Commercial insurer to pull out of area
Businesses fear Travelers' move will put the brakes on recovery
Saturday, December 02, 2006
By Rebecca Mowbray
St. Paul Travelers Cos. Inc., Louisiana's largest commercial insurance provider, plans to cancel all its commercial property policies in the New Orleans area next year, sparking fears that other insurers will follow and slow the region's economic recovery.
While the St. Paul, Minn., company refused to say how many commercial policies will be affected or specify where the cuts will be in South Louisiana, two insurance brokers who were briefed by the company this week say Travelers will not renew any property insurance for businesses in Orleans, Jefferson, Plaquemines, St. Bernard and eastern St. Tammany parishes. Cuts will also affect individual businesses in other parts of South Louisiana, including St. Charles and St. John the Baptist parishes.
"I said, 'May I tell anybody who asks that Travelers is withdrawing from the commercial property insurance market in southeast Louisiana?' " said Anderson Baker, president of the New Orleans agency Gillis, Ellis & Baker, who met with the company Wednesday. "The answer was, 'Yes.' "
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Travelers spokeswoman Jennifer Wislocki said the company has "a high concentration of commercial policies in the hurricane-prone areas of Louisiana" and will not renew many commercial policies when they expire.
"To keep future losses to a more acceptable level for continued financial stability, we are reducing our exposure in some of these areas by non-renewing a number of small to mid-sized commercial properties," Wislocki said.
Crisis summit called
State Insurance Commissioner Jim Donelon, who was tipped off about Travelers' plans Wednesday night by the Business Council of New Orleans and the River Region, said he was stunned by the news. When he met with Travelers on Thursday, he was equally stunned by the stated reason for the company's retrenchment.
"They cited the state of the rebuilding of our levee system as the primary reason for their decision," Donelon said.
In conjunction with Gov. Kathleen Blanco and Louisiana Department of Natural Resources Secretary Scott Angelle, Donelon quickly convened a summit of commercial property insurers for Tuesday. At the meeting, the three hope to advise commercial property insurance providers about the efforts to restore the Louisiana coast and improve the levee system to stave off other defections.
"I have lived in the New Orleans metropolitan area for 61 years, and I can personally vouch for the fact that the levee system is better and stronger than it ever has been, and is getting stronger as every day goes by," Donelon said. "We need to let Travelers and the rest of the commercial property writers know of that effort."
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