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redlining
Hard Lessons From Katrina We’re Still Learning 20 Years Later
Hurricane Katrina not only exposed the vulnerability of communities to extreme weather events exacerbated by climate change, but also systemic injustices and a deeply flawed US insurance system.
Aug 29, 2025
It’s been 20 years since Hurricane Katrina struck the Gulf Coast of the United States, wreaking havoc in Louisiana, Mississippi, and Alabama. An estimated 1,833 people died in the hurricane and the flooding that ensued. The storm destroyed or damaged more than a million housing units and more than 200,000 homes, causing one of the largest relocations of people in US history.
In the months and years that followed, entrenched inequalities, questionable policy choices, and predatory practices by private insurers decided who could return home and rebuild. For instance, countless residents impacted by the hurricane learned too late that their standard homeowners’ insurance offered no protection against flood damage, leaving them to shoulder devastating repair costs themselves. In cities such as New Orleans, these dynamics further marginalized Black residents, who were more likely to live in flood-prone neighborhoods. The result was widespread and often permanent displacement, with longtime communities effectively erased from the map.
Hurricane Katrina not only exposed the vulnerability of communities to extreme weather events exacerbated by climate change, but also systemic injustices and a deeply flawed US insurance system. Private insurers pour billions of dollars into the fossil fuel industry, which is the main contributor to climate change. Thus, insurers help fuel the very crisis that is driving more frequent and severe climate disasters like Hurricane Katrina. Meanwhile, they are passing the financial risk of the escalating impact of climate change onto policyholders and forcing them to bear the costs of the crisis the industry itself helps perpetuate.
As climate-driven storms grow more frequent and increasingly destructive, the same insurance failures, housing crises, and inequitable recovery that followed Katrina now threaten communities nationwide. Two decades later, Katrina’s hard lessons cannot be ignored. Everyone deserves to live in safety and the opportunity to stay in the place they call home. Corporate greed and government negligence cannot continue to undermine these rights.
The Hurricane
On August 29, 2005, Hurricane Katrina made landfall with winds that reached 140 miles per hour. These high-velocity winds drove a storm surge that raised sea levels 25 to 28 feet above normal along parts of the Mississippi coast, and 10 to 20 feet along the southeastern Louisiana coast. The surge breached protective levees, causing catastrophic flooding. Two days after the hurricane struck, 80% of the city of New Orleans was underwater. Other coastal towns and cities in Louisiana, Mississippi, Alabama, and along the western Florida panhandle also experienced significant storm surges and destructive winds, which caused widespread flooding and damage to homes.
The Great Displacement
Approximately 1.5 million people aged 16 years and older had to leave their residences in Louisiana, Mississippi, and Alabama because of Hurricane Katrina. In New Orleans, where the mayor issued a mandatory evacuation order, a population of around 500,000 was reduced to a few thousand people within a week of the storm.
As water was pumped out of the flooded areas and basic services and infrastructure were restored, New Orleanians were allowed to return. But tens of thousands were not able to do so. One year after Katrina, approximately 197,000 residents had not come back to the city; many relocated to the relatively close cities of Houston and Baton Rouge, but others as far away as Alaska and Massachusetts. Still today, many of those who evacuated the city, hoping to return, remain displaced. New Orleans’s metropolitan area population remains 20% below pre-Katrina levels.
The Impact On Black Communities
The development of New Orleans has been fraught with injustices. Racial segregation, redlining, and chronic underinvestment in Black communities pushed residents and renters into areas with crumbling infrastructure, poorer-quality homes, and greater exposure to environmental hazards and contaminants.
When Katrina hit, Black residents were concentrated in the most vulnerable parts of New Orleans, located well below sea level and poorly protected by inadequate levees. Accordingly, neighborhoods with the highest percentages of Black residents saw greater housing destruction from the storm.
Did You Know?
The disparate impact of climate disasters on property and infrastructure in US minority communities is the result of nearly a century of discriminatory home lending and insurance policies.
In the 1930s, the US federal government used a rating system in its low-cost home loan program to assess lending risk. Assessors created maps ranking the perceived risk of lending in certain neighborhoods, with race often used as the determining factor in assessing a community’s risk level. Black and immigrant neighborhoods were typically rated as “hazardous” and outlined in red, warning lenders that the area was a perilous place to lend money. Known as redlining, these and other discriminatory practices led to a lack of investment in minority communities.
This lack of financial access resulted in shoddy construction and poor infrastructure that have made minority neighborhoods less resilient to climate disasters and more prone to other financial risks. For instance, insurers are more likely to increase premiums if they determine that properties are less resilient to climate damage. This new financial practice is known as bluelining, and it occurs when insurers raise their prices or pull out of areas that they perceive to be at greater environmental risk.
Reconstruction: A New Pathway to Segregation?
For Lousina’s Black residents, Katrina’s damage was compounded by discriminatory recovery policies that deepened inequalities. After the storm, the federally funded Road Home program was launched to help residents repair or rebuild damaged homes. It offered grants of up to $150,000 per homeowner, but payments were based on whichever was lower—the home’s pre-storm value or the cost to rebuild.
Because property values in Black neighborhoods were often far lower than in white neighborhoods, this meant many Black homeowners would receive only a fraction of what they needed to rebuild. In one case, a woman had rebuilding costs of over $150,000, but because the estimated value of her home pre-storm was much lower, she would’ve received an essentially useless grant of $1,400. As a result, the program was alleged to discriminate against Black homeowners, and a federal class action suit was filed on November 12, 2008, on behalf of 20,000 homeowners. The litigation settled with Louisiana agreeing to reward approximately 1,300 homeowners with $62 million in additional compensation.
The Blow to Affordable Housing
Renters fared no better. Hurricane Katrina damaged or destroyed 82,000 rental units in Louisiana, 20% of which were affordable to extremely low-income households. The impact on public and federally subsidized rentals was especially severe. In New Orleans, public-housing residents were displaced at a rate of nearly 90%. And reconstruction policies only exacerbated the disparities these residents faced.
Consider this.
Before the storm hit and floodwaters rose, the Housing Authority of New Orleans evacuated all residents living in its 7,379 public housing units. After the waters receded, residents were allowed to return to approximately 1,600 units. Most other units were sealed off with steel doors and barbed wire—officially due to storm damage—before being slated for demolition. Yet, the redevelopment that followed included far fewer mixed-income apartments. By 2010, five years after the hurricane, less than half of the original 7,379 units were open in any form. The dramatic decrease in public housing contributed to the permanent displacement of many of New Orleans’ longtime residents.
After Katrina, renters faced a range of economic pressures. Many landlords delayed repairs or rebuilding, especially in low-income areas, which are seen as less profitable. Some used the disaster as an opportunity to renovate and target higher-paying tenants, further shrinking the supply of affordable rentals. Within five years of the Hurricane, the stock of mid-priced housing units in New Orleans had declined by more than two-thirds, pushing the median rent from $689 in 2004 to $876 in 2009. These rising costs hit Black residents hardest, forcing many to leave and permanently altering the city’s character.
Even those who could afford to return to New Orleans and buy a new home after Katrina faced soaring prices—up 14% in the first year alone—as demand outpaced the reduced housing supply. In addition, homeowners’ insurance premiums jumped 22% in Louisiana between 2005 and 2007, adding yet another barrier to homeownership.
The Flood Exclusion Trap
Then, as now, and to the surprise of many victims of the Hurricane, standard home insurance policies in the US did not protect homeowners from floodwater damage. This means residents must buy additional flood insurance to be protected in the event of a disaster like Katrina.
New Orleans residents had among the highest participation rates in the country in the National Flood Insurance Program (NFIP), a federal government program that provides flood insurance to homeowners, renters, and businesses. However, the majority of residents in areas affected by Katrina had not purchased flood insurance. Uninsured property losses due to flooding were economically devastating, exceeding an estimated $41.1 billion (USD 100 billion in 2024 prices). In addition, the NFIP incurred some $16.1 billion in losses and a deficit exceeding $18 billion as a direct result of the flooding caused by Katrina.
Even for New Orleanians with flood insurance, coverage likely fell short. Policies typically covered about $152,000—the city’s median house price at the time. But this was rarely enough to replace the damaged household contents or to pay residents for temporary housing while their home was uninhabitable.
More and more, whether people hit by climate-driven storms get anything from their insurers depends not on the fact that their homes were damaged, but on how they were damaged.
While the standard home insurance policy does not cover water damage from a hurricane, it does cover wind damage. This gap left residents and insurers arguing about whether Katrina’s destruction to their homes was caused by its high-velocity winds or the flooding that followed, with multiple lawsuits challenging the validity of flood exclusions in insurance policies. Even before the flooding receded and residents of Louisiana and Mississippi could start to rebuild their lives, courts were inundated with litigation, with about 6,600 insurance-related lawsuits being instigated in the US District Court. Yet, Katrina’s destructive flooding was driven by a storm surge powered by the hurricane’s high winds—the very peril homeowners’ policies are supposed to cover.
On September 15, 2005, Mississippi’s Attorney General Jim Hood filed a case against five of the largest homeowners’ insurers in the state. Attorney General Hood sought a court declaration that the flood exclusion provision in standard home insurance policies was “void and unenforceable” and in violation “of the public policy of the State of Mississippi.” However, in that case and others, courts ruled that the flood exclusions were spelled out clearly in homeowners’ insurance policies and did not violate public policy.
The exclusion of water damage from insurance coverage remains a present issue for existing homeowners. According to the Federal Emergency Management Agency, since 1996, 99% of US counties have been impacted by flooding, but only 4% of homeowners have flood insurance. And, more importantly, over half (56%) of American homeowners don’t know that their home insurance policy excludes flood damage. As hurricane season intensifies, many homeowners will be shocked to learn that their insurance does not cover flood loss.
Insurers’ Favorite Loophole: Wind vs. Water Damage
After Katrina, some insurers exploited the false dichotomy between wind and water damage, classifying losses as water damage to shift liability onto homeowners or the NFIP.
In 2013, a federal jury in Mississippi found that State Farm Fire and Casualty Co. defrauded the NFIP after avoiding covering a policyholder’s wind losses from Katrina by blaming the damage on storm surge, which is covered by federal flood insurance. Almost 10 years later, in August 2022, State Farm settled the case, agreeing to pay $100 million to the federal government.
State Farm was not the only insurer engaged in nefarious behavior, attributing Hurricane Katrina damage to flooding instead of wind. In oral argument before the Mississippi Supreme Court in 2009, insurance company USAA publicly admitted that it shifted its own costs to the NFIP and thus taxpayers.
The false dichotomy between the wind and water damage resulting from a hurricane remains nebulous. The damage caused by Hurricane Ian in Florida, North Carolina, and South Carolina in 2022, with its record-high wind speeds, generated $63 billion in private insurance claims. In contrast, 2018’s Hurricane Florence primarily caused water—not wind—damage in North and South Carolina, leaving uninsured flood losses estimated at nearly $20 billion and letting private insurers largely escape liability. More and more, whether people hit by climate-driven storms get anything from their insurers depends not on the fact that their homes were damaged, but on how they were damaged.
Regulators Must Act: People over Profit
Hurricane Katrina exposed widespread gaps in home insurance coverage that persist today. In the 20 years since Katrina, unmitigated climate change has fueled rising temperatures and made extreme weather events such as hurricanes both more frequent and more severe. As storms grow costlier and more destructive, insurers have raised home insurance premiums and declined to renew many policies, leaving households with fewer options for protection. This escalating cycle has produced today’s insurance crisis.
Federal and state lawmakers must respond. The federal government must reform the NFIP to improve federal flood insurance and ensure it provides affordable coverage for more hazards. At the same time, the NFIP should do more to support community-based mitigation. States, meanwhile, must use their regulatory authority over insurance markets to address skyrocketing insurance costs and growing coverage gaps resulting from mounting climate change impacts.
Regulators should adopt legislation, like New York’s Insure Our Future bill, to prohibit insurers from underwriting new fossil fuel projects, require them to phase out support for existing projects, and force insurers to divest from fossil fuel companies.
The insurance industry cannot ignore its role in fueling the very crisis it now faces. Climate change-induced disasters are indisputably driven by fossil fuel emissions. And insurance companies facilitate climate change by investing in fossil fuel companies and underwriting fossil fuel projects. US insurance companies have investments of more than $500 billion in fossil fuel-related assets, including coal, oil, and gas. In 2022 alone, insurers worldwide collected $21 billion in premiums for underwriting fossil fuel projects—directly enabling their expansion.
Regulators should adopt legislation, like New York’s Insure Our Future bill, to prohibit insurers from underwriting new fossil fuel projects, require them to phase out support for existing projects, and force insurers to divest from fossil fuel companies. Without bold action, insurers will continue to profit from climate destruction while leaving families and communities to bear the costs.
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‘Bluelining’ Is the Insurance Industry’s Latest Contribution to Climate Injustice
Areas previously affected by redlining are now also those prone to flooding and higher temperatures, a problem compounded by poor infrastructure that fails to mitigate these risks.
May 22, 2024
In an era of climate disasters, Americans in vulnerable regions will need to rely more than ever on their home insurance. But as floods, wildfires, and severe storms become more common, a troubling practice known as “bluelining” threatens to leave many communities unable to afford insurance—or obtain it at any price.
Bluelining is an insidious practice with similarities to redlining—the notorious government-sanctioned practice of financial institutions denying mortgages and credit to Black and brown communities, which were often marked by red lines on map.
These days, financial institutions are now drawing “blue lines” around many of these same communities, restricting services like insurance based on environmental risks. Even worse, many of those same institutions are bankrolling those risks by funding and insuring the fossil fuel industry.
This situation will demand a radical rethink of how we approach investing in our communities based on climate risks.
Originally, bluelining referred to blue-water flood risks, but it now includes other climate-related disasters like wildfires, hurricanes, and severe thunderstorms, all of which are driving private-sector decisions. (Severe thunderstorms, in fact, were responsible for about 61% of insured natural catastrophe losses in 2023.)
In the case of property insurance, we’re already seeing insurers pull out of entire states like California and Florida. The financial impacts of these decisions are considerable for everyone they affect—and often fall hardest on those in low-income and historically disadvantaged communities.
A Redfin study from 2021 illustrated that areas previously affected by redlining are now also those prone to flooding and higher temperatures, a problem compounded by poor infrastructure that fails to mitigate these risks. This overlap is not a coincidence but a further consequence of systemic discrimination and disinvestment.
This financial problem exists no matter where you live. In 2024, the national average home insurance cost rose about 23% above the cost of similar coverage last year. Homeowners across more and more states are left grappling with soaring premiums or no insurance options at all. And the lack of federal oversight means there is little uniformity or coordination in addressing these retreats.
This situation will demand a radical rethink of how we approach investing in our communities based on climate risks. For one thing, financial institutions must pivot from funding fossil fuel expansion to investing in renewable energy, natural climate solutions, and climate resilience, including infrastructure upgrades.
What about communities in especially vulnerable areas?
One strategy is community-driven relocation and managed retreat. By relocating communities to low-risk areas, we not only safeguard them against immediate physical dangers but also against ensuing financial hardships. Additionally, preventing development in known high-risk areas can significantly decrease financial instability and economic losses from future disasters.
As part of this strategic shift, financial policies must be realigned. We need regulations that compel financial institutions to manage and mitigate financial risk to the system and to consumers. We also need them to invest in affordable housing development that is energy-efficient, climate-resilient, and located in areas less susceptible to climate change in the mid- to long-term.
Meanwhile, green infrastructure and stricter energy efficiency and other resilience-related building codes can serve as bulwarks against extreme temperatures and weather events.
The challenge of bluelining offers us an opportunity to forge a path towards a more resilient and equitable society. We owe it to the future generations to do more than just adapt to climate change. We also need to confront and overhaul the systems that harm our climate. The communities most exposed to climate change deserve no less.
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The US Housing Crisis Is 4 Decades in the Making
There is no developed country in the world besides the United States where the very ill, mothers who have just given birth, elderly people who worked all their lives, and veterans who fought for their country are unhoused.
Aug 21, 2023
Yesterday, I read a story about a family of four—granted two were very young—so excited about all the money they were saving living in a tiny house. Today, the story was about a young man who had no cash, so he has tricked out a semitruck interior. Last week it was a renovated shipping container from Lowe's, the week before, it was a fully fixed-up ancient school bus. Some of these projects look like they might be OK places to live, especially if you live in a climate where you can be outdoors much of the time—a very quickly shrinking portion of the world.
What is going on? This is the wealthiest country in the history of the world, as Noam Chomsky reminds us. I am 69 years old. The people in my generation, and even more the generation older than I, were able to purchase homes at prices that haven't been seen for decades, at sweet mortgage interest rates that made it possible in many cases for one parent to work and the family to prosper. This mostly applies to white Americans, as the GI Bill (for the WWII generation) mainly helped almost all returning white GI's become homeowners.
When I was starting to look for my own housing, amazing deals on land and fixer-uppers, as well as reasonably priced starter homes, existed and in fact were still abundant in some cities and states. Even for Black home buyers, who had been blocked by redlining (policies created by banks to keep the suburbs white), 40 years ago homes were more affordable and many Black families took advantage of relatively low prices to purchase homes.
What appears to be happening is that, like so many other long term failures, the housing crisis can be laid at the dead, unmourned feet of Ronald Reagan.
Today, there are no housing bargains. In fact, in many states and cities, there is no housing at all for anyone except the most affluent. With no real incentives from the government to build workforce housing, developers build to make the largest profit possible—and the large profits are in luxury housing. In my state, Vermont, not only is the great housing deal a thing of the past, but there are also no rentals available. Some friends recently applied for a rental in my small town, Brattleboro, and when the landlord told them he would rent to them, he informed them that he had received 119 applications, and the place was on the market for about a week, if that.
What appears to be happening is that, like so many other long term failures, the housing crisis can be laid at the dead, unmourned feet of Ronald Reagan. Before 1980, the federal government actually used to build housing. During Reagan's transformational eight years as president, he essentially disposed of the idea that building housing is an obligation of the government. Reagan sponsored a completely inadequate supposed substitute for building the housing desperately needed by a fast growing country. The population has grown by a full third from 1980 until today—the federal government has not built any housing for the 105 MILLION more people who now populate the country.
The Reagan plan, which has been an abject failure, was to give tax breaks to developers to build a small number of market-rate apartments in their upscale projects. Reagan said in 1981 that every church and synagogue should take in 10 homeless families and voila! no more homeless. He also turned his back on a scandal in which U.S. Department of Housing and Urban Development money was given to Republican consultants to confer on how to stop building housing altogether instead of the intended use: building and repairing low-income housing. It seems to some that the housing crisis has happened quickly, but I would argue that it has been four decades in the making.
In every other developed country, there is social housing for those in need. In Vienna, Austria, the social housing is so desirable that 78% are renters, many by choice. The rentals are mixed income, and are a major social network in the city. How social housing is viewed in Europe varies by country, but there is nothing like the problems poor people face in the United States. There is no developed country in the world besides the United States where the very ill, mothers who have just given birth, elderly people who worked all their lives, and veterans who fought for their country are unhoused.
We will continue to see the youth, and the not so young, of America creatively housing themselves—whether it is the shed set up in Mom and Dad's back yard, the ubiquitous garage and basement apartments for the more fortunate, old, used RVs, or possibly a regrowth of house shares, communes, and other methods of keeping a roof over one's head. What is highly unlikely is that we will see a time in the near future where the current younger generation is heading to the local savings and loan for a mortgage.
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