1. Is it possible that the frequency and destructiveness of hurricanes hitting Florida and the propensity for Floridians to build their houses “upon the sand” is a factor in the high cost of house insurance there?

    Just a thought.

  2. ps. is house insurance REALLY a “necessity”??? Is living in Hurricane ravaged Florida when you can’t afford insurance or to rebuild out of pocket a “necessity”? Lot’s of low cost housing and jobs in Texas, come on over.

  3. Unrestrained markets work really well when it comes to most products and services — if a restaurant is too pricey, you can just drive past it.

    But it’s different when we’re dealing with the things that all people must have to pursue their personal happiness in community with others.

    Those include infrastructure, healthy air, food and water….

    Don’t restaurants serve food?

  4. Matt:

    You probably should get smacked for those comments. A few points:

    I’m pretty sure Texas suffers natural disasters (tornadoes, droughts, hurricanes, etc.) that you guys are quite thrilled to have the federal government and insurance companies come in and pay for. If insurance companies started preventing you from having insurance, so that you’re a disaster away from having nothing, I’m pretty sure you’d be a little upset.

    “Just move?” You say that so casually. Moving away from your home, culture, and family isn’t a joyful thing. It’s not a conservative thing either, unless you’re just pretending about all the stuff about community and family and tradition, etc.

    Every community has its dangers, but every person is born into that community. Whether it’s the blizzards in the north, earthquakes in the west, tornadoes in the midwest and texas, or hurricanes in the south people should be able to purchase insurance for their homes and possessions at a reasonable rate and have those companies treat them fairly.

    Telling them to move or live without insurance shows a lack of understanding and charity.

  5. Michael Denton,

    You probably should get smacked for those comments. A few points

    just like a lefty, resorting to such behaviour when arguments fail.

    I’m pretty sure Texas suffers natural disasters (tornadoes, droughts, hurricanes, etc.) that you guys are quite thrilled to have the federal government and insurance companies come in and pay for.

    Well personally I’m generally opposed to FEMA, but I’m in favor of insurance companies paying out to those insured who have suffered losses. While we do have natural disasters, the overwhelming majority of Texans do not live in areas which are regularly inundated. Those that do wish to live upon the sand, should pay for insurance based on their risk, or pay for their own repairs.

    If insurance companies started preventing you from having insurance, so that you’re a disaster away from having nothing, I’m pretty sure you’d be a little upset.

    Insurance companies aren’t preventing anyone from doing anything. They are simply not offering services. DO you think every business should offer services to everyone regardless of the cost of doing so??? That’s absurd.

    “Just move?” You say that so casually. Moving away from your home, culture, and family isn’t a joyful thing. It’s not a conservative thing either, unless you’re just pretending about all the stuff about community and family and tradition, etc.

    I didn’t say it casually, but it must be said. If you can’t find work, or afford to live where you have been living, you MUST move to support your family, that is a MORAL obligation. It’s not the governments responsibility to make every region affordable so that you can live where you chose regardless of ability to pay. That IS conservative.

    Every community has its dangers, but every person is born into that community. Whether it’s the blizzards in the north, earthquakes in the west, tornadoes in the midwest and texas, or hurricanes in the south people should be able to purchase insurance for their homes and possessions at a reasonable rate and have those companies treat them fairly.

    Of course the companies must treat people fairly, but why do you think hurricane insurance is so expensive in Florida, and less so elsewhere? What is a “reasonable rate” for insurance? It’s the risk of loss * the amount of losses, simple as that, higher risk (such as hurricane’s in florida) means higher rates. Are you saying that people who live in the Mid-West should subsidize Floridians to be insured for losses in a hurricane?

    Telling them to move or live without insurance shows a lack of understanding and charity.

    Not in the slightest, it’s just common sense.

    ps. I’m not suggesting there aren’t legitimate gripes with how insurance companies deal with people, it’s the nature of the demands being made above that are erroneous.

  6. Home insurance is essential if you want a state/nation of home owners according to how our mortgage system is set up- this is so that if catastrophe hits you don’t decimate whole neighborhoods by having destroyed homes left abandoned and rotting next door I suppose- if someone has a better idea for continuity for home owners then that might be worthy to hear about. But this post is really meant to connect up with the Pope’s encyclical, so try and keep your proposed solutions based upon something from that authoritative source.

    The exact list of what is essential to live a decent life here in America may vary- but what about the main points here?

  7. Just move? You say that so casually.

    To be fair, there are those territories below sea level that most assuredly will suffer repeat disasters, where homes should never have been built in the first place.

    Is it really reasonable that billions of dollars be devoted to the rebuilding of homes, etc. in areas that will simply end up experiencing the same disasters all over again the following years?

  8. just like a lefty, resorting to such behaviour when arguments fail.

    Did you just call me a lefty? If so, I am certainly not. I am proud son of the state of Louisiana, which is why i took offense to your ignorance and indifference. As it is attitudes like yours that have left many of my neighbors destitute, the adjoining neighborhoods abandoned, and the city of New Orleans struggling, allow me the indulgence of being upset.

    Well personally I’m generally opposed to FEMA, but I’m in favor of insurance companies paying out to those insured who have suffered losses. While we do have natural disasters, the overwhelming majority of Texans do not live in areas which are regularly inundated. Those that do wish to live upon the sand, should pay for insurance based on their risk, or pay for their own repairs.

    Without trying to wade into the mess of what “personally I’m generally opposed” is supposed to mean, the assertion that Texas is a utopian place immune to nature is laughable. Even not considering Houston, Galveston, and Corpus Christi which suffer from hurricane danger, Texas routinely suffers tragedy from nature.

    Insurance companies aren’t preventing anyone from doing anything. They are simply not offering services. DO you think every business should offer services to everyone regardless of the cost of doing so??? That’s absurd.

    Nonsense. You need insurance to get a mortgage; you need a mortgage to buy a house. No insurance=no mortgage=no house. If the insurance companies gouge prices, then they are most certainly forcing people to move.

    As for them offering services regardless of the cost, I’d think you’d be hard pressed to find that the insurance companies are really charging appropriate prices. After all, in the year following Rita & Katrina, the insurance companies made billions. They’re not hurting and they’re certainly making enough money to not have to raise prices they way they did.

    I didn’t say it casually, but it must be said. If you can’t find work, or afford to live where you have been living, you MUST move to support your family, that is a MORAL obligation. It’s not the governments responsibility to make every region affordable so that you can live where you chose regardless of ability to pay. That IS conservative.

    No, you sound so upset and heartbroken that families have to be torn apart and communities abandoned. Indeed, it is clear that you feel our pain.

    It is most certainly the obligation of government to preserve the community when it threatened by companies gouging prices. It is NOT conservative or Catholic to allow big corporations to become the arbiters of what is moral and to allow them free reign. It is is a legitimate use of governmental authority to step in and ensure that the insurance companies are charging appropriate rates.

    Of course the companies must treat people fairly, but why do you think hurricane insurance is so expensive in Florida, and less so elsewhere? What is a “reasonable rate” for insurance? It’s the risk of loss * the amount of losses, simple as that, higher risk (such as hurricane’s in florida) means higher rates. Are you saying that people who live in the Mid-West should subsidize Floridians to be insured for losses in a hurricane?

    I’m not saying the rates in Florida should be the same as in everywhere else. You live on the beach you have higher rates, just like if you drive more recklessly you have high rates. that’s understandable. The problem is when insurance companies are pricing out entire cities and communities. Not everyone “lives on the sand” as you fancifully put it.

    I think they should be reasonable and affordable. As far as what those rates are, I’m not an insurance adjuster, but I can tell you that a 100% hike is probably not justified, which is usually what happens after a storm. If it is, then the government should step in and make sure that they can subsidize those rates. After all, the people in Louisiana and Florida often live so close “to the sand” in order to provide oil for Texan Suburbans and shipping portals for Midwestern farmers. Louisiana gladly subsidizes other states when they have an emergency and it’s not unreasonable to expect the same kindness.

    So don’t give me this nonsense about your indignity about helping people pay for insurance or with the government making sure the prices charged are fair.

    I’m not suggesting there aren’t legitimate gripes with how insurance companies deal with people, it’s the nature of the demands being made above that are erroneous.

    Mention State farm or Allstate in any gathering space in the state of Louisiana, and you’ll understand “legitimate gripes.” For example, the insurance companies changed their mind about how high they wanted certain houses raised, so that all of sudden some people houses which originally met minimum requirements were now 2 inches too tall and were denied coverage.

    Communities and their heritage and families are more important than the profit-margins of insurance companies.

  9. On the issue of home insurance, my question would be this: Tim says in his editorial that “the big insurance providers don’t truly compete against one another on price.” If this is true (and it would be interesting to hear how he knows this) the obvious question is why not? After all, presumably people would prefer to pay less on home insurance rather than more. Why doesn’t some insurance company reduce their prices and take all their competitors’ business?

    I used to live in Florida and in fact the area in which I lived was hit by a major hurricane while I was there. It was a gorgeous area and there were many beautiful houses right up against the beach. It was a nice way to live, but building so close to the water meant that the chances were greater you were going to get flooded or your house would be destroyed in a storm. If you are willing to pay for that in the form of higher premiums, I have no problem with that (and if you can’t afford to, then I’m sorry but owning beachfront property is not a human right). The problem comes when people expect others to subsidize their repairs and/or restrict the ability of insurance companies to charge them higher premiums based on their higher risk. At that point you create a situation where people in less desirable neighborhoods are effectively paying extra so that folks in good neighborhoods can keep their nice houses, which is not only unfair but also encourages more risky building.

  10. “the big insurance providers don’t truly compete against one another on price.”

    I’ll only add that my actuary friends would be fascinated by this line of argument – and unemployed if it were accurate. A complaint about high housing insurance premiums is basically an argument that other people should be paying more to subsidize your residential choices; it’s nice when other people pay for stuff for you obviously, but it’s often unfair to them.

  11. To be fair, there are those territories below sea level that most assuredly will suffer repeat disasters, where homes should never have been built in the first place.

    Those homes are not all the homes of the wealthy who want an ocean view, as view and Blackadder seem to suggest. Most of the homes affected are the homes of the poorer who are trying to be closer to the resources (fishing & oil) which the rest of the country depends upon.

    Is it really reasonable that billions of dollars be devoted to the rebuilding of homes, etc. in areas that will simply end up experiencing the same disasters all over again the following years?

    Unless you’d be happy to have the price of oil, fish, etc. factor in the increased cost of transportation for workers, then yes, it is. People rebuild in Tornado Alley all the time; the city of San Francisco and Los Angeles are begging to be destroyed by an earthquake, yet people only complain about New Orleans and Florida residents being selfish for wanting protection for insurance gouging.

  12. Michael,

    I just don’t see the logic in committing billions of dollars to rebuilding efforts for homes built in territories below sea level since most assuredly (by nature) they’ll simply suffer the same catastrophes all over again the following year, with not only disasters wreaked on homes but lost of lives as well.

  13. Unless you’d be happy to have the price of oil, fish, etc. factor in the increased cost of transportation for workers, then yes, it is…

    Is there any reason why these costs shouldn’t be factored in?

    People rebuild in Tornado Alley all the time; the city of San Francisco and Los Angeles are begging to be destroyed by an earthquake, yet people only complain about New Orleans and Florida residents being selfish for wanting protection for insurance gouging.

    So, are you suggesting that private insurance companies are acting irrationally? In other words, that they are either taking risks they shouldn’t be taking in San Francisco/LA/Tornado Alley or that they are irrationally conservative in protecting themselves from exposure in N.O. or FL? If so, it’s odd that you think you are better at predicting these things than the actuaries/etc. who do this full time. Maybe the difference is related to the actual risks involved…why do you think it isn’t?

  14. With respect, earthquakes, while they do happen in places like Los Angeles and San Francisco, do not happen with such assured frequency as do those disasters wreaked in places located in territories below sea level which seem to occur almost annually, if not every other year.

  15. People rebuild in Tornado Alley all the time.

    True enough. And as I said before, if people are willing to accept the costs of doing this is the form of increased premiums, I have no problem. That goes for people in Kansas and California and Texas and Florida and Louisiana and anywhere else.

  16. I want to build a house on the edge of a live volcano that is currently covered with snow; I plan to build right beneath an enormous snow flurry that would turn into the world’s largest known avalanche upon the slightest disturbance. This is a very delicate operation. Unfortunately, insurance companies are so mean that they want me to pay higher rates. I demand that someone else subsidize my insurance. It’s only fair.

  17. The bit about how the big home insurers don’t really compete on pricing was something that was concluded during the Florida Today sponsered forum with experts- it was the conclusion drawn by the chief investigative reporter and no one challenged it- so I used that line in my column to see if there was any denial from other sources from within the industry or elsewhere- no one wrote in or blogged in to dispute it- so I don’t know- I’m not privy to the insides of the big insurance companies any more than I am with Big Oil- but it certainly has been the case in Florida that all the majors that were here had similar rate hikes and also made a lot of money even after the hurricanes hit- and I compare this to oil companies who seem to arrive at similar prices and then also set record profits- it would seem that with all the profit margins someone would take a big price dip to gather in more customers- but it hasn’t happened- it is very hard to prove monopoly abuses, but certainly there can be many unspoken agreements to keep all the big players extremely profitable while the average consumer is left with little of no choice. In Florida we have had Citizens insurance which is the place of last resort, but the rules were drawn up that Citizens could NOT be priced lower than the private companies.

    Now I am not claiming that all areas should be developed for homes- there can certainly be discretion when deciding whether permits should be granted in the first place- or second place when homes are repeatedly hit by violent storms predictably.

    Wow- this whole blog has turned into an insurance deal- I’d like to see some application of the pope’s encyclical for my own edification- I want to reflect an authentic Catholic worldview that is my goal- so let’s not bog down into a single issue complaint that has more to do with Florida living and politics than with the bigger picture perhaps. Though I do think I hit on an issue that has many people upset and looking for the right solutions- all of us who are homeowners anyway.

  18. it certainly has been the case in Florida that all the majors that were here had similar rate hikes and also made a lot of money even after the hurricanes hit- and I compare this to oil companies who seem to arrive at similar prices and then also set record profits- it would seem that with all the profit margins someone would take a big price dip to gather in more customers- but it hasn’t happened

    I don’t know much about how insurance companies operate in Florida, but the average profit on a gallon of gas is less than $.10. You’d think that if oil companies were colluding together to set prices they would set it higher than that (an alternate explanation for the similarity in prices is that there is very little to differentiate gasoline other than price, and comparing prices is fairly easy).

  19. Tim:

    Sorry to have helped hijack the post; I do think what you said has a lot in common with the pope’s encyclical.

    S.B.

    You’re embarrassing yourself. Your example has nothing in common with the situation of a functioning and productive community that has existed for hundreds of years. Moving on.

    Blackadder

    True enough. And as I said before, if people are willing to accept the costs of doing this is the form of increased premiums, I have no problem. That goes for people in Kansas and California and Texas and Florida and Louisiana and anywhere else.

    Yes, but just b/c we should have increased premiums does not mean all increases are justified and all levels are justified. If tornado or earthquake rates got to the point or pricing out large sections of Tornado Alley or Los Angeles, I’d have a problem and would like to see the government step in.

    e.

    With respect, earthquakes, while they do happen in places like Los Angeles and San Francisco, do not happen with such assured frequency as do those disasters wreaked in places located in territories below sea level which seem to occur almost annually, if not every other year.

    I don’t think the frequency conceptions you have are accurate. New Orleans has been devastated by a hurricane so badly I think 3 times since 1900 (Katrina, Betsy, and what I think is the Labor Day hurricane in the 20s). That’s hardly “frequent.”

    One might argue that if global warming is created by human action, then the frequency is not the fault of location as the higher temperatures have led to higher hurricane numbers. One could also argue that the damage done has been increased the negligence of the farmers up north who allow the toxins in the fertilizer to drift down here and destroy our wetlands, which for centuries were natural barriers that minimized hurricane damages. These argues could say that the location has been made less suitable not due to the stupidity of the people of New Orleans but the actions of others.

    In short, I don’t think it’s terribly unfair for New Orleans to ask for help against price gouging from insurance hurricanes just b/c of their location.

    So, are you suggesting that private insurance companies are acting irrationally? In other words, that they are either taking risks they shouldn’t be taking in San Francisco/LA/Tornado Alley or that they are irrationally conservative in protecting themselves from exposure in N.O. or FL? If so, it’s odd that you think you are better at predicting these things than the actuaries/etc. who do this full time. Maybe the difference is related to the actual risks involved…why do you think it isn’t?

    Do I believe insurance companies are human and therefore can act irrationally and dare I say greedily? Let me think…YES!

    I mean, perhaps your actuaries are above sin but if they can figure out they can charge a much higher price and get away with it, even if it’s mostly just to increase their own wealth, then yes, I think they’ll do it.

    Companies acting greedily and needing regulation…it’s almost like I read that somewhere yesterday…something about Caritas in the title…

  20. Michael — it’s just a reductio ad absurdum. The principle is the same, though, as the notion that people who choose to live in high-risk areas should have their insurance subsidized by folks elsewhere.

    For those of you calling for regulation: Are you aware of the existence of state insurance departments that already regulate rates and services quite thoroughly? For Florida, see http://www.floir.com/pcfr/is_pcpr_index.aspx and http://www.floir.com/pc/oir_pcfo_index.aspx

  21. Do I believe insurance companies are human and therefore can act irrationally and dare I say greedily? Let me think…YES!

    I mean, perhaps your actuaries are above sin but if they can figure out they can charge a much higher price and get away with it, even if it’s mostly just to increase their own wealth, then yes, I think they’ll do it.

    Michael, that’s a silly distortion of my question. You are alleging insurance companies are acting irrationally: you’ve provided no evidence for this assertion, and, as far as I can tell, have no basis from which to make this determination other than you feel the premiums are too high. There are three interpretations of the fact of high premiums: 1) the insurance companies are right and you are wrong about the risk profile of the properties; 2) You are right, and they are mistaken – that N.O. is actually a wonderful haven of profit opportunity for a smart insurer who correctly evaluates the risk and prices out their competitors; 3) You are right, and the insurance companies know it; they are breaking the law, engaging in collusion, and overlooking a great opportunity for profit out of pure spite. You’ve selected option 3. Is there any particular reason why?

  22. Michael,

    Trying not to focus on the insurance aspect here, but I wonder what you think of this. First let me say that I’m a big proponent of family and community, and of the common man being able to go about living his life. And not to seem cold hearted about the plight of those from New Orleans, but is it not a valid consideration that N.O. was an experiment that failed, that this is one part of nature that man shouldn’t try overcoming? I mean, do the people of Chernobyl have the right to demand that the region be scraped down 10 feet, the soil hauled out, and the city rebuilt? I don’t think there’s much difference, really. N.O. belongs just as much to the sea as it does the land. Perhaps society would have been better off letting her go.

    I have mixed thoughts on the matter, but i think it’s a valid consideration and if so, to what extent does the rest of society have an obligation to support it?

  23. John Henry,

    Well said.

    Doesn’t option 3 seem highly unlikely given the scrutiny that state regulators place on insurance companies? If there is evidence of collusion, where is it? That’s a serious charge that requires more than “I just feel that premiums are too high.”

  24. If tornado or earthquake rates got to the point or pricing out large sections of Tornado Alley or Los Angeles, I’d have a problem and would like to see the government step in.

    I’m not sure I get the logic here. Presumably you agree that there are some areas in which people just shouldn’t live because the costs of disasters that will befall people living there are too high. I would think that if the cost of insuring against such disaster in a particular place becomes prohibitively expensive for most people, that might be an indication that that place is in one of those areas.

    Do I believe insurance companies are human and therefore can act irrationally and dare I say greedily? Let me think…YES!

    There’s a difference between acting irrationally and acting greedily. Greed can’t explain why insurance companies would be undercharging people in California.

    To put it another way, my understanding is that while home insurance in Florida costs more than the national average, the cost of car insurance is not much higher than usual. Not only that, but in some cases it is the same companies selling the car and house insurance. It could be that these insurance companies are really greedy whenever they deal with house insurance but inexplicably become non-greedy when the subject turns to cars. But that seems unlikely. Another possibility is that the costs of insuring houses in Florida are just higher than average, and the higher insurance premiums are a reflection of that.

  25. John Henry:

    You have no reason to assume that they are acting rationally yet you seem incredulous that I could postulate such a theory, so it’s not a distortion.

    Yet you assume that they are quite reasonable. I see I’ll have to go back and look up some numbers, but the fact is that insurance companies had lower rates and were making plenty of money in New Orleans long before Katrina. It’s the same city; the protections are even better than before. Heck, until Monday when the levee broke New Orleans was in the clear. The risk is the same, yet the prices are now sky high or inaccessible. I don’t think it’s that unreasonable to think that the insurance companies saw an excuse to do a price hike that isn’t entirely justified by need or risk.

    SB:

    It’s not a reduction ad absurdum, it’s a false analogy. As for the insurance departments, I’m well aware of them. Louisiana has a long history of commissioner department being bribed by the rational and innocent insurance companies and going to jail for it.

    Rick:

    While I appreciate your effort at being kind, there really isn’t a way to not be cold-hearted when telling someone their city should be in the sea. But I do appreciate the effort, so I’ll answer your question.

    There’s a MR-GO canal, a federal project pushed by shipping interests that ended up providing a canal right for the water to flow into New Orleans East. That is an example of man not respecting nature, as is some of the projects that have damaged the wetlands. So man’s arrogance plays a part, but that does not mean NO is a failed experiment. NO has survived the British, fires, and hurricanes before. Other cities have been rebuilt before. They have been rebuilt

    1) b/c lessons were learned to help ward off the impact of future disasters. This is true in this case. The MR-GO is being closed and filled, more effort is trying to put into wetland conservation (LA had negotiate hard to get money from LA oil revenue that the feds were taking to pay for it, speaking of things that are not LA’s fault, but that’s another issue), the levees were rebuilt, homes in flood-prone areas are being raised. The levees have been restored and we’re looking into ways to further improve them.

    2) A city, especially New Orleans, cannot be replaced. It would be a great loss to the US if New Orleans is lost. Not only does it represent a different culture from anywhere in the US (part of why it’s maltreated as opposed to say Miami, which is in an even dumber spot), it represents a valuable culture. Especially for Catholics: how many other cities point to a cathedral as its main monument? Sure, Mardi gras has gotten out of hand but there is a rich Catholic culture here, one that preserves many things that ought to be preserved. Whether it’s London, Chicago, or Los Angeles, losing a city means losing a lot. Of course, I haven’t even begun to discuss the impacts on the economy losing NO would have. From the oil fields largely serviced by headquarters in NO to the shipping from the Mississippi, etc. NO is a valuable asset. Thomas Jefferson seemed to think so, at least.

    So yeah, I don’t think it’s a given that NO belongs to the sea.

  26. Blackadder:

    You’re putting me in false position. I’m not arguing that NO rates shouldn’t be higher than other places; I’m saying that they’re too high.

    As far as insurance departments, 1) we have Republicans in office who is they want higher office try to look good big-business and 2) insurance companies threaten to leave the state, in which case LA has to take over insurance coverage. Maybe I’m not conservative enough for most of you, but I’d rather State Farm than the state of Louisiana be my insurance provider.

    In all, I don’t think many of you quite comprehend the scope of what we’re talking about. We’re not talking about some beachfront homes here; look up a map of New Orleans and see how large it is. 500,000 people before Katrina in new Orleans alone; 1.3 in the metro area I believe. Moving does not mean moving a mile or two to higher ground; moving means an hour away if you’re lucky. That you guys can’t understand or even try to sympathize that is amazing for a group of so-called Catholics who claim to practice charity.

  27. P.S. to Blackadder:

    There’s a difference between acting irrationally and acting greedily.

    To sin is irrational according to Catholic conceptions of reason, therefore greed is irrational and in fact in long-term situations undermines the economic good. See Caritas in Veritate for details.

  28. j. christian:

    we need stronger ethics codes which oh by the way Bobby Jindal got done last year while Palin was out looking at Russia from her house.

    Besides, I didn’t ask for another layer of bureaucracy; I’m not a liberal. I just want the people to do the jobs they have now.

  29. Michael,

    A couple of points.

    First, if you want people’s sympathy, I’m not sure calling them “so-called Catholics” is a good strategy.

    Second, all greed may be irrational but not all irrationality is greed. In particular, if an insurance company is undercharging people in California, that may be irrational, but it’s hard to argue it’s motivated by greed.

    Third, you say that you’re fine with people being charged higher premiums based on risk but that the rates in New Orleans are too high. Okay. But so far as I’ve seen, you’ve offered no reason for thinking that this is so. Personally I have no idea how high a premium for a house in New Orleans should be. I know nothing about the costs, probabilities, or other factors that are involved. I do know, however, that the insurance companies employ people who do know about such things, and whose job it is to calculate how much a given policy is expected to cost. I also know that, if the calculations turn out to be wrong, the insurance companies stand to lose a whole lot of money. I’m therefore inclined to think that the market rate for insurance is about what it should be absent some reason to think otherwise (greed, you’ll note, is not a reason as it should make a company more desirous of getting the calculations right, not less).

  30. The insurance rates on New Orelans are a issue. Sadly too many people see the area of New Orelans as the French Quarter and notheing more. It is a major port and is large part the start of the working Coast that stretches across Louisiana. When I say working Coast I am talking the fact that much of MAerica Seafoold inhustry, transport, and oli and gas needs are met by people that have to live on it. Itr can’t be done by robots.

    Louisina folks including those in New Orleans contribute much to the Economic and National Security of the United States. I hope this problem is dealt with

  31. “I just don’t see the logic in committing billions of dollars to rebuilding efforts for homes built in territories below sea level since most assuredly (by nature) they’ll simply suffer the same catastrophes all over again the following year, with not only disasters wreaked on homes but lost of lives as well.”

    Most people do not relaize this but a nice boit of New Orelans is not belwo sea level. That being said this a working Coast

    THe consern should be immediate massive intervention to save the Coast which if not is going to be a huge econolic and ecological disaster for the nation

  32. Blackadder:

    First, so called Catholics is a fairly gentle term for what was going through my mind, but I shouldn’t have said it. Regardless, I do not think it is a stretch to say that the indifference towards mass amounts of people having to uproot themselves does not show a strong Catholic example

    Second, allright, let’s give you a number. http://www.usatoday.com/money/economy/housing/closetohome/2007-10-29-new-orleans-housing_N.htm

    For a $175,000 home, a buyer will have to shell out $4,200 to $4,800 a year for insurance, says Lisa Heindel, an agent at Latter & Blum Realtors. Before the hurricane, the cost was about $1,200 annually.

    I believe Texas was around 1,000 for insurance.

    Maybe I’m crazy, but did the risk really triple or quadruple after the storm? Is is possible, just possible that the insurance companies took advantage of situation to make money?

    One course, one could ask if the rate changed so much and they’re right now, how they could screw up so badly before the storm? Maybe in fact, the market forces don’t quite work out all the time.

  33. “After all, the people in Louisiana and Florida often live so close “to the sand” in order to provide oil for Texan Suburbans and shipping portals for Midwestern farmers. Louisiana gladly subsidizes other states when they have an emergency and it’s not unreasonable to expect the same kindness. ”

    Michael he hit ot right on the nose. FOr all the talk of environemnt Louisiana is rarely mentioned. And don’t get me started on the idiotic Corp of Engineers that drives me insane.

    Much of the flooding we can lay right at their feet. The Nation is served by things like the Intracoastal Canal which has a had side effect of tearing up the wetlands which has increased flooding. But the nations shipping sinterest still go through it while people go why do yall folks live down there

  34. I’ll confess to not having followed this whole thread in detail, this having been a busy day, but the following two thoughts might be useful in regards to the discussion of homeowners insurance:

    - Speaking as a Los Angeles native: After the Northridge quake in the mid 90s, a lot of homeowners insurance companies operating in California dropped nearly all earthquake coverage and offer separate earthquake coverage at additional cost (if they offer it at all.) This means that many Californians are sitting on a potential economic time bomb.

    - As someone who deals with statistics at work all the time: the fact of the matter is that we are not nearly as good at predicting infrequent events as we think we are. Even now, with three data points in the last century, the fact of the matter is that insurance companies do not have a very good idea whether they are over or under charging for homeowners insurance in LA. They took a major bath with Katrina, and they’re hoping that they have it right now, but they really don’t know.

    - If you think about what insurance is, it’s a promise to replace a home and its contents. So insuring a 175k home is a promise to replace up to 200k in total value of house and possessions. So if it’s being priced at 4k per year, that means that the insurance company is betting they’d have to pay out roughly once every fifty years on average.

  35. Somewhere out there is my lost posting! I do think this insurance discussion is a good one- it shows that there are many things to consider- the business end, the homeowner’s ability to pay for insurance, the profits of companies, the role of regulators, the development question in areas where nature is often very destructive, and the overall morality for all of those involved in these sorts of transactions, with the common good the ultimate focal point for Catholics and all people of good will.

  36. “After all, the people in Louisiana and Florida often live so close “to the sand” in order to provide oil for Texan Suburbans

    What world do you live in? There is no oil or gas pipelines that flow into Texas from NO. We have plenty of oil and gas here thank you very much. Our workers live close to the cost, but mostly not on Galveston Island.

    Louisiana gladly subsidizes other states when they have an emergency and it’s not unreasonable to expect the same kindness. ”

    Yes, and, you may or may not recall it, but those Texans you’re dissin sent more of it then just about anyone else. We took the homeless in with deep generosity.

    The problem with New Orleans (and Louisiana) go way beyond being a bowl that wants to fill with water. It is deeply corrupt (though much improved of late). That’s the real reason that so many died, and so much was lost. Your mayor failed to act in evacuating his people, and so many were stranded, and all the buses destroyed. The governor failed to call in the necessary resources and grant authority to bring in the federal resources being offered. Many policeman deserted, some became looters, and not a few turned out to be not real at all, just a way for some corrupt individual to collect their paycheck.

    Before you respond. None of the corruption is by the hard workers in the oil, shipping and fishery industries, but they take some blame for continuing to put up with the problem.

    ps. who was that congressmen who had a freezer full of cash, and STILL got re-elected in LA?

  37. t is deeply corrupt (though much improved of late). That’s the real reason that so many died, and so much was lost. Your mayor failed to act in evacuating his people, and so many were stranded, and all the buses destroyed. The governor failed to call in the necessary resources and grant authority to bring in the federal resources being offered. Many policeman deserted, some became looters, and not a few turned out to be not real at all, just a way for some corrupt individual to collect their paycheck.

    I would differ with you on the state of the police force (most did stay, there were a few who committed suicide, sadly). I think being abandoned in the middle of a natural disaster zone with precious few resources is a tremendously tall order, and while there were lessons learned I think most New Orleanians came away with a better view of the force overall.

    On the government side, while the buses was a terrible decision, just think about how much experience people have with evacuating entire cities. Something is bound to go wrong. Additionally, a lot of people just don’t leave. They don’t want to. They’d rather wait it out, despite warnings.

    The government should have been better, I’d agree.

    To your ps: William Jefferson, who was re-elected primarily b/c all the Republicans voted for him instead of his rabidly pro-abortion opponent. Of course, he was ousted in 2008 for Catholic Congressman Cao and his trial is happening right now I believe.

  38. For a $175,000 home, a buyer will have to shell out $4,200 to $4,800 a year for insurance, says Lisa Heindel, an agent at Latter & Blum Realtors. Before the hurricane, the cost was about $1,200 annually.

    Maybe I’m crazy, but did the risk really triple or quadruple after the storm? Is is possible, just possible that the insurance companies took advantage of situation to make money?

    Why is it hard to believe that would have gone up this much? Katrina, after all, was a fairly major event.

    Insurance companies are in the business of making money. If they aren’t constrained by things like competition or supply and demand in setting their rates, then why weren’t they charging four grand for a policy before the storm? If an insurance company could make money selling policies at a rate most people are willing and able to pay, why would they set rates at a level most people are unwilling and unable to pay? Why, in fact, would companies be refusing to write new policies in certain areas at all, regardless of price? If there motive is making money, then that doesn’t make much sense. You don’t make money by pricing all your customers out of the market. The idea that all the insurance companies would do this, and that no company would step in and offer lower rates to get these potential customers, is just implausible. Saying that the insurance companies are greedy and only care about making money makes it more implausible, not less.

  39. the insurance company is betting they’d have to pay out roughly once every fifty years

    Thanks for the von Neumann-Morgenstern napkin calculation, Darwin. Very good point; this would be the “actuarially fair” zero profit premium, of course. And how many hurricanes have hit New Orleans in recorded memory? Three or four since the Louisiana purchase? Sounds like the new rates are probably closer to reality.

  40. I have some differing views on the matter I suppose.

    I need food, water, and access to shelter. eating beens drinking well water and living in a shanty is sufficient to meet all of my needs. i don’t “need” electricity or a vehicle, unless I live real far from my job. and if my shanty gets blown over by a hurricane I can rebuild it out of my own pocket probably.