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Some of the many readers of this blog may have noticed that we’ve been off the air for a bit. I’m afraid Ike took a significant toll on the attention of most Houstonians. So, at the risk of digressing a bit, here are some stray thought.

1. Houston exists. It is a major American city. I understand that Wall Street melted down while we were struggling, but still it did feel like a bit of a kick to be relegated to the back pages of the New York Times and other national media — CNN seemed to think the fate of an attractive victim of a possible serial rapist was particularly interesting a la Natalee Holloway, while others thought more intriguing Round 359 of Obama responds to Palin attack on Biden statement on media report of trooper investigation — while 2 million people were without power, food, water, gas and other things that separate us from the conditions in which many people in the world live daily. 

2. We need a better electrical utility infrastructure. The Houston Chronicle has an interesting story in which regulators and regulatees collaborate in an explanation of why so much of our power infra-structure remains vulnerable to hurricane. The argument appears to be that it is costly to reinforce power poles to the needed level and that some sort of cost-benefit analysis needs to be done. I’m all for cost-benefit analysis, but given the economic costs of shutting down this city for a week, not to mention the monetizable cost of misery and stress, there is no possible way that even gold-plated utility polls (although probably gold would not be the best material) would outweigh the costs of the status quo. I will cheerfully pay what it takes.

3. We are in for some major insurance battles in Texas. These will include (A) is surge an excluded flood for purposes of coastal property insurance policies? The early smart money will join the Texas Windstorm Insurance Association (TWIA) in saying it is excluded, see cases like this and this. If I’m correct, many surge victims will be relegated to their flood insurance policies, if they have one, and its $250,000 cap and other limitations. (B) TWIA liquidity issues. The Texas Windstorm Insurance Association is going to have some significant claims against them. To pay then, they are likely going to need to get their 63 reinsurers, many of whom have offices in Bermuda, promptly to write a 1.5 billion check. In my experience, reinsurers don’t write checks terribly swiftly and, given all the surge flood issues (see above), I’d be pleasantly surprised if they did so here. Right now, all that stands between TWIA policyholders and an insolvent insurer is the $370 million remnants of the TWIA catastrophe fund and a $430 million assessment that hopefully Texas insurers will actually pay swiftly notwithstanding the aforementioned Wall Street meltdown and the demands on cash flow imposed by non-TWIA policies. (C) Gory Business Interruption claims. These are policies that insure businesses not against physical loss but basically against loss of income occasioned by disaster. They are always difficult to adjust and given the special complexities here of interdependent power losses, government restrictions such as curfew, closures of areas, etc., are likely to provide fodder for insurance litigators for years to come.

4. Much more to say, but my day job beckons. Well, actually one more comment. While it is generally bad form to explain a joke, I have to remark that the opening sentence “Houston exists” is indeed a pun. It is a response to the appearance that we have been forgotten by major media outlets headquartered on the coasts. Do you think if New York got hit by a hurricane (not an impossibility) and all Manhattan lost power and Staten Island was uninhabitable media coverage would be subordinated the way it has been?  It is also an assertion that we are gradually clawing our way back.  We’re down, but not out. And let us hope that we really learn something from this experience. OK, now back to work for real.


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