This is disasterous to the recovery of New Orleans.
As the insurance company states its reason for pulling out is “the state of rebuilding” of the levees you can lay the blame at the feet of George #^%$%& Bush…
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.
While the St. Paul, Minn., company refused to say how many commercial policies will be affected or specify where the cuts will be in South Louisiana, two insurance brokers who were briefed by the company this week say Travelers will not renew any property insurance for businesses in Orleans, Jefferson, Plaquemines, St. Bernard and eastern St. Tammany parishes. Cuts will also affect individual businesses in other parts of South Louisiana, including St. Charles and St. John the Baptist parishes.
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.
On Monday, Travelers found out it could face additional legal liability for levee breach flooding when U.S. District Court Judge Stanwood Duval ruled that the flood-exclusion language in the policy forms of Travelers and a number of other insurance companies was vague, opening the door for the insurers to be held responsible for flood damage. Since insurance companies write the contracts people sign, lawyers said, any finding of ambiguity in an exclusion is generally a win for the policyholder.
Wislocki said there is “no connection at all” between the timing of the court decision and Travelers’ decision against renewing commercial property policies.
Donelon, commercial insurance agents and business leaders said they worry that Travelers’ retreat will inspire others to follow, deepening a crisis in the limited availability and rising cost of commercial insurance.
“This is sending a shock wave through the business community,” said Mark Drennen, president and chief executive officer of Greater New Orleans Inc., a public-private partnership that seeks to promote economic development in the area. “If one company has come to that conclusion, you would anticipate that others would come to that conclusion. Without insurance, we have a calamity. We cannot exist as a business community without insurance.”
Other pullouts feared
Marc Eagan, president of Eagan Insurance Agency Inc. in Metairie, said Travelers’ pullout is a devastating blow to the region, and he worries that other companies will follow in March after a special emergency rule expires that had artificially held insurance coverage in place after Katrina and Rita.
“This is going to be a blood bath,” said Eagan, who added that Hanover Insurance Group, Lafayette Insurance Co. and possibly Zurich North America have indicated that they are likely to not renew some commercial policies. (all emphasis mine)
The importance of this can not be overstated. If there is no insurance there is no rebuilding. George Bush can claim the levees are hunky dory but NOLA residents do not have faith in them and now we see neither does the insurance industry.
So what are we going to do about it folks?
UPDDATE: Athenae has more above
UPDATE: NOLA blogger Oyster has more…
UPDATE: Another from me on Shared Risk—–