Insuring the Worst

In the nearly six months since Hurricane Katrina destroyed half of New Orleans, many storm victims’ expectations of help have been dashed, creating a legacy of bitterness. That legacy may be all the more painful when we consider that many homeowners suffered unnecessarily devastating losses because of their lack of insurance or their underinsurance, often owing to the belief that they could not afford the right coverage.

Future catastrophes – storms, earthquakes, tsunamis, volcano eruptions, forest fires, agricultural or other environmental crises, disease epidemics, or terrorist attacks – are likely to result in the same kinds of problems. So it is important to consider the causes of underinsurance and whether our insurance institutions are adequate to the risks that we face.

According to a report from the Insurance Information Institute, nearly 70% of homeowners’ claims in Louisiana were settled by the end of January, for a total of $7.5 billion dollars. Sounds good, but there were roughly 200,000 homes that were either severely damaged or destroyed, so the total amounts to less than $40,000 per home – far below what was needed.

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.


Log in;
  1. China corruption Isaac Lawrence/Getty Images

    The Next Battle in China’s War on Corruption

    • Chinese President Xi Jinping knows well the threat that corruption poses to the authority of the Communist Party of China and the state it controls. 
    • But moving beyond Xi's anti-corruption purge to build robust and lasting anti-graft institutions will not be easy, owing to enduring opportunities for bureaucratic capture.
  2. Italy unemployed demonstration SalvatoreEsposito/Barcroftimages / Barcroft Media via Getty Images

    Putting Europe’s Long-Term Unemployed Back to Work

    Across the European Union, millions of people who are willing and able to work have been unemployed for a year or longer, at great cost to social cohesion and political stability. If the EU is serious about stopping the rise of populism, it will need to do more to ensure that labor markets are working for everyone.

  3. Latin America market Federico Parra/Getty Images

    A Belt and Road for the Americas?

    In a time of global uncertainty, a vision of “made in the Americas” prosperity provides a unifying agenda for the continent. If implemented, the US could reassert its historical leadership among a group of countries that share its fundamental values, as well as an interest in inclusive economic growth and rising living standards.

  4. Startup office Mladlen Antonov/Getty Images

    How Best to Promote Research and Development

    Clearly, there is something appealing about a start-up-based innovation strategy: it feels democratic, accessible, and so California. But it is definitely not the only way to boost research and development, or even the main way, and it is certainly not the way most major innovations in the US came about during the twentieth century.

  5. Trump Trade speech Bill Pugliano/Getty Images .

    Preparing for the Trump Trade Wars

    In the first 11 months of his presidency, Donald Trump has failed to back up his words – or tweets – with action on a variety of fronts. But the rest of the world's governments, and particularly those in Asia and Europe, would be mistaken to assume that he won't follow through on his promised "America First" trade agenda.