Almost a year after it was struck by Hurricane Katrina, Louisiana's economy is in desperate shape, but conditions for that state and Mississippi should improve as insurance claims payments and $107 billion in federal aid arrive, an insurance trade group predicts.

That forecast comes from the Property Casualty Insurers Association of America (PCI) based in Des Plaines, Ill., in a report on "Rebuilding the Gulf: The Impact of Insurance Claims Payments on Post-Hurricane Economic Recovery in Louisiana and Mississippi."

In the time since the storm arrived on Aug. 29, 2005, insurers have settled more than one million claims for all lines including homeowners, commercial property, business interruption and personal and commercial automobile, PCI reported

Insurers have paid out approximately $16.3 billion in Louisiana and $8 billion in Mississippi, based on state regulators' data, PCI said. There have also been National Flood Insurance Program payments of $13.1 billion in Louisiana and $2.5 billion in Mississippi.

However, the report found that rebuilding and recovery of the two states' economies are hampered by a variety of factors, with Louisiana facing "a far greater range of economic and systemic challenges to reconstruction," making recovery more difficult than Mississippi.

Louisiana faces a labor shortage with 13,000 fewer construction workers than before the storm, and it has lost about 175,000 jobs. The state now has only 17 percent of its buses operational, and the amount of gas service is at a 41 percent level while electricity is at 60 percent, the report said.

It found New Orleans now only has 43 percent of the food establishments that were in business pre-Katrina, and 64 percent of its hotels open. The city's population is half its pre-storm level of 500,000.

The report said that Louisiana's economic uncertainties may be contributing to reluctance by businesses and property owners to rebuild, "further delaying economic recovery."

Rebuilding was slowed when the release of federal flood plain maps, that determine how high a renovated home has to be elevated, was delayed until April in the most heavily impacted parishes.

PCI noted that $107 billion in federal aid money has been allocated to the five Gulf states, and as this money makes its way to households, businesses and state highway and public works departments, Louisiana should show increased economic activity.

It also cited the fact that a $963 million bridge over Louisiana's Lake Pontchartrain is due for construction, along with a $660 million widening of its Huey P. Long Bridge.

Insurers have been working to put resources in the hands of business and homeowners, and as federal monies arrive, "the recovery should accelerate and citizens on the Gulf Coast should see more tangible progress in rebuilding their lives," PCI said.

Special Reports /

Now Hurting, Gulf States Will Rebound: PCI

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