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It wasn't long after Hurricane Katrina changed the Gulf Coast forever, that I left my home with its blue-tarpaulin roof near New Orleans and made my way to Atlanta for an insurance industry conference.
At the time, insurers were seen as no small part of the problem. They invoked flood exclusions in denying claims on homes and businesses that were blown apart by high winds, then drenched in floodwaters or rain. Many policyholders who did get payouts claimed that their settlements were unreasonable. The popularity of insurance companiesnever high in normal timeswas at rock bottom along the coast.
It was in Atlanta, with Katrina's wounds still fresh, that I listened with a fair amount of incredulity to a panel discussion featuring executives from insurance companies and agencies. How was it possible, the moderator asked, that the industry could be so maligned when it was doing its best work and helping so many people?
The befuddled panelists couldn't explain it. So many claims had been settled they told their audience. How can we be so hated?
No one bothered to bring up the fact that a large number of closed claims did not mean they were all settled to the policyholders' satisfaction. Some buyers got tired of the fight and took what they could get.
And property owners now know something else: While they were scrambling to rebuild their homes and lives with what they could get from their insurers, the insurance companies were working out how they could recoup all their losses and much, much more. Just look at the profits that have rolled in since the storm.
The conference in Atlanta was nearly two years ago. When I visited New Orleans in June, I found that the distaste for insurers there has not faded. They are regularly vilified in newspapers, on talk radio and anywhere a handful of people gather to have a drink or bite to eat.
My wife and I had dinner with several friends at an Italian restaurant that had been heavily damaged by Katrina. Our conversation quickly turned to the city's continuing problems with the recovery, and, most notably, the local attitude towards underwriters. "Insurers," one of my friends said, "are the biggest problem with the recovery."
The horror stories began: Homeowners' premiums have as much as doubled. Some insurers only write coverage that excludes damages from wind and water, which makes the coverage worth little for a Gulf Coast policyholder. Some residents have built their homes back, only to find they had to sell because they could not afford the insurance. Others have decided not to come home because of coverage costs.
Insurers might say they responded to the devastation with kindness, pouring millions of dollars into the coffers of agencies involved in the region's recovery. Problem is, the storm victims feel they are now paying back that largess through staggering premium increases.
The message to insurers from the Gulf Coast is this: Do as you urge others to do and manage your risk. That doesn't mean avoiding it entirely. And it doesn't mean charging premiums that leave policyholders strapped. If you really want to show some concern for hurricane victims and do something to spur the recovery, offer the region reasonably priced insurance. You can afford it. And your policyholders will appreciate it by remaining customers for life.