they had. And oh yeah, their brand new house was repossessed and her husband lost his job. And she has “good” insurance.

  8. Oh Pansypoo. You are so adorable. Be careful out there! When I was in the midwest I reminded myself that when it snows everyone goes crazy and forgets how to drive. Including me!
    Now in Califorina I think the same thing when it rains. When I’m riding my bike in traffic my mantra is ‘They are all trying to kill me! Nobody can see me. Does this guy see me?” I can’t afford to forget that or I’ll be smacked. Heck sometimes I get smacked even when I DO pay attention!

  9. Good Virgo tex that’s terrible! That is what I really find frightening. Elisabeth Warren did some research on this and printed it in Talking Points Memo. The number one cause of bankruptcy? Medical crisis. Even with people who HAVE good insurance.
    I remember trying to get Sarak and Amanda to understand the importance of some sort of universal insurance, but they were brainwashed by Rush and Hannity. Millionaires both.

  10. Insurance has already ceased to function on the hurricane coast. What comes after it is the first abandonment of a major portion of the United States, or something very different from what we now know of as insurance.

  11. *sigh* Universal insurance isn’t a panacea, I’m afraid. I live in Canada, and I think still one of the major causes of personal bankruptcy is medical crises. It isn’t necessarily the medical bills that kills you, though, it’s having to take time off work, extra travel expenses, extra personal expenses (such as childcare), having your spouse or a family member have to take time off work to take care of you, that kind of thing.
    If you’re very lucky, have a high income to start with, and aren’t trying to get by on a single person’s hourly wage, you’ll probably get by. Otherwise, you’re still screwed.
    — Interrobang

  12. defensinve driving is the only way to go.
    of course when i drived like a wild child it was 70’s oldsmobile tanks. the skid in my 72′ i barely felt hitting the barrier. and the same car took the flying WHEEL with just header and engine lid damage. didn’t feel a fucking thing.
    my 73′ sweet pea was too ugly to be hit.
    i dearly miss my 70’s delta 88 driving couches.

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