Plumped up payments
“The partnership has, over time, relieved FEMA of the need to develop, hire, and train an in-house corps of sales agents, adjusters, and others to administer flood insurance.”
— A report from the Government Accountability Office analyzing the National Flood Insurance Program. The report indicated that the NFIP, which is administered by the Federal Emergency Management Agency, is largely implemented by private insurance companies that sell and service policies and adjust claims under the “Write Your Own” (WYO) Program. This partnership was developed nearly 25 years ago, and operating procedures have not been updated. As a result, the federal government may be overpaying private insurers for their NFIPoperating costs, the report said.
Best bill at the time
“In the end, a fair deal was needed in order to ensure that the participating insurers wouldn’t fight the bill in the Legislature and, equally important, to ensure that the participating insurers would sign their contract modifications to agree to the additional $1.3 billion liability.”
— Rex Frazier, president of the Personal Insurance Federation of California, noting that recently passed legislation to allow the California Earthquake Authority to assess insurers to pay for claims arising from a one-in-500-year event was a compromise bill. Parties to the negotiation said reaching a compromise solution was difficult, and other options could have led to litigation.
Federal help not needed
“[The Bush Administration] strongly opposes efforts to expand the federal government’s role in terrorism reinsurance.”
— Statement from the White House, noting that the Bush Administration believes that the federal backup for terrorism reinsurance should be phased out in favor of a private market for terrorism insurance. The Office of Management and Budget said that if the Terrorism Risk Insurance Act (TRIA), H.R. 2761, is sent to Bush as currently written, his senior advisors would recommend that the President veto the bill.
Cooperating with CPSC
“I believe that our actions, in close cooperation with the CPSC, in quickly identifying and announcing these recent lead recalls demonstrate that we are committed to the commission and its processes.”
— Mattel Inc. CEO Robert Eckert insisting that the company acted responsibly in recalling millions of Chinese-made toys because they contained lead paint or small magnets. Eckert said Mattel has been working with the Consumer Product Safety Commission and denied any suggestions of a feud with the agency. (AP)
Terrorism threatens economy
“Besides killing almost 3,000 individuals, the terrorists also sent economic shock waves throughout the U.S. economy.”
— Dr. Robert Hartwig, president of the Insurance Information Institute, noting that the anniversary of 9/11 is a reminder that the threat of a terrorist attack continues to create economic uncertainty.”
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