St. Paul Travelers said Dec. 1 that it will stop renewing many commercial insurance policies in the New Orleans area next year, stoking fears that other insurers are prepared to pull out of the market after Hurricane Katrina.
The state’s largest commercial insurer will stop renewing property business policies for an undisclosed number of small- and mid-sized businesses, mostly in Orleans Parish, starting in March, a spokeswoman for the St. Paul, Minn.-based company said.
It wasn’t immediately clear how many businesses would be affected, but The St. Paul Travelers Companies Inc. writes about 14 percent of the state’s policies.
The company is the first insurer to announce that it will stop renewing commercial policies in Louisiana in the wake of Katrina, which destroyed tens of thousands of homes in Mississippi and Louisiana, according to the state’s insurance department.
Travelers spokeswoman Jennifer Wislocki said the company “will continue to be an important part of the insurance market in Louisiana” and has no immediate plans to stop renewing other types of policies, including those for homeowners.
“St. Paul Travelers has a high concentration of insured commercial property in hurricane-prone areas in the state,” she said. “We are reducing our exposure in some of those areas, by non-renewing a number of small- to mid-sized commercial properties.
Mark Drennen, president and CEO of the Greater New Orleans Inc. economic development group, estimates the company’s decision will result in $3 billion in lost coverage for businesses in the New Orleans area.
Drennen said it would be “catastrophic” if other major insurers join Travelers in no longer renewing commercial policies in the region.
“We believe it’s a crisis that can totally thwart any kind of economic recovery down here,” he said.
State Farm Insurance Group accounts for 12.6 percent of the state’s commercial policies, followed by Zurich Insurance Group at 10.3 percent and Allstate Insurance Group at 5.9 percent, according to insurance department spokeswoman Amy Whittington.
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