I think this will be a great way to spread out the risk on the back end. However, I don\’t know if people will buy it if they didn\’t buy Flood Insurance before. The premiums will probably be higher since it is a catch-all which may deter more people from purchasing it and leave them without any type of disaster insurance if they do away with it. I know I would buy into this program, but an ill informed consumer may not. I think we will always encounter the problem of total loss for people due from failure to buy insurance. However, I do think this will be a good program for spreading out the risk in the future and for the informed consumer.
I realize there is concern with those did not purchase flood insurance – but a major concern going forward are for those that desire to purchase insurance – and may find none available – or what is available too costly. We can never overcome that group of people unwilling to purchase – but the availability to responsible consumers and lending institutions is critical. This situation impacts not only the direct property owner, but lending institutions and communities as a whole. The more support and participation from all parties can work to improve program paramenters and cost.
I wondering whenany of these folks will start to think outsiede of the box, and stop their continued traditional discussions of how you always fix things with insurance.
My next article in IRMI, I\’m going to take what is really a simplistic idea, which contains a lot of common sense, and was advanced recently to me by a senior member of this industry, and good friend, and see if those of us in this industry can explore what may be a real solution.
I think Congress needs to make major changes to the National Flood Program as a start. It seams the higher the premium the less participation and therefor the higher the losses! This becomes a death spiral and is what prompted NFIP to introduce the Prefered Risk policies. I think everyone that has a Federal backed mortgage (almost everyone) should be forced to carry flood coverage the same as property coverage and regardless of the flood zone. This would spread the risk and allow the premium to be very low. When someone no longer has a mortgage they can choose to carry coverage or not to carry the coverage. If they choose to not to carry the coverage they would understand there will be no Federal help coming in the event of a loss. This would free up a lot of funds that are currently being put into the NFIP that could be used to fund a program to help private carriers from going under from a major cat.
Do any of you realize that most NFIP policyholders have not received payment for their losses after Katrina? If I recall correctly, the estimates for insured claims are somewhere around $25 billion. About $4 to $5 billion has been paid out and now FEMA says it does not have the money to pay the remainder of the claims yet they have only asked Congress for a small percentage of additional funding. Real policyholders are simply being left in the lurch.
But why should States with few if any \’major\’ disasters hae to raise their insurance rates (or taxes) for people who insist on living in dangerous areas? This makes no sense.
What proportion of the consumers is ill-informed or well-informed, do you think?
I think this will be a great way to spread out the risk on the back end. However, I don\’t know if people will buy it if they didn\’t buy Flood Insurance before. The premiums will probably be higher since it is a catch-all which may deter more people from purchasing it and leave them without any type of disaster insurance if they do away with it. I know I would buy into this program, but an ill informed consumer may not. I think we will always encounter the problem of total loss for people due from failure to buy insurance. However, I do think this will be a good program for spreading out the risk in the future and for the informed consumer.
I realize there is concern with those did not purchase flood insurance – but a major concern going forward are for those that desire to purchase insurance – and may find none available – or what is available too costly. We can never overcome that group of people unwilling to purchase – but the availability to responsible consumers and lending institutions is critical. This situation impacts not only the direct property owner, but lending institutions and communities as a whole. The more support and participation from all parties can work to improve program paramenters and cost.
I wondering whenany of these folks will start to think outsiede of the box, and stop their continued traditional discussions of how you always fix things with insurance.
My next article in IRMI, I\’m going to take what is really a simplistic idea, which contains a lot of common sense, and was advanced recently to me by a senior member of this industry, and good friend, and see if those of us in this industry can explore what may be a real solution.
Why is it always insurance 101.
Always looking for real solutions. Will look for your article in IRMI.
I think Congress needs to make major changes to the National Flood Program as a start. It seams the higher the premium the less participation and therefor the higher the losses! This becomes a death spiral and is what prompted NFIP to introduce the Prefered Risk policies. I think everyone that has a Federal backed mortgage (almost everyone) should be forced to carry flood coverage the same as property coverage and regardless of the flood zone. This would spread the risk and allow the premium to be very low. When someone no longer has a mortgage they can choose to carry coverage or not to carry the coverage. If they choose to not to carry the coverage they would understand there will be no Federal help coming in the event of a loss. This would free up a lot of funds that are currently being put into the NFIP that could be used to fund a program to help private carriers from going under from a major cat.
Do any of you realize that most NFIP policyholders have not received payment for their losses after Katrina? If I recall correctly, the estimates for insured claims are somewhere around $25 billion. About $4 to $5 billion has been paid out and now FEMA says it does not have the money to pay the remainder of the claims yet they have only asked Congress for a small percentage of additional funding. Real policyholders are simply being left in the lurch.
But why should States with few if any \’major\’ disasters hae to raise their insurance rates (or taxes) for people who insist on living in dangerous areas? This makes no sense.