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(Photo sent to me by Scout Prime from a recent trip to New Orleans, LA.)

If you live in a coastal area, or near any waterway that has ever flooded in its long history, or in an area where tornados or mudslides or other natural disasters have occured.  Or if you have ever had wildfires in your area.  Or made a claim on your insurance in any way.  Or…well, if you are pretty much any person who pays into an insurance policy month after month, and expects that the insurance company will pay a legitimate claim if you ever have the need for such a payment, you had better listen up and listen good.

Scout Prime gave me a call last night, and we spent some time talking about a recent decision by a major commercial insurer — Traveler's Insurance — to pull their coverage out of the Southern Louisiana area beginning in March of next year.  This is a devastating decision, because without commercial insurance most, if not all, construction companies will not be willing to risk construction.  Without commercial insurance, most businesses will not be willing to risk re-opening.  And that will be true even for areas that did not flood or sustain heavy damage — because without some means of risk insurance, most businesses will simply move elsewhere — even if they have never filed a claim in their history.  As Scout says in an article that she wrote on the subject at First Draft:

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.

First and foremost, for NOLA, this is about the levees — and the lack of any real push from the Bush Administration that the Army Corps of Engineers put any sort of priority into better engineering and rebuilding. There is no commitment from the Bush Administration whatsoever on this, and so insurance companies and businesses see no real incentive to rebuild or work within the community as a result — for the lack of strong levees pretty much dooms NOLA to relive the nightmare that was Katrina if another strong hurricane ever hits the city again.

No strong levees equals no protection equals no New Orleans. And that is the truth of it.

What does that have to do with the rest of us?  Athenae covers this well:

Next week, I expect, insurers will announce that they're pulling out of Chicago. Risk of fire, you understand, and in the final analysis it's not worth their time.

San Francisco? Too many earthquakes. LA? Drought (or mudslides, take your pick). Kansas? Did you see the Wizard of Oz? No way is anybody going to be responsible for yet another town wiped off the map by a twister.

It snows a lot in Wisconsin and Minnesota; ice storms down trees and power lines, pipes burst in the cold. Anybody living near a river could get flooded anytime, so forget about it, those of you on the Mississipp. Fry the whole state of Maine, too; I hear they get Perfect Storms up there.

Look, I know somebody's gonna respond with risk-analysis graphs and such and I get it, I do, but the fact of the matter is that it's past time we stopped with the unconditional surrender in the class warfare that leads to these insurers saying eh, too bad, so sad, see ya later every time people actually need them to do what they exist to do and what you pay them every single month to do….

So my question is this. Who is going to stop them? Because somebody has to. We just elected a whole bunch of new congressmen and senators. Any of y'all out there not wholly owned subsidiaries of Allstate? I know since the campaign's over some of you have been lonely for the press coverage. Want an issue to pound away at? Want to be more than That Guy Who Isn't Barack Obama this year, with the added benefit that it'll help some of the Democrats who elected your ass? Step up to the plate. Somebody has to say, enough. Because pretty soon it'll be San Fran they're abandoning, Chicago, Indianapolis, Portland, Boise, Salt Lake. Pretty soon it'll be you, so when are you going to step up?

It's a good question. Who is going to step up? You think it's going to be Sen. Joe Lieberman (I-Ins.) who, as the proposed head of the Homeland Security committee in the incoming Congress represents a state which houses a whole lot of big insurers who contribute to his campaign coffers?  Yeah, me neither.

So who is it going to be?

Because, as the LATimes demonstrated in a recent article — what the folks in NOLA and all over the Gulf Coast are dealing with in the aftermath of Katrina and Rita and their insurers – is what any of us could be dealing with at any time.  Insurance companies have long been in the business of not paying claims — they make money by taking in monthly policy payments and then never having to pay anything back out again.  It's called profit margin.  And the profit margin gets eaten into with every paid claim, now doesn't it?

While I do not expect insurers to assume irrational or substantial risk for altruistic and idiotic reasons, I do expect some good faith on their part when the chips are down for their insureds.  And that is where the tough questions ought to be asked of all sides in this mess.  Starting with the Bush Administration and their failure to adequately address genuine questions about the levee construction in NOLA.  Why are those questions not being asked?

Oyster, a local NOLA blogger, has as good an answer as any on this question:

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.

New Orleans as a port city is essential to the workings of this nation: oil and other commodities are shipped in and out of its port every day. Likely a whole lot of things on the grocery store shelves, in your local department stores, fuelng your cars, and so on, came in and through NOLA. Those ports cannot be run without employees, who cannot live int he area without housing and stores and all sorts of other businesses to sustain their day to day existence. If they have to travel a great distance to get to work, their wages are going to rise, which will translate into a rise in prices for the things that we all use and buy. Beginning to see how this ripples outward?

But wait, there is more.  As Scout Prime wrote this morning:

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.

There are a lot of issues tied up in this: environmental, developmental, economic, shared-risk, and so on and so on. Which means that there are a LOT of questions that need to be asked and answered, and then asked and answered again. What I would like to ask everyone this morning is how we can get the people who ought to be sitting up and taking notice of all of this to get off their butts and start asking them.

Because, let us take this a step further: this is the result of a category five hurricane for which there was several days of lead time and notice as we all watched it head toward land on the weather reports. Imagine, if you will, this same level of ineptitude and disregard for American citizens after a catastrophic terrorist attack on American soil — say a nuclear device or some biological weapon. And then think about how we have had years — YEARS — since 9/11/01 to work on this, to put together some comprehensive planning, to have some immediate response up and ready to go…and then ask yourself how safe you feel about that after the catastrophic failure that was the Katrina response.

NOLA's fate could be all our fates.  And it is well past time that we started demanding some accountability on this.

More on the insurance pull-out and it's impact on NOLA here.