Gulf Coast Day 2: Well Hedged
Biloxi is a town that likes a good bet. Before Katrina, the city was pulling in $20 million a year in revenue from casinos. But how's ...
Biloxi is a town that likes a good bet. Before Katrina, the city was pulling in $20 million a year in revenue from casinos. But how's this for a blow on the dice? It seems Biloxi took out an insurance policy on its gaming revenue just two months before the storm hit.
Mayor A.J. Holloway told me yesterday that he looked into buying a "business interruption policy" last year after an agent told him that other coastal towns in Alabama and Florida had similar insurance policies. Those policies covered sales tax revenues, in order to keep towns whole in the event that a hurricane wiped out all their hotels, car dealerships and big box stores. Biloxi's, which cost $92,000 for $10 million worth of coverage, was on gaming revenues. "We took it out in June," Holloway said. "And we cashed it in August."
"I was here for Camille, and I've been mayor now through three hurricanes in 13 years," Holloway continued. "I never expected anything like Katrina. But I knew we were due for a good hit."
Of course, making good on such a policy isn't really good luck. You don't need to look far along Biloxi's coastline to know that. But it's something. And it's probably not replicable in the current insurance market. Holloway has been shopping for another policy, but can't find anyone who will sell to him.