News Release Distributed 6/19/08
NEW ORLEANS – Without insurance, there will be no recovery, insurance industry experts and members of the Louisiana congressional delegation said Monday (June 16).
Speaking at the 4th Presidents’ Forum on Meeting Coastal Challenges, which took the form of a daylong seminar on property insurance in coastal Louisiana, a lineup of speakers representing the insurance industry and the public sector laid out their assessment of the insurance situation for coastal areas subject to the destructive forces of tropical storms and hurricanes.
Like it or not, without insurance, recovery from the 2005 hurricanes will stall, Dr. William Jenkins, president emeritus of Louisiana State University, told approximately 200 people who attended the conference sponsored by the LSU AgCenter, the Louisiana Sea Grant College Program, the Louisiana Department of Insurance and America’s Wetland Foundation.
R. King Milling, vice chairman of Whitney Bank in New Orleans and chairman of America’s Wetland Foundation, said the Gulf Coast is recovering from the largest natural and manmade disaster in the history of the United States.
In order for recovery to continue, he said, people who rebuild have to have assurances they can get affordable insurance.
“After the storms of 2005, homeowner and business property insurance rates increased significantly,” said Dr. Paul Coreil, vice chancellor with the LSU AgCenter, one of the sponsors of the meeting.
“With new building codes statewide, the LSU AgCenter continues to sponsor educational programs that focus on best building practices that hopefully will lead to reduced property losses and help stabilize property insurance options so critical to citizens and businesses that continue to rebuild after Katrina and Rita,” Coreil said.
The conference featured three members of the Louisiana congressional delegation, who laid the groundwork for the day’s discussions.
Rising insurance rates have retarded recovery, said U.S. Rep. William Jefferson, D-New Orleans.
Jefferson said courts have determined insurance regulation is a state issue because it’s not involved in interstate commerce. On the other hand, he added, the Federal Housing Administration, the U.S. Small Business Administration and other federal agencies that provide loans require insurance. If that’s the case, he said, the federal government has an interest in insurance.
Jefferson said insurance is a regional issue that “should cut across state lines” and that Congress is discussing subsidies for purchasing insurance for catastrophes.
Sen. David Vitter, R-La., said that while levee protection is still uppermost in the minds of many in south Louisiana, wind insurance needs to be added to flood insurance to help people recover from hurricanes and related catastrophes.
“We understood in the weeks following Katrina the enormous gaps in that system and engineering flaws,” Vitter said of the levees.
Vitter added that the “single-most important” role of the federal government is to provide protection from a 100-year weather event by the 2011 hurricane season. He called the U.S. Army Corps of Engineers’ initial cost estimates for restoring south Louisiana levees “very, very low.”
Vitter also expressed concern some Louisiana levee systems may be decertified. If that happens, people behind those levees would lose their insurance ratings.
Because the legislation behind the federal flood insurance program expires this year, Vitter said, Congress has an “opportunity to try to improve that program and use it as an opportunity to bring up wind and liability issues.”
Rep. Charles Melancon, D-Napoleonville, said people in Orleans, Jefferson and St. Bernard parishes perceived they were protected because of the levees built over the years. People in Cedar Rapids, Ames and Des Moines, Iowa, had the same ideas, he added.
Melancon said federal flood insurance funds collected from policy holders are deficient because homes have been underinsured over the years. Unlike many homeowner policies, he said, federal flood insurance policies are not automatically adjusted for inflation.
“We need actuarially sound rates,” he said.
Although federal flood insurance rates are subsidized by the federal government, Melancon said the government shouldn’t subsidize rates for second and third homes.
“People who can afford second homes should be able to afford nonsubsidized flood insurance,” he said.
Following Jefferson, Vitter and Melancon, the program featured presentations on the variety of flood insurance options available to businesses and individuals, background on the federal flood insurance program and a variety of ways state and local governments can address hazard mitigation.
Louisiana insurance commissioner James Donelon, who was instrumental in putting the conference together, said Louisiana has to find new ways to address property insurability in hurricane-prone areas.
Writer: Rick Bogren at (225) 578-5839 or email@example.com