I can tell you from direct experience that it’s not a gold mine. I worked for a company that included this coverage for no charge on primary GL policies.
Please pray tell where the exposure is to provide Terrorism for GL policies. It is no wonder some carriers do not make a charge. This was intended to be property protection due to the acts of Terrorism. It has been a gold mine for the Property carriers since they have been making a charge for it for many years without paying a single loss.
Terrorism coverage is not mandatory, the vast majority of our clients decline this coverage. Premiums are usually less than $30. This is peanuts for an insurance company.
December 17, 2014 at 12:12 pm
Agent says:
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The majority of my clients reject it as well, but in larger cities, they often take it. If you have a risk in excess/surplus lines with a substantial property value and premium, the charge made is fairly substantial on those policies. Take that times several million businesses and pretty soon you are talking serious money.
December 17, 2014 at 12:42 pm
Dave says:
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Security firms or obvious terrorist targets, i.e. Madison Square Garden, Willis Tower, Empire State Building have a GL exposure to terrorism.
December 18, 2014 at 10:32 am
Hmmmm says:
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Agent….. think of the Sony situation right now. If they had released the movie despite the threats of 9-11 type of attack, it could be argued that Sony had a part in the damages. I am not saying parties would be successful — but the CGL is as important to use for defense as it is for limits.
December 18, 2014 at 10:34 am
jw says:
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the gl exposure would be for the theaters that show the film and an incident happened to which they were forewarned. the lawyers would be out in droves
December 17, 2014 at 9:46 am
Puzzled in PA says:
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I am not certain where the “gold mine” resides but catching multiple policies with a few hundred dollars a year in return for protection from a terrorist event, whether foreign of domestic, would seem to be a win for most insureds. Insurance always has been an issue of the law of large numbers both from claims predictability to financing. I fail to see where this is substantially different. Why not just create a Terrorist Regulatory Agency (like the NRC) where the terrorists need to apply for permits? That way the Government could surcharge certain industries that seem predominantly exposed and we could exclude Terrorism in its entirety from the insurance world. In all seriousness, though, Congressional failure in this is appalling and I really don’t care if they are lame ducks or not. They have failed the public yet again but most of us are too unfamiliar with insurance to know it.
You lack the understanding of what the insurance mechanism is. This has not been a gold mine for companies. The insurers are shouldering enormous, almost unpredictable risk. They have assumed the risk that the reinsurers abandoned because of its very unpredictability. The federal backstop was so that insurers would be willing to take on at least some of the risk.
Agent, you really don’t have a clue how TRIA works, do you? The $200 million a threshhold that needs to be met before it is possible for an event to be considered a terrorism event under the law. It is NOT the amount the insurance industry would be responsible for. That is determined based on individual company deductibles (20% of commercial premium) and co-pay (15%) after the deductible is met.
I generally do not care for government intervention in almost anything. However, the primary duty of any government (beyond any of its other duties) is to protect its citizenry from attack, interanally and externally. And on 9/11/2001 the Federal government failed miserably. That failure points to the need for some kind of backstop to financially protect businesses and the insurance industry from the next attack. Determining the threshhold and/or co-payment is obviously debatable. But no backstop will most likely lead to many types of insureds and coverages becoming uninsurable with the result of grinding some forms of commerce to a halt. I hope this gets settled soon.
Capitalism only works when Socialism is there to save it ?? The industry should solve it’s own problems, that’s why reinsurers and Cat bonds were developed. So we have backstops for crop, flood, health what’s next??? Florida homeowners, oh yea did that one also.
Next, explain how Dave’s post made you ask the question, “Capitalism only works when Socialism is there to save it ??”
I agree with your statement, “The industry should solve it’s own problems, that’s why reinsurers and Cat bonds were developed.”, with the key term being “should”. Historically the government has served as a backstop when the industry is unable or unwilling to provide coverage.
What is your solution if the industry will not provide coverage and the government is not allowed?
Harry Reid is quick to point fingers at Republicans when things don’t go as planned in the Chamber of Congress HE controlled for several years.
Reid blamed Coburn for failure of the TRIA renewal due to a delay caused by Coburn’s objection to provisions in the bill. But Reid expedited confirmations of a few dozen liberal Federal Judges without delay. Harry isn’t forgetful; he’s plagued with ‘Senatility’.
If Reid were truly concerned about businesses that need TRIA protection, he would have extended the Senate session to Dec. 15.
Everyone should remember we still have a lame duck Senate controlled by Harry Reid. As the majority leader, he obviously didn’t show leadership getting it renewed. He could just retire and go home to his Pomegranate farm.
Wait – so a DEMOCRAT is responsible for a REPUBLICAN holding up legislation?
So in the future — if a democrat holds up legislation in a republican-controlled senate, you’ll agree with me if I blame the republican majority leader for not showing proper leadership?
Yes, I will be the first one to condemn McConnell for not showing leadership to get important legislation passed in the Senate. I don’t think you will see McConnell not allowing debate or voting on much legislation like Reid has done for the past 6 years. 300+ bills tabled with no discussion or debate. Unbelievable.
Fair enough. We shall see what happens if the tables are turned in the future!
December 18, 2014 at 10:15 am
Yogi Polar Berra says:
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Yes, McConnell should be held accountable for holding up legislation passed by the House. But why would he? The House is controlled by his party. Reid stalled legislation that was passed by Republicans for purely political reasons.
Apparently, TRIA isn’t as important to Reid as appointment of liberal Federal judges and vacation.
Maybe if the House Republicans did not keep sending politically motivated bills to Senator Reid, he would not have held them up. Most of them to repeal the PPACA.
For the record, I do not like Senator Reid or the PPACA. I am just making an observation as an Independent. Both sides are guilty of this crap.
December 19, 2014 at 1:15 pm
bob says:
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Most of the over 300 bills held up in congress since after the ACA were to repeal the ACA? Numerically this is impossible, and shows you argue one liners and cliches over common sense. You aren’t an independent. You are a bash everyone type of person. This would be considered more of an anarchist. You have never said “gee, I like this” when it comes to a law or politics. I once pointed out a few things I liked that democrats passed, namely another type of stem cell research, HPV vaccine bills in various states, as well as an idea they put forward for 401k’s. Can you list a few laws you like from anyone?
I don’t even need to provide the links. Regarding that 300 bills. Google which bills from congress are being held up. They are all online.
Both parties do it, yes, but throughout history, republicans have been blocked from passing laws more often. Both parties are not exactly in all ways equal.
You always make this argument.
And what a surprise. Republicans are sending bill through that democrats don’t agree with. Maybe they should just stop trying to make people aware of their ideals, and pass only what democrats want eh?
It’s called getting your ideals out there. Democrats and republicans are different. Get over it!
And as being different, the only way to pass their different ideals, and I know this is shocking to you Ron,
Is to actually put them on the table! Whether or not democrats (who I know this is surprising, don’t want to pass ideals that are different than their own) want to pass the plan.
Shocking!
December 22, 2014 at 8:32 am
Ron says:
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Bob,
Yes, the point about most of the bills being to repeal the PPACA was hyperbole. For that I apologize.
However, even you have to, or at least should admit that the amount of time wasted by the House to repeal a law that had ZERO chance of being repealed was ridiculous.
How come it is OK for Republicans to block legislation they believe is harmful to the country, but not Democrats?
You said, “republicans have been blocked from passing laws more often.” First, you really should be capitalizing “Republicans”. Show some respect. Second, please cite your source. If this is true, maybe it is because nobody likes their ideals.
The only way I see the Republicans and Democrats being different is tax policy. Republicans believe in supply-side, trickle down where Democrats believe in a consumer driven, demand-based economy. Give the money to the people who will spend it and the economy grows, making more money for the wealthy.
Republicans have had opportunities to differentiate themselves from Democrats, but failed miserably. Remeber 2003-07 when they controlled all branches? Our debt increased by more than $5 trillion, Debt to GDP went from 62.3% to 64.8%, and annual deficit grew from $555 billion to $1.017 trillion (please tell me again how Republicans are fiscally responsible), we were involved in 2 unwinable wars (one of which was justifiable), health care refrom was not addressed, our country became divided, and our economy went into the tank. Good job!
If the Republicans were more fiscally responsible when they had control, they would garner more of my support.
Put your methodology in your pipe and smokeit. Show me results.
Methodology=Spin
December 17, 2014 at 9:20 am
Arthur says:
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Coburn killed a bill that the Left and the Right did not like. It was the Party of Finance (made of both Republicans and Democrats) that liked this program. Coburn had the tacit support of many Senators on the Left (e.g. Bernie Sander, Elizabeth Warren). I don’t know if it is the right move, but it is certainly one that, I’m betting, most Americans will agree with. That’s why no one will try to make political hay out of this. They know better.
Good, hopefully this will be the first in a long line of abolishing programs backstopped by the taxpayers. Enough with this enormous ponzi scheme that can only end in total collapse. Maybe if we stop occupying foreign countries and droning wedding parties we wouldn’t have so many who hate us….but they hate us for our freedom right? Well I guess that won’t continue much longer since we are in the process of abolishing it.
Help me understand why they hated all of the kids killed yesterday at the school in Pakistan. Did they happen to drone a wedding party as well?
They hate us as they hate all non belivers in Alah due to their perverse interpretation of what the koran says or doesn’t say. Just as bad as the crusades and burning of witches. When one group forces their beliefs on another by physical force it is wrong regardless of what they claim the reason to be.
As to the US involvement in any country that supports terror my jury is still out but would appear to be the only logical approach for now at least.
Ben, you may be disppointed to know that Republicans have inserted another backstop to protect the wall-streeters who gamble with our money, so they can go back to the pre-2008 risk-taking and will be allowed more taxpayer bailouts in the event that their bets lose money.
I am just a regular guy who happens to work in the insurance industry and this decision scares me on multiple levels, not only from a business perspective but personally as well.
Colburn has no idea what he is talking about! This is a government’s problem brought on by our government beyond the average citizens control. I don’t know why it wasn’t investigated a long time ago as to how other countries handle their terrorism risks. Such as Israel, who fund their Terrorist Pool through Property Taxes. This is no win situation for everyone if this backstop is not renewed. Catastrophes such as Earthquakes and Floods are inevitable just like Terrorism. The same can be said about insurance companies that provide insurance for Earthquake. The fact is that the written premium that is collected over years such as that in Earthquake insurance with no losses to payout since Northridge, doesn’t mean that the insurance companies are making a gold mine. It means that enough premium better be accumulated WHEN the big one hits in California.
My point is that TERRORISM is here to stay because it is an effective sadist method used by idiots and their backward way of thinking. Our government needs to be responsible for helping the insurance industry period. Until a better program can be created for insuring Terrorism, this is all we have.
It sure would be nice to know if anyone in the insurance industry is advising the Senate. The Senate should not recess until ALL matters are settled. They do not deserve a break!
I have seen property TRIA endorsements that specifically say that if reinsurance is lost, coverage will cease (even mid-term). All of our multi story/high rise buildings require TRIA coverage for their mortgage companies. In some parts of the country – this is not a big deal. Other parts of the country, this is critical. What about big venues like Bowl Games or Super Bowl? I don’t see private market stepping up to provide reinsurance – I guess we will see. As an industry we can just exclude it and say “it’s not our problem”.
Agent….. it is no longer a “wire” — TRIA is done January 1. Senate ajourned the session. They can start over in January, but that is mid-month and they have to start from the begining.
Harry Reid wanted to make sure he got home in time for Christmas so he didn’t make anyone work until they got this resolved. Besides, he would rather dump it in McConnell’s lap when the new Senate is sworn in. Can you see why there was such a turnover in the mid terms?
What happens in Time Square on New Years’ Day Eve and New Years’ Day?
December 17, 2014 at 3:02 pm
mac from mo says:
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Most carriers attached IL 09 95 the Conditional Exclusion of Terrorism (Relating to the disposition of Federal Terrorism Insurance Act)beginning last year. This endorsement specifically excludes Terrorism on policy in just this situation, whether premiums were paid or not. SO any policy with that exclusion will effectively on 1.1.15 not have coverage for Terrorism (other than following fire but not Business Income or Extra Expense, etc.)
That’s correct. They make billions, but claim to be non-profit. The team owners get millions in free taxpayer support (welfare queens), which they get to invest in the team, in other words, their business, and they get to reap the profits (no complaints about government interference there). Then they pay fees (tax-deductible dues) to the NFL, then the NFL uses the money to promote the team-owners’ interests and claims to be non-profit. Meanwhile, the NFL benefits immensely from our infrastructure and taxpayer-funded services. There’s a nice little dose of socialism right there.
In summary, the NFL is a bunch of tax-dodging commies.
It’s funny that the Insurance journal didn’t feel like they needed to include Coburn’s rationale for holding up the legislation. I was curious, so I looked it up. According to what I found, ‘he (Coburn) is criticizing the creation of a national, nonprofit clearinghouse that would allow insurance agents to register and establish a national standard, and he says states should be able to opt out of the program. Coburn spokeswoman Elaine Joseph said that Coburn wants to offer an amendment allowing for the opt-out. “If NARAB [National Association of Registered Agents and Brokers] is as popular as proponents say that it is, no state will ever opt out and the amendment will be moot,” Joseph said.’
Sen Coburn was acting irresponsible — he basically threw a temper tantrum about NARAB and since he was retiring he didn’t care about the damage he was doing.
Terrorism,flood,crop insurance represent the failure of the Ins Companies to come up with solutions. If you don’t develop solutions you become irrelevant. Health insurance was a mess so we got ACA and they are going to loose that market with single payer if they don’t get with the program. When Ben Franklin started the Greentree ins co it was a solution to a problem of underwriters wanting everone to chop down their trees because of the lighting risk.
To bad everyone is missing the real issue here. Our elected officials add to much unrelated BS to bills and it is typically just that stuff that kills what is otherwise a sound concept. TRIA/TRIPA whatever name you put on it is a sound concept to allow for risk transference for what would otherwise be uninsurable to the average size carrier in our country. The Bozo’s on both sides of the aisle add on all of the pet amendments to the bill and that is what the issue is with this one.
If we could as a country just focus on the true issues without the fluff we would all be significantly better.
How long did the Soviet Union last before collapsing during Reagan’s term? Communism & Socialism do not work and never have worked to better an economy. Our problem is to stave off the Socialists in our country who want us to go in that direction. The mid terms were a good start.
“Our elected officials add to much unrelated BS to bills and it is typically just that stuff that kills what is otherwise a sound concept”
Totally agree, AZGuy. Both Republicans and Democrats play this “game” and both are wrong when they do it. It doesn’t matter who did it first or who does it more, until each side stops playing that game, inaction will continue to be the norm.
Then, Reid will blame it on the new Senate leaders for not cleaning up the mess he left behind because he was more concerned with his party getting as many liberal federal judges appointed before he lost his power.
Yes Ron, we know what a wonderful job Obama has done cleaning up messes left behind from Bush, Pelosi & Reid. 6 years+ in and it is far worse now than ever before. He now thinks it is more important to make nice with brutal Communist dictatorships than take care of America’s business. What a guy!
Exactly. We shouldn’t do business with a brutal communist dictatorship. Hobby Lobby should get their supplies from somewhere else.
We shouldn’t make nice with Cuba, either. It’s best to keep them as enemies; it’s not like Venezuela, China, or any other country would ever use the animosity as leverage to be able to put missiles there. We don’t need them on our side. A handful of former Cuban plantation owners in Florida should get to decide our country’s foreign policy.
December 19, 2014 at 1:19 pm
bob says:
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By your measure, Bush didn’t leave behind the mess.
As you have many times said, there are three chambers of congress and a president has little control of flow.
Or does that change when it comes to Bush W, and Obama gets a pass?
What matters is how the collapse happened and what could have been done.
The democrats did cause the collapse of 2008. This is not at all debatable. While republicans could have stopped it if 100% of them were voting in league, 90% of democrats blocked them, 10% of republicans blocked them. Therefore, democrats are more at fault.
The right is correct: Obama is doing plans that is harming the recovery. I just posted a link showing that one individual section of a law passed specifically would raise the cost of homes by $6,000 on average. Their goal is to increase housing costs in a recession and that will help correct? They kept food costs high during the depression. That helped too correct?
QE, the printing of money should clean up the mess correct? As well as stimulus? Then why is it that now that we have a congress blocking Obama on everything, and near shut downs, each year we do slightly better? Why did the same happen after the 1995 shut down?
This is old.
You call blaming Obama bad, but blaming Bush W makes perfect sense…Since he’s just responsible right? You don’t have to you know…Prove that or anything. It shows you are guilty of what you say the right do, only the right DO have proof Obama is a serious threat to the economy.
Wall-street gambling caused the collapse, and now the Republicans are forcing a measure (written by Citigroup) to go back to allowing the very same gambling, with taxpayer-backed money. So, when the bets pay off, rich crooks like Jamie Dimon (another major supporter of this boondoggle bailout provision) get to pocket the money; when the bets lose, the taxpayers will have to cover it. Gee, so much for smaller government. So much for government not interfering in business.
December 19, 2014 at 3:02 pm
bob says:
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Incorrect.
Citigroup was sued for not giving out loans I might add in the past, red lining against low income borrowers.
Then they had serious financial issues ten years later for giving the same loans.
The government forced these loans to be given.
You could write them with the CRA regs for loans, or you could write them with your own program, but you had to write them.
The loans that failed were 50% regulated CRA loans, and 50% non regulated.
If the regulated loans failed at an equal rate as the non regulated, this means that both the government and the private sector shouldn’t have written the loans in the first place.
The difference here being, that you had to write these loans. The private firms didn’t have a choice.
Of course they tried to diversify their risk by selling these loans (credit default swaps).
But regulating the sale of loans that were bad (credit default swaps) would not have caused those loans to not fail.
The problem was the government forced low income loans to be given, and refused to let companies grow, merge, or sell, without a high CRA rating. CRA ratings are given to all firms, to see if they are discriminating. It is not a “some firms” get CRA ratings thing.
I gave links to this before, to show that WAMU specifically made a commitment of 750 billion in low income loans to get a higher rating so they could expand.
They expanded into SAFE markets to MAKE UP for the bad markets the government forced them into.
You are just wrong about this. Give it up.
December 19, 2014 at 3:07 pm
bob says:
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In other words:
Citigroup was sued for not giving a type of loan, that they then nearly went bankrupt for giving the same loan 10 years later.
If it was the bank’s choice, why is it the government sued them for not making the loans?
You can google this yourself. I already gave links you didn’t read, specifically showing the section of the law that says CRA ratings had to be satisfactory before mergers, sales, and debt to net capital ratios could exceed certain thresholds.
In a free market, the whole market does not fail at the same time, for the same thing.
You are arguing for a unicorn even in capitalism. It doesn’t make sense.
You need to get your political allegiances out of your opinions and do research for yourself.
My father was a Jimmy Carter Democrat. I think I have less allegiances than you. He then switched based on, and get this, INDIVIDUAL POLICIES.
I follow that to the letter.
I was raised to be democrat. I was in the party groups in Seattle of WA.
I have argued every point you have made against republicans.
Until I grew up. As you need to.
December 19, 2014 at 3:08 pm
bob says:
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*unicorn event*
December 19, 2014 at 3:09 pm
bob says:
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A funny note to be made here:
We still have the Carter pins and campaign items.
December 19, 2014 at 3:49 pm
Agent says:
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Hey Bob, have you ever heard the term – “yellow dog Democrat”? They have been around since Harry Truman. Basically, the yellow dog votes the straight Democrat ticket without any thought about what the candidate stands for intends to do when elected. They think the Democrats will take care of the poor and the Republicans are just for the rich. Now, we have “yellow dog Obama Democrats” who follow blindly like lemmings into the pit. They didn’t really care what Obama stood for or his Progressive divisive politics which has ripped this country a new one. Has the Middle or lower Middle Class benefitted from Obama’s 6 years? I think not, but Republicans are still blamed even though they haven’t been in charge for the past 6 years. The only thing that has grown is debt, entitlements galore and very bad public policy.
Good points. The first phrase of my post reflects my own personal take on the past.
However, the fact, aside from political allegiances, is that Republicans, this week (not 2008), put this provision in the newly-passed budget. That is not my opinion; that is a fact. It is in the bill. This provision is almost word-for-word what Citigroup provided to them; they basically copied-and-pasted into the new budget. Jamie Dimon was also a major supporter of this. That is also a fact, not my opinion
This has nothing to do with CRA. It simply allows them to NOW gamble with taxpayer guarantees. If the Democrats had put this in, I would be against it as well (I’m not very fond of either party).
As far as pre-2008, Wall Street over-leveraged bad debt. Also, banks didn’t even adhere to the (admittedly insufficient) lending standards and took on loans that didn’t even pass muster under CRA. They knew they could unload them, bundled with legitimate loans, before anyone else would know about it. CRA may have sold them a clunker, but the bankers and wall-streeters got drunk behind the wheel and crashed it.
Can you link regarding this law? You said what it does in terms of being pissed off what it does. I need to read it.
What does this law do?
On the other topic: They didn’t get drunk. They didn’t enjoy making the loans, though they did enjoy passing them off and not taking on the risk of what they were forced to do. But this again, was due to regulation. They saw they could use the regulation yes, but if it didn’t exist, the market for a system of people giving bad loans wouldn’t have been a smart market. I’m sure that firms buying the loans with credit default swaps wouldn’t have wanted to buy it either, if the government wasn’t nearly assured to step in. So in the case I’m talking about, the drunk people taking the credit swaps would never have done so without regulation ensuring their survival. Without that, they never would have done the swaps.
I will say there is validity to stopping credit default swaps in general, but not as much as ending the requirements to give low income loans and changing the CRA, for the reason above. Companies will be a lot less likely to take bad loans in swaps if they know they won’t be saved this time.
I should note one of Obama’s first actions was to have these loan companies give out more loans, and to give them money to do so so a credit crunch wouldn’t occur. It’s the same cycle, encouraging low income loans…
Thanks. I’ll try to get some links to info on here.
As you stated “Companies will be a lot less likely…if they know they won’t be saved this time.” The provision I mentioned (and will try to get the link to on here) basically makes it possible for them to be saved again, leading to a return of the behavior around the CDS’s (as in our drunk people analogy). It’s not surprising, regardless of party, that some people in Congress don’t learn from (or forget) history, but so soon?
I don’t so much have a problem with these fat cats gambling with credit default swaps on their own dime (or their companies’ own proprietary funds), but they shouldn’t be allowed to do this with taxpayer-guaranteed money. It just gives back the incentive for financially irresponsible behavior. I think you and I might be on the same page on this point.
Also, I agree that having lending standards that are too loose is problematic as well. Then, when we have those who don’t even comply with those meager standards, it makes the situation even worse.
I agree entirely on the on their own dime merit. That’s actually what I was pointing out above, that as long as they didn’t know the government would save them they should be fine making the default swaps.
I saw the article, but not the wording for the law.
I’ll find the house bill number.
December 19, 2014 at 5:10 pm
bob says:
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As an example:
I see wording saying that it loosens the derivative market, which is basically what we were talking about above, where both Shirley and I said there would be no problem with the credit swaps if the banks knew they would fail if they took on too many bad loans.
But I see nothing stating that the participators of the derivative market will be bailed out as part of this law.
Tom Colburn is correct. This is and has been a gold mine for
insurance companies.
Mr. Bailey will please explain how this has been a gold mine for the insurance industry?
I can tell you from direct experience that it’s not a gold mine. I worked for a company that included this coverage for no charge on primary GL policies.
Please pray tell where the exposure is to provide Terrorism for GL policies. It is no wonder some carriers do not make a charge. This was intended to be property protection due to the acts of Terrorism. It has been a gold mine for the Property carriers since they have been making a charge for it for many years without paying a single loss.
Terrorism coverage is not mandatory, the vast majority of our clients decline this coverage. Premiums are usually less than $30. This is peanuts for an insurance company.
The majority of my clients reject it as well, but in larger cities, they often take it. If you have a risk in excess/surplus lines with a substantial property value and premium, the charge made is fairly substantial on those policies. Take that times several million businesses and pretty soon you are talking serious money.
Security firms or obvious terrorist targets, i.e. Madison Square Garden, Willis Tower, Empire State Building have a GL exposure to terrorism.
Agent….. think of the Sony situation right now. If they had released the movie despite the threats of 9-11 type of attack, it could be argued that Sony had a part in the damages. I am not saying parties would be successful — but the CGL is as important to use for defense as it is for limits.
the gl exposure would be for the theaters that show the film and an incident happened to which they were forewarned. the lawyers would be out in droves
I am not certain where the “gold mine” resides but catching multiple policies with a few hundred dollars a year in return for protection from a terrorist event, whether foreign of domestic, would seem to be a win for most insureds. Insurance always has been an issue of the law of large numbers both from claims predictability to financing. I fail to see where this is substantially different. Why not just create a Terrorist Regulatory Agency (like the NRC) where the terrorists need to apply for permits? That way the Government could surcharge certain industries that seem predominantly exposed and we could exclude Terrorism in its entirety from the insurance world. In all seriousness, though, Congressional failure in this is appalling and I really don’t care if they are lame ducks or not. They have failed the public yet again but most of us are too unfamiliar with insurance to know it.
You lack the understanding of what the insurance mechanism is. This has not been a gold mine for companies. The insurers are shouldering enormous, almost unpredictable risk. They have assumed the risk that the reinsurers abandoned because of its very unpredictability. The federal backstop was so that insurers would be willing to take on at least some of the risk.
The first $200 million of a Terrorist Event?
Agent, you really don’t have a clue how TRIA works, do you? The $200 million a threshhold that needs to be met before it is possible for an event to be considered a terrorism event under the law. It is NOT the amount the insurance industry would be responsible for. That is determined based on individual company deductibles (20% of commercial premium) and co-pay (15%) after the deductible is met.
This is terrible timing, what with “The Interview” movie coming out causing all the threats by North Korea!
I generally do not care for government intervention in almost anything. However, the primary duty of any government (beyond any of its other duties) is to protect its citizenry from attack, interanally and externally. And on 9/11/2001 the Federal government failed miserably. That failure points to the need for some kind of backstop to financially protect businesses and the insurance industry from the next attack. Determining the threshhold and/or co-payment is obviously debatable. But no backstop will most likely lead to many types of insureds and coverages becoming uninsurable with the result of grinding some forms of commerce to a halt. I hope this gets settled soon.
Capitalism only works when Socialism is there to save it ?? The industry should solve it’s own problems, that’s why reinsurers and Cat bonds were developed. So we have backstops for crop, flood, health what’s next??? Florida homeowners, oh yea did that one also.
jw,
First, define Socialims.
Next, explain how Dave’s post made you ask the question, “Capitalism only works when Socialism is there to save it ??”
I agree with your statement, “The industry should solve it’s own problems, that’s why reinsurers and Cat bonds were developed.”, with the key term being “should”. Historically the government has served as a backstop when the industry is unable or unwilling to provide coverage.
What is your solution if the industry will not provide coverage and the government is not allowed?
correction: Socialism
Harry Reid is quick to point fingers at Republicans when things don’t go as planned in the Chamber of Congress HE controlled for several years.
Reid blamed Coburn for failure of the TRIA renewal due to a delay caused by Coburn’s objection to provisions in the bill. But Reid expedited confirmations of a few dozen liberal Federal Judges without delay. Harry isn’t forgetful; he’s plagued with ‘Senatility’.
If Reid were truly concerned about businesses that need TRIA protection, he would have extended the Senate session to Dec. 15.
Everyone should remember we still have a lame duck Senate controlled by Harry Reid. As the majority leader, he obviously didn’t show leadership getting it renewed. He could just retire and go home to his Pomegranate farm.
Wait – so a DEMOCRAT is responsible for a REPUBLICAN holding up legislation?
So in the future — if a democrat holds up legislation in a republican-controlled senate, you’ll agree with me if I blame the republican majority leader for not showing proper leadership?
Yes, I will be the first one to condemn McConnell for not showing leadership to get important legislation passed in the Senate. I don’t think you will see McConnell not allowing debate or voting on much legislation like Reid has done for the past 6 years. 300+ bills tabled with no discussion or debate. Unbelievable.
Fair enough. We shall see what happens if the tables are turned in the future!
Yes, McConnell should be held accountable for holding up legislation passed by the House. But why would he? The House is controlled by his party. Reid stalled legislation that was passed by Republicans for purely political reasons.
Apparently, TRIA isn’t as important to Reid as appointment of liberal Federal judges and vacation.
Yogi Polar Bear,
Maybe if the House Republicans did not keep sending politically motivated bills to Senator Reid, he would not have held them up. Most of them to repeal the PPACA.
For the record, I do not like Senator Reid or the PPACA. I am just making an observation as an Independent. Both sides are guilty of this crap.
Most of the over 300 bills held up in congress since after the ACA were to repeal the ACA? Numerically this is impossible, and shows you argue one liners and cliches over common sense. You aren’t an independent. You are a bash everyone type of person. This would be considered more of an anarchist. You have never said “gee, I like this” when it comes to a law or politics. I once pointed out a few things I liked that democrats passed, namely another type of stem cell research, HPV vaccine bills in various states, as well as an idea they put forward for 401k’s. Can you list a few laws you like from anyone?
I don’t even need to provide the links. Regarding that 300 bills. Google which bills from congress are being held up. They are all online.
Both parties do it, yes, but throughout history, republicans have been blocked from passing laws more often. Both parties are not exactly in all ways equal.
You always make this argument.
And what a surprise. Republicans are sending bill through that democrats don’t agree with. Maybe they should just stop trying to make people aware of their ideals, and pass only what democrats want eh?
It’s called getting your ideals out there. Democrats and republicans are different. Get over it!
And as being different, the only way to pass their different ideals, and I know this is shocking to you Ron,
Is to actually put them on the table! Whether or not democrats (who I know this is surprising, don’t want to pass ideals that are different than their own) want to pass the plan.
Shocking!
Bob,
Yes, the point about most of the bills being to repeal the PPACA was hyperbole. For that I apologize.
However, even you have to, or at least should admit that the amount of time wasted by the House to repeal a law that had ZERO chance of being repealed was ridiculous.
How come it is OK for Republicans to block legislation they believe is harmful to the country, but not Democrats?
You said, “republicans have been blocked from passing laws more often.” First, you really should be capitalizing “Republicans”. Show some respect. Second, please cite your source. If this is true, maybe it is because nobody likes their ideals.
The only way I see the Republicans and Democrats being different is tax policy. Republicans believe in supply-side, trickle down where Democrats believe in a consumer driven, demand-based economy. Give the money to the people who will spend it and the economy grows, making more money for the wealthy.
Republicans have had opportunities to differentiate themselves from Democrats, but failed miserably. Remeber 2003-07 when they controlled all branches? Our debt increased by more than $5 trillion, Debt to GDP went from 62.3% to 64.8%, and annual deficit grew from $555 billion to $1.017 trillion (please tell me again how Republicans are fiscally responsible), we were involved in 2 unwinable wars (one of which was justifiable), health care refrom was not addressed, our country became divided, and our economy went into the tank. Good job!
If the Republicans were more fiscally responsible when they had control, they would garner more of my support.
Put your methodology in your pipe and smokeit. Show me results.
Methodology=Spin
Coburn killed a bill that the Left and the Right did not like. It was the Party of Finance (made of both Republicans and Democrats) that liked this program. Coburn had the tacit support of many Senators on the Left (e.g. Bernie Sander, Elizabeth Warren). I don’t know if it is the right move, but it is certainly one that, I’m betting, most Americans will agree with. That’s why no one will try to make political hay out of this. They know better.
Good, hopefully this will be the first in a long line of abolishing programs backstopped by the taxpayers. Enough with this enormous ponzi scheme that can only end in total collapse. Maybe if we stop occupying foreign countries and droning wedding parties we wouldn’t have so many who hate us….but they hate us for our freedom right? Well I guess that won’t continue much longer since we are in the process of abolishing it.
Ben Dover_what came first, the chicken or the egg?
Many in this country also want the National Flood Insurance Program to go away as well and have the Insurance Industry handle it.
and crop.
Did you just cite a scene from Homeland as justification for terrorism against the U.S.?
Andy, can’t stop laughing at your comment. Good stuff.
It was from a new Adam Sandler movie, “The Wedding Droner”.
Help me understand why they hated all of the kids killed yesterday at the school in Pakistan. Did they happen to drone a wedding party as well?
They hate us as they hate all non belivers in Alah due to their perverse interpretation of what the koran says or doesn’t say. Just as bad as the crusades and burning of witches. When one group forces their beliefs on another by physical force it is wrong regardless of what they claim the reason to be.
As to the US involvement in any country that supports terror my jury is still out but would appear to be the only logical approach for now at least.
Ben, you may be disppointed to know that Republicans have inserted another backstop to protect the wall-streeters who gamble with our money, so they can go back to the pre-2008 risk-taking and will be allowed more taxpayer bailouts in the event that their bets lose money.
I am just a regular guy who happens to work in the insurance industry and this decision scares me on multiple levels, not only from a business perspective but personally as well.
Colburn has no idea what he is talking about! This is a government’s problem brought on by our government beyond the average citizens control. I don’t know why it wasn’t investigated a long time ago as to how other countries handle their terrorism risks. Such as Israel, who fund their Terrorist Pool through Property Taxes. This is no win situation for everyone if this backstop is not renewed. Catastrophes such as Earthquakes and Floods are inevitable just like Terrorism. The same can be said about insurance companies that provide insurance for Earthquake. The fact is that the written premium that is collected over years such as that in Earthquake insurance with no losses to payout since Northridge, doesn’t mean that the insurance companies are making a gold mine. It means that enough premium better be accumulated WHEN the big one hits in California.
My point is that TERRORISM is here to stay because it is an effective sadist method used by idiots and their backward way of thinking. Our government needs to be responsible for helping the insurance industry period. Until a better program can be created for insuring Terrorism, this is all we have.
It sure would be nice to know if anyone in the insurance industry is advising the Senate. The Senate should not recess until ALL matters are settled. They do not deserve a break!
you don’t accumulate premiums. Premiums are only for the term of risk, generally one year. It based on the odds of that particular year.
I have seen property TRIA endorsements that specifically say that if reinsurance is lost, coverage will cease (even mid-term). All of our multi story/high rise buildings require TRIA coverage for their mortgage companies. In some parts of the country – this is not a big deal. Other parts of the country, this is critical. What about big venues like Bowl Games or Super Bowl? I don’t see private market stepping up to provide reinsurance – I guess we will see. As an industry we can just exclude it and say “it’s not our problem”.
Have we not seen Government go down to the wire several times on this issue? Never let a good crisis go to waste, right?
Agent….. it is no longer a “wire” — TRIA is done January 1. Senate ajourned the session. They can start over in January, but that is mid-month and they have to start from the begining.
Harry Reid wanted to make sure he got home in time for Christmas so he didn’t make anyone work until they got this resolved. Besides, he would rather dump it in McConnell’s lap when the new Senate is sworn in. Can you see why there was such a turnover in the mid terms?
The new Senate will convene Jan 6th. That is a week to sweat until it comes up again.
What happens in Time Square on New Years’ Day Eve and New Years’ Day?
Most carriers attached IL 09 95 the Conditional Exclusion of Terrorism (Relating to the disposition of Federal Terrorism Insurance Act)beginning last year. This endorsement specifically excludes Terrorism on policy in just this situation, whether premiums were paid or not. SO any policy with that exclusion will effectively on 1.1.15 not have coverage for Terrorism (other than following fire but not Business Income or Extra Expense, etc.)
PierreTruTru say, this is bad news all the way!
Who is going to insure the Super Bowl? No one. Without a government backstop no company is going to get on that risk.
SPeaking of, I just heard the NFL is a not for profit 501 is that true?
It is a 501(c) 6 based on a 1966 law.
That’s correct. They make billions, but claim to be non-profit. The team owners get millions in free taxpayer support (welfare queens), which they get to invest in the team, in other words, their business, and they get to reap the profits (no complaints about government interference there). Then they pay fees (tax-deductible dues) to the NFL, then the NFL uses the money to promote the team-owners’ interests and claims to be non-profit. Meanwhile, the NFL benefits immensely from our infrastructure and taxpayer-funded services. There’s a nice little dose of socialism right there.
In summary, the NFL is a bunch of tax-dodging commies.
The NFL may need some help to settle their player concussion issues which mounts by the week.
Don’t worry about the NFL – they have plenty of money to spend on people to help them in court. It’s the players who need help with the lawsuit.
If all of the insurance companies go insolvent from a terrorist attack, taxpayers won’t be on the hook — just don’t get into any car accidents.
It’s funny that the Insurance journal didn’t feel like they needed to include Coburn’s rationale for holding up the legislation. I was curious, so I looked it up. According to what I found, ‘he (Coburn) is criticizing the creation of a national, nonprofit clearinghouse that would allow insurance agents to register and establish a national standard, and he says states should be able to opt out of the program. Coburn spokeswoman Elaine Joseph said that Coburn wants to offer an amendment allowing for the opt-out. “If NARAB [National Association of Registered Agents and Brokers] is as popular as proponents say that it is, no state will ever opt out and the amendment will be moot,” Joseph said.’
What do the readers here think of this?
Sen Coburn was acting irresponsible — he basically threw a temper tantrum about NARAB and since he was retiring he didn’t care about the damage he was doing.
Can’t Obama simply issue another executive order to get it done!
Terrorism,flood,crop insurance represent the failure of the Ins Companies to come up with solutions. If you don’t develop solutions you become irrelevant. Health insurance was a mess so we got ACA and they are going to loose that market with single payer if they don’t get with the program. When Ben Franklin started the Greentree ins co it was a solution to a problem of underwriters wanting everone to chop down their trees because of the lighting risk.
To bad everyone is missing the real issue here. Our elected officials add to much unrelated BS to bills and it is typically just that stuff that kills what is otherwise a sound concept. TRIA/TRIPA whatever name you put on it is a sound concept to allow for risk transference for what would otherwise be uninsurable to the average size carrier in our country. The Bozo’s on both sides of the aisle add on all of the pet amendments to the bill and that is what the issue is with this one.
If we could as a country just focus on the true issues without the fluff we would all be significantly better.
When the country was founded it was pledging life and fortunes to the new republic; now, we all just look to what can I get?
So far, no democracy has ever lasted, due mostly to politics. Of course, they’ve never printed money before like these days!
How long did the Soviet Union last before collapsing during Reagan’s term? Communism & Socialism do not work and never have worked to better an economy. Our problem is to stave off the Socialists in our country who want us to go in that direction. The mid terms were a good start.
“Our elected officials add to much unrelated BS to bills and it is typically just that stuff that kills what is otherwise a sound concept”
Totally agree, AZGuy. Both Republicans and Democrats play this “game” and both are wrong when they do it. It doesn’t matter who did it first or who does it more, until each side stops playing that game, inaction will continue to be the norm.
This is a serious legislative issue that should not be left unattended. No TRIA, then what?
Then, Reid will blame it on the new Senate leaders for not cleaning up the mess he left behind because he was more concerned with his party getting as many liberal federal judges appointed before he lost his power.
Yogi Polar Bear,
Kinda like how the right blames President Obama for not cleaning up the mess President Bush left behind?
Yes Ron, we know what a wonderful job Obama has done cleaning up messes left behind from Bush, Pelosi & Reid. 6 years+ in and it is far worse now than ever before. He now thinks it is more important to make nice with brutal Communist dictatorships than take care of America’s business. What a guy!
Exactly. We shouldn’t do business with a brutal communist dictatorship. Hobby Lobby should get their supplies from somewhere else.
We shouldn’t make nice with Cuba, either. It’s best to keep them as enemies; it’s not like Venezuela, China, or any other country would ever use the animosity as leverage to be able to put missiles there. We don’t need them on our side. A handful of former Cuban plantation owners in Florida should get to decide our country’s foreign policy.
By your measure, Bush didn’t leave behind the mess.
As you have many times said, there are three chambers of congress and a president has little control of flow.
Or does that change when it comes to Bush W, and Obama gets a pass?
What matters is how the collapse happened and what could have been done.
The democrats did cause the collapse of 2008. This is not at all debatable. While republicans could have stopped it if 100% of them were voting in league, 90% of democrats blocked them, 10% of republicans blocked them. Therefore, democrats are more at fault.
The right is correct: Obama is doing plans that is harming the recovery. I just posted a link showing that one individual section of a law passed specifically would raise the cost of homes by $6,000 on average. Their goal is to increase housing costs in a recession and that will help correct? They kept food costs high during the depression. That helped too correct?
QE, the printing of money should clean up the mess correct? As well as stimulus? Then why is it that now that we have a congress blocking Obama on everything, and near shut downs, each year we do slightly better? Why did the same happen after the 1995 shut down?
This is old.
You call blaming Obama bad, but blaming Bush W makes perfect sense…Since he’s just responsible right? You don’t have to you know…Prove that or anything. It shows you are guilty of what you say the right do, only the right DO have proof Obama is a serious threat to the economy.
Wall-street gambling caused the collapse, and now the Republicans are forcing a measure (written by Citigroup) to go back to allowing the very same gambling, with taxpayer-backed money. So, when the bets pay off, rich crooks like Jamie Dimon (another major supporter of this boondoggle bailout provision) get to pocket the money; when the bets lose, the taxpayers will have to cover it. Gee, so much for smaller government. So much for government not interfering in business.
Incorrect.
Citigroup was sued for not giving out loans I might add in the past, red lining against low income borrowers.
Then they had serious financial issues ten years later for giving the same loans.
The government forced these loans to be given.
You could write them with the CRA regs for loans, or you could write them with your own program, but you had to write them.
The loans that failed were 50% regulated CRA loans, and 50% non regulated.
If the regulated loans failed at an equal rate as the non regulated, this means that both the government and the private sector shouldn’t have written the loans in the first place.
The difference here being, that you had to write these loans. The private firms didn’t have a choice.
Of course they tried to diversify their risk by selling these loans (credit default swaps).
But regulating the sale of loans that were bad (credit default swaps) would not have caused those loans to not fail.
The problem was the government forced low income loans to be given, and refused to let companies grow, merge, or sell, without a high CRA rating. CRA ratings are given to all firms, to see if they are discriminating. It is not a “some firms” get CRA ratings thing.
I gave links to this before, to show that WAMU specifically made a commitment of 750 billion in low income loans to get a higher rating so they could expand.
They expanded into SAFE markets to MAKE UP for the bad markets the government forced them into.
You are just wrong about this. Give it up.
In other words:
Citigroup was sued for not giving a type of loan, that they then nearly went bankrupt for giving the same loan 10 years later.
If it was the bank’s choice, why is it the government sued them for not making the loans?
You can google this yourself. I already gave links you didn’t read, specifically showing the section of the law that says CRA ratings had to be satisfactory before mergers, sales, and debt to net capital ratios could exceed certain thresholds.
In a free market, the whole market does not fail at the same time, for the same thing.
You are arguing for a unicorn even in capitalism. It doesn’t make sense.
You need to get your political allegiances out of your opinions and do research for yourself.
My father was a Jimmy Carter Democrat. I think I have less allegiances than you. He then switched based on, and get this, INDIVIDUAL POLICIES.
I follow that to the letter.
I was raised to be democrat. I was in the party groups in Seattle of WA.
I have argued every point you have made against republicans.
Until I grew up. As you need to.
*unicorn event*
A funny note to be made here:
We still have the Carter pins and campaign items.
Hey Bob, have you ever heard the term – “yellow dog Democrat”? They have been around since Harry Truman. Basically, the yellow dog votes the straight Democrat ticket without any thought about what the candidate stands for intends to do when elected. They think the Democrats will take care of the poor and the Republicans are just for the rich. Now, we have “yellow dog Obama Democrats” who follow blindly like lemmings into the pit. They didn’t really care what Obama stood for or his Progressive divisive politics which has ripped this country a new one. Has the Middle or lower Middle Class benefitted from Obama’s 6 years? I think not, but Republicans are still blamed even though they haven’t been in charge for the past 6 years. The only thing that has grown is debt, entitlements galore and very bad public policy.
I’ve heard it yes.
I think most people agree with what you have said but disagree with the cause.
That’s why I try to point out the cause so much. I’m also quite upset as everyone here is as well, left and right.
Though none quite so much as Stan.
Agent, are you saying you don’t vote straight Republican ticket?
Good points. The first phrase of my post reflects my own personal take on the past.
However, the fact, aside from political allegiances, is that Republicans, this week (not 2008), put this provision in the newly-passed budget. That is not my opinion; that is a fact. It is in the bill. This provision is almost word-for-word what Citigroup provided to them; they basically copied-and-pasted into the new budget. Jamie Dimon was also a major supporter of this. That is also a fact, not my opinion
This has nothing to do with CRA. It simply allows them to NOW gamble with taxpayer guarantees. If the Democrats had put this in, I would be against it as well (I’m not very fond of either party).
As far as pre-2008, Wall Street over-leveraged bad debt. Also, banks didn’t even adhere to the (admittedly insufficient) lending standards and took on loans that didn’t even pass muster under CRA. They knew they could unload them, bundled with legitimate loans, before anyone else would know about it. CRA may have sold them a clunker, but the bankers and wall-streeters got drunk behind the wheel and crashed it.
Note: The above is in response to bob’s last post.
I know. What gambling are you referring to?
Can you link regarding this law? You said what it does in terms of being pissed off what it does. I need to read it.
What does this law do?
On the other topic: They didn’t get drunk. They didn’t enjoy making the loans, though they did enjoy passing them off and not taking on the risk of what they were forced to do. But this again, was due to regulation. They saw they could use the regulation yes, but if it didn’t exist, the market for a system of people giving bad loans wouldn’t have been a smart market. I’m sure that firms buying the loans with credit default swaps wouldn’t have wanted to buy it either, if the government wasn’t nearly assured to step in. So in the case I’m talking about, the drunk people taking the credit swaps would never have done so without regulation ensuring their survival. Without that, they never would have done the swaps.
I will say there is validity to stopping credit default swaps in general, but not as much as ending the requirements to give low income loans and changing the CRA, for the reason above. Companies will be a lot less likely to take bad loans in swaps if they know they won’t be saved this time.
I should note one of Obama’s first actions was to have these loan companies give out more loans, and to give them money to do so so a credit crunch wouldn’t occur. It’s the same cycle, encouraging low income loans…
And further I apologize for acting like a smart @$$ in my first post.
I admit a lot of that is due to one particular person ticking me off recently. It’s making me see you as the same when you are not.
I apologize.
By the way:
Thank you for the good replies…
I was getting really agitated by the tone lately around here.
You actually did a very succinct, relevant, and respectful reply.
Thanks. I’ll try to get some links to info on here.
As you stated “Companies will be a lot less likely…if they know they won’t be saved this time.” The provision I mentioned (and will try to get the link to on here) basically makes it possible for them to be saved again, leading to a return of the behavior around the CDS’s (as in our drunk people analogy). It’s not surprising, regardless of party, that some people in Congress don’t learn from (or forget) history, but so soon?
I don’t so much have a problem with these fat cats gambling with credit default swaps on their own dime (or their companies’ own proprietary funds), but they shouldn’t be allowed to do this with taxpayer-guaranteed money. It just gives back the incentive for financially irresponsible behavior. I think you and I might be on the same page on this point.
Also, I agree that having lending standards that are too loose is problematic as well. Then, when we have those who don’t even comply with those meager standards, it makes the situation even worse.
Unbelievable that they would build that in.
I agree entirely on the on their own dime merit. That’s actually what I was pointing out above, that as long as they didn’t know the government would save them they should be fine making the default swaps.
See the IJ article titled “House $1.1 Trillion Plan Includes Deals on Banks, Trucks, Adjusters, Campaign Funds”
It is mentioned in there. The bill passed the house, but I’m not sure about the Senate. The article does not include the House Bill number.
I saw the article, but not the wording for the law.
I’ll find the house bill number.
As an example:
I see wording saying that it loosens the derivative market, which is basically what we were talking about above, where both Shirley and I said there would be no problem with the credit swaps if the banks knew they would fail if they took on too many bad loans.
But I see nothing stating that the participators of the derivative market will be bailed out as part of this law.