Storms shake faith of businesses in New Orleans

[Refugee 7]

NEW ORLEANS (Reuters) - For New Orleans cafe owner Kappa Horn, the inconvenience of a hurricane like Gustav, which roared through town this week, is shutting down the business and laying off staff.

For art gallery owner Jack Bosma the problem is paying hefty insurance premiums for ever shrinking storm coverage.

Furniture maker George Nakajima says it's not knowing what heartbreak lies around the corner with the next storm to barrel into the low-lying city.

New Orleans is known as "The Big Easy" for its laid-back lifestyle. But after Gustav, which hit while the city was still recovering from Katrina in 2005, residents are seriously wondering if they can afford this roller-coaster ride.

"It's constantly nagging at the back of your head, is it worth it?" said Nakajima, after sitting out Gustav, which came ashore with 100 mph winds.

The emotional toll is enormous, but living at or below sea level in a storm corridor on the Gulf of Mexico also carries a heavy financial risk for big and small businesses.

Katrina's rampage caused more than $80 billion in damage, over half of it borne by private insurers. Preliminary estimates put the cost of Gustav at up to $10 billion.

Many residents returned to New Orleans after Katrina, but the rising cost of doing business could test the resilience of city's economy.

"Trying to find insurance coverage is a huge challenge, especially for windstorms and hurricanes. It has become incredibly expensive," said Richard Bell, risk management director for Loyola University New Orleans.

Businesses in the city say premiums for storm interruption insurance in some cases doubled or even tripled since Katrina.

Homeowners say they pay anywhere from $4,800 to $20,000 each year to insure their homes, while facing increasingly large deductibles for wind damage and the possibility of protracted wrangling to get a payout.

"Life and death is obviously a huge concern when these storms are coming through, but insurance is pretty damn close behind it," art dealer Jack Bosma said.

MANAGING DISRUPTION

Storms don't just fray nerves and ratchet up insurance in this storied Louisiana city, where the key industry, tourism, generates $5 billion a year in revenue.

Ahead of Gustav, hotels and restaurants had to close down and lay off staff just at the start of the autumn convention season -- the busiest time of year.

"You have to lay people off, and then you don't know when they are coming back," said Horn, who shuttered up her traditional American diner in the historic Garden District. "That's the real kicker."

Business executives said they had to juggle storm evacuation plans while meeting their work commitments.

When managing high-profile accounts, "the last thing that you want them to think about is that there is a liability associated with doing business with a New Orleans-based company," said advertising agency director Robbie Vitrano, who left during the storm.

In comparison to the chaos following Katrina, businesses drew some comfort from the orderly response to Gustav.

"A lot of media attention was given to the exodus, on how well coordinated and how well planned that was, security in the city was a lot tighter and tougher," Bell said. "That helps confidence."

But for others, the continuing feasibility of the city will also depend on pressing federal, state and city authorities to complete the economic and physical recovery from Katrina.

The top priority is completing a program to safeguard the city from flooding by raising the earth, steel and concrete flood barriers at a cost of some $800 million before a storm packing a harder punch than Gustav can hit.

"We need to spend more money on it," said art photographer Louis Sahuc who reopened his store in the French Quarter this week. "If they can do it in Holland, why can't we do it here?," he said, referring to the system of dikes around the low-lying European country.

[Echosoftom 3]

This is so sad. I'm beginning to think that no matter what, this city is never going to fully recover.

[Pettyjunkie 0]

^Same.

[LizzieB 0]

When I consider that small, sleepy Galveston, TX was second only to NYC in importance when the storm of 1900 hit, it is not hard to imagine that New Orleans may never fully recover from Katrina now.

And that is sad, because New Orleans is a great, fun city. There isn't another place in the US to compare, in my opinion.