Saving You Money For Life

St. Paul Travelers Insurance said in December that it will stop renewing many commercial insurance policies in the New Orleans area in 2007, stoking fears that other insurers are prepared to pull out of the market after Hurricane Katrina.

The state’s largest commercial insurer will stop renewing property business policies for an undisclosed number of small- and mid-sized businesses, mostly in Orleans Parish, starting in March. It wasn’t immediately clear how many businesses would be affected, but The St. Paul Travelers Companies Inc. writes about 14 percent of the state’s policies.

The company is the first insurer to announce that it will stop renewing commercial policies in Louisiana in the wake of Katrina, which destroyed tens of thousands of homes in Mississippi and Louisiana, according to the state’s insurance department.

“St. Paul Travelers has a high concentration of insured commercial property in hurricane-prone areas in the state. We are reducing our exposure in some of those areas, by non-renewing a number of small- to mid-sized commercial properties,” said a Travelers spokesman.

The homeowners’ insurance crisis that has swept over the Gulf states and the Mid-Atlantic coastal areas has unfailingly been blamed on a fundamental shift in weather patterns. The insurance companies have made it clear that their old models for predicting catastrophes are no longer viable. What is interesting about Travelers decision, then, is the different set of facts that drove their decision. They are citing the state of the rebuilding of the city’s levee system as the primary reason for their decision.

It’s one thing to fault global warming for hurricane damage. That’s a planet-wide problem that is the result of human consumption and industrialization. The problem in New Orleans is the result of decades of incompetence from municipal leadership: incompetence that was a principal factor in the city’s destruction.

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