New Orleans: Risky business for insurance

…New Orleans, which sits an average of six feet below sea level, is slowly dropping into the Mississippi Delta sediment, a fact acknowledged by the Army Corps of Engineers and others who have reviewed land surveys.

Says Robert Hartwig, chief economist at the Insurance Information Institute: “New Orleans is the most vulnerable city in America. Despite the best-laid plans, ultimately Mother Nature is going to have her way.”

Indeed, some of the city’s most vulnerable neighborhoods are sinking at the alarming rate of an inch per year. The wetlands around New Orleans, a network of marshes and tributaries that once served as protection from the invading Gulf of Mexico, are rapidly eroding.

Sea levels are rising too. As if that weren’t enough, recent weather patterns suggest a ten-year period of more frequent and more severe hurricanes in the gulf.

“These factors all serve to increase the storm-surge flood hazard faced by New Orleans,” is the warning in a recent report by Risk Management Solutions (RMS), a catastrophe-modeling firm whose research the U.S. insurance industry depends on.

As for the levees, they won’t do much to mitigate the increasing flood risk – even after they are fortified. Why? Because they’re sinking too.

Fortune