Declarations

Catastrophic coverage

“A decrease in the already low penetration rate would reduce the number of Californians able to afford to rebuild after a devastating earthquake.”

— The California Department of Insurance, warning that if higher earthquake claims limits were unavailable, the relatively small number of people that purchase earthquake insurance would decrease. Already, just slightly more than 12 percent of California households have earthquake insurance, according to California Earthquake Authority data. If CEA were to limit coverage, it predicts it would lose a “significant” number of policyholders in seismically active areas.

States at fault

“States, by allowing and enabling nearly unfettered development in areas vulnerable to major catastrophic loss, are principal contributors to their own residents’ insurance woes, bearing greater culpability than Mother Nature herself.”

— Dr. Robert P. Hartwig, president and chief economist for the Insurance Information Institute, noting that people’s desire to build in riskier, coastal areas is “not irrational.” Property owners in many cat-prone areas have a low cost of living, low real estate costs with rapid appreciation, lower taxes and rapid job growth. Furthermore, politicians are hesitant to slow development in those risky areas because it would hurt economic growth, he said in a recent presentation for the Insurance Institute of London.

Easy reading

“Insurance policies are notoriously hard to read and understand because they’re primarily written in complex legalese. …I believe every insurer should include a plain-English description of a homeowner’s policy, prominently displayed on the policy’s first page.”

— Senator Trent Lott, R- Miss., explaining why he introduced a bill giving the Federal Trade Commission enforcement authority to require insurers to disclose property insurance coverage and noncoverage in plain language on the front page of each homeowner’s policy. Lott’s bill would require the basic description to be contained in a “noncoverage disclosure” box stating in bold font, twice the size of the body of the policy’s text, all conditions, exclusions and other limitations pertaining to the individual policy’s coverage.

Superfluous suit

“We have tried to reach resolution and can only describe [New York’s] settlement demands as excessive and unreasonable: both in terms of magnitude and in [its] demands that we change legitimate business practices in states outside their legal jurisdictions. We have declined these demands and are preparing to resolve the issues in court.”

— Boston-based Liberty Mutual Insurance Group, commenting on why it has refused to settle its suit with New York and other states that its practices were illegal. Charges were begun by former New York Attorney General Eliot Spitzer, who said the company engaged in anti-competitive bid-rigging and broker compensation practices. The company said the charges are untrue and overblown.

Topics California Catastrophe New York