House-Passed Flood Insurance Bill Includes Windstorm, Business Interruption Options

September 28, 2007

  • September 28, 2007 at 8:32 am
    Mark says:
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    How can you have actuarially sound rates AND a 15% per year cap on rate increases?

    This further proves that the elected leaders of this great country have no clue. Legislation proposed by so-called leaders with a personal vendetta against the insurance industry would not even have be concidered by a true leader.

  • September 28, 2007 at 8:36 am
    Cap says:
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    So what the feds have done have created a competing homeowner’s insurance product, but without fire, theft, liability, etc. -Just wind, flood and BI. Does this mean that private insurers are going to be able to get new coverage forms filed that cover just the things the feds are leaving out? If you purchase your flood and wind insurance from the federal government, will you be doubling up your wind insurance by purchasing a standard policy?

    Assuming that the government doesn’t make a horrible mess of the program (ha! like there’s any chance of that)….. This would mean that private insurers might actually want to write business on the SE coast again. Assuming someone like FL’s Crist doesn’t go on another mushroom-gathering expedition and start hallucinating again, and do something like demand that insurance companies offer wind insurance for less than federal rates.

    Of course, this isn’t going to solve the REAL problem – which is not underinsured people or people unable to find insurance. The real problem is people who don’t understand how insurance works and fail to purchase the amount they need. Here’s my scenario:
    1) Feds offer wind insurance
    2) Private Insurers offer the option to drop wind coverage in coastal areas
    3) Bob the Guy Who Lives On the Sea buys the now-much-less-expensive wind-coverageless policy
    4)Bob fails to buy federal insurance
    5)Hurricane knocks Bob’s house down
    6)Bob sues the private insurer because wind isn’t covered
    7) Media drags the insurance industry through the mud again because they “don’t care” about the poor, poor Bob
    8) Pseudo-commie state legislators in Bob’s state respond by screaming, running around in circles, and trying to pass laws that make Bob’s Insurance company take a loss in Bob’s state, figuring that places like Idaho should subsidise Bob’s inability to purchase the right coverage

  • September 28, 2007 at 9:09 am
    Mark says:
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    Also, consider that the Mississippi Windstorm Underwriting Association (MWUA), the state run wind insurer of last resort, is in the hole. I’m sure Rep. Taylor is not trying to transfer the MWUA’s risks to the federal government, is he? If the wind program in his own state is doing so poorly, why does he think the Federal government should take over?

  • September 28, 2007 at 9:10 am
    Gill Fin says:
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    my earthquake insurance. Oh, I know, you are thinking why in the heck would we pay for Gill’s earthquake coverage. Well, for one I live in an earthquake zone. Its not a matter of if but rather when. And two, its very expensive. And I guess thats the long and the short of it. I think I’ve met the burden – thats all folks!

  • September 28, 2007 at 11:33 am
    tiger says:
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    Veto this socialist garbage!

  • September 28, 2007 at 11:34 am
    Flood Veteran says:
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    How do you tell Gene Taylor is lying? His lips are moving.
    Fortunately, this travesty will never make it past the Senate…

  • September 28, 2007 at 11:34 am
    Bob says:
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    Time to stop this nonsense… the federal or local geovernments do not belong in the insurance business and the insurance business had better wake up and realize that by backing these measures we are cutting our own throats in the long run. If you want to live in a wind or flood prone area then you need to pony-up and pay outrageous prices for you insurance… if you live in these areas you have seen multi-digit increases in the value of your property due to the proximity to sun and sand… ya gotta pay for that privilege.. I don’t need to pay for damage to your property in increased taxes and subsidies… I disagrre with Bush on many things..but VETO this.

  • September 28, 2007 at 11:40 am
    carlfarm says:
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    You guys are looking at this all wrong, hahaha. keep rates artificially low in state windstorm pools,making your constituents very happy, and private insurers running. suddenly it occurs to everyone that we are tremendously underfunded. so shift the burden to federal goverment, they can just print more money. everybody’s happy right!!

  • September 28, 2007 at 12:06 pm
    gill fin says:
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    why don’t they help lead the industry to a policy provides wind and water. Our forefathers should be rolling over in their graves over the idea that government would 1) usurp private enterprise and 2) spread the burden of property insurance among the populace. I own rental property – am I really to believe that someone somewhere holds me accountable to educate them that flood insurance is available to them? Myself, I only rent to tenants smart enough to know how to take care of there stuff without my help. You want it covered – buy the coverage.

  • September 28, 2007 at 12:27 pm
    Dawn says:
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    The majority of natural disasters this year have been in the north east and CENTRAL part of the country.

    I’ve never considered Kentucky or Oklahoma beachfront or particularly sunny, yet they’ve had more tornadoes and flooding than any ‘coastal’ state this year.

    The natural disasters are happening everywhere now. There aren’t any ‘safe’ states anymore.

    And don’t forget the triple digit foreclosure rate down here due to insurance rates and taxes.

  • September 28, 2007 at 12:28 pm
    Sam says:
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    to your Senators and put the pressure on them to keep their constituents happy. I saw this story on breaking news on another site, and IMMEDIATELY wrote to my senators to vote against this bill. I also gave a sound basis/reason in my email. I am in the midwest, and although my Senators are Dems, I hope they get this right!

  • September 28, 2007 at 12:30 pm
    Sam says:
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    Yes, but Dawn the private market is handling those disasters in Kentucky & Oklahoma just fine!

  • September 28, 2007 at 12:54 pm
    Dawn says:
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    But they won’t continue to. That’s the point.

    What effect is this year going to have there? Oklahoma has had a declared state of emergency and requested FEMA four times this year for unprecedented natural disasters. F5 tornadoes and flooding.

    According to the people that claim to know what’s going on in weather patterns, it’s not going to stop. It’s only going to get worse. They are already planning to ‘revisit’ the scales (Fujita and Saffir-Simpson) due to storms going above and beyond the level 5. What was considered an ‘anomaly’ is now becomming common, unfortunately.

    There are 7 states NOT ON THE COAST that have each cost as much as 2004 Florida this year. FEMA has been activated to assist twice in Fla – central and northern for tornadoes. Out of I believe (I could be wrong) 23 times in the country.

    What’s the answer for them when their private carriers start pulling out or writing X-Wind?

    Half the country could end up in the same situation Florida has by the end of 2009. That’s what we need to prepare for.

  • September 28, 2007 at 1:01 am
    Cap says:
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    Wait, what? How does one have triple digit foreclosure rates? Sure not 100% of homes are being foreclosed on?

    Anyways, the fingers get pointed at Florida not because they have expensive losses, it’s because they have already passed garbage legislation that screws private insurers and forces people to depend on the underfunded government program – they are using band-aids for a sucking chest wound.

  • September 28, 2007 at 1:06 am
    Tinkerbell says:
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    The private sector cannot fund the windstorm exposure. Why not have the federal govt subsidize wind, like they do water? If this actually does come to pass, the other perils policy should absolutely exclude coverage for wind losses and both policy types should be required. The other component is to adequately fund the program.

    Insurance is a pooling of resources. Everyone in the nation, regardless of location should contribute. If you own a home with a mortgage, it should be mandatory that you buy both the all other perils policy and flood/wind coverage. This way, we avoid adverse selection. All contribute, not just those whose likelihood of loss is great. This keeps the cost down for all.

  • September 28, 2007 at 1:11 am
    Dawn says:
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    Sorry, I meant triple digit INCREASE in foreclosures. And the ARM mess only accounts for a small percentage of them. This started 2 years ago. After ‘sound’ rates came to Fla. If Citizens had been approved for the increase they wanted, I would have been foreclosed last year. So for purely selfish reasons, I’m glad Crist won that round.

    Bob’s comment towards Fla was the national program ‘bailing out’ Fla in a natural disaster. We’re not the only state for that anymore.

  • September 28, 2007 at 1:15 am
    FSeven says:
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    Hopefully your tenants are smart enough to know the difference between there, their, and they’re.

  • September 28, 2007 at 1:25 am
    Cap says:
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    Now I understand what you mean, dawn- yeah, foreclosures are up everywhere because of the high-risk mortgage market -toss in high rates and taxes and I can see that. It doesn’t help that the housing market has tanked and a lot of people who bought more house than they could afford on the promise of increased equity are really in trouble.

    I still don’t think a federal program is the answer. The only reason the other ones (flood, crop) survive is that we as a nation borrow to support them. It’s just a losing proposition. The real answer is just to move farther away from the water. The insurance industry is handling the windstorm losses in other states just fine with private insurance.

    As for Tinkerbell – geez, move to china or something, you socialist. You want low rates, move somewhere less risky. I hear they’re getting good rates in North Dakota.

  • September 28, 2007 at 1:29 am
    Doug says:
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    LOLOMG F7 U PWNZORED THAT N00B /sarcasm

    Using grammar insults to try and invalidate someone’s argument points you out as a first-class tightarse with nothing relevant to say.

    KTHXBYE

  • September 28, 2007 at 1:30 am
    Native South Floridian says:
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    You say that I should have to pay astronomical rates to live in sunshine and sand? I was born here, my parents were born here, part of my family has been in the State of FL since the Civil War. Just because I live in FL doesn’t mean I am well to do and can afford the outrageous insurance & tax rates. Florida isn’t all made of $$. It is the northererns who will pay high prices for property; and have taken advantage the native Floridians. The year round residents (teachers, nurses, bank tellers, construction, insurance agents, etc) in FL cannot afford to buy a house because the wealthy northerns are willing to pay millions for a small piece of property. Shame on you for stereo-typing. I am the middle class who has an office job and can barely afford to live here. I would have to agree with Dawn, the majority of wind catastrophes this yr have not been in Florida this yr- Lets think about this… Texas, Mississippi, Louisanna, Alabama, Kentucky, Kansas, Oklahoma, I am sure if I googled tornadoes hits this year the list of other states could go on. Just wait for the private insurers to pull out of your state because your state is too much of a risk. Are you saying you do not have a wind hazard because you live in a landlocked state- do you not have tornadoes? Florida has one year, 2004, of hurricanes that left thousands of people with nothing. The business owners in my community can no longer afford to stay open due to the high insurance rates. After 20 yrs in business they are having to close their doors, and do what??Comprehend this, your property insurance for your business goes from $2,000 yr to $20,000 yr… Or how about this, your homeowner’s insurance goes from $950 yr to $8,000 yr. Just wait its only a matter of time….

  • September 28, 2007 at 1:31 am
    tinkerbell says:
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    Cap, I have thick skin. I’m not moving to China or something. What area of this nation is not subject to some sort of catastrophe? Hurricanes on the East coast, tornadoes & flooding in the midwest, wildfires in the Southeast, etal.

    Given this, why not have everyone share in the burden?

  • September 28, 2007 at 1:33 am
    John says:
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    Tinkerbell,
    Never never land is calling you!

  • September 28, 2007 at 1:38 am
    Cap says:
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    Why not have everyone share in the burden? Because some of us live in low risk areas. Our low-risk areas don’t have the luxuries of being coastal, or having great weather like the southeast. Therefore, those of us IN those areas cost far less to insure. With the private market, the far lower rates that I pay exist because I’m not costing the system very much money. A required federal program that subsidises risky areas at the expense of less risky ones amounts to just yet another tax, an economy-slowing one at that, and one that encourages people to make poor choices about where and how they build. On top of that, the feds manage things so poorly that it is bound to be ineffecient and wasteful.

    And I said you should move to China because they are socialist there – if you don’t like China try Sweden or something. This is not a socialist nation (at least not yet) and the proposal you made is most definitely socialist.

  • September 28, 2007 at 1:42 am
    Gene Corvino says:
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    To argue about whether or not Wind coverage should or should not be included in the NFIP is a joke. To solve the problem, just make it mandatory that wind coverasge cannot be duplicated, i.e., if it is included in the homeowner Insurance policy, it cannot be included in the NFIP policy and vice versa. Argument over!

  • September 28, 2007 at 1:44 am
    Nobody Important says:
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    No other state limits the ability of insurance companies to charge premiums appropriate to the exposure to the extent of Florida. No other state has the massive potential for loss over huge areas. Tornados and hailstorms cause a lot of damage, but nothing to the extent of a big hurricane. Dawn thinks that all insurance companies are rip off artists so I don’t even read her posts. If there is so much profit to be made why are companies leaving the market? Simple question that nobody has answered. Government never does it better than the private market. Ok, your turn insurance company haters.

  • September 28, 2007 at 1:53 am
    cap says:
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    Gene, what are you talking about?

    The argument isn’t about redundant coverage. I did bring up the notion that insurers would have to file new forms that allow for X-wind, and I was wondering if state regulators would permit them – but that’s not the real point of contention on this topic.

    The argument is whether national government should have a role in the wind insurance business at all. I think the heavy debt that NFIP generates would say that the answer is no. We all still pay through the nose with a national program, we just pay more, and we pay it to the government instead of private industry. Government profits (I know, I know oxymoron) aren’t taxable either. It’s like a loss to private enterprise AND a loss to the tax base.

    The only advantage to a national program is for people who live in high-risk areas and have a difficult time finding “affordable” insurance – Affordable usually being defined as the national average plus or minus 10%.

  • September 28, 2007 at 1:59 am
    Doug says:
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    “Dawn thinks that all insurance companies are rip off artists so I don’t even read her posts. If there is so much profit to be made why are companies leaving the market? Simple question that nobody has answered. Government never does it better than the private market. Ok, your turn insurance company haters.”

    HaHa Nobody Important owned you.

  • September 28, 2007 at 2:07 am
    Gene Corvino says:
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    To CAP: The problem we are faced with is that the private sector is refusing to accept insurance responsibilty for wind in coastal areas. The states therefore are picking up the slack and providing wind coverage through the state pools. The diffence in cost is not the 10% you stated. It is almost 100%! I should know. I write the policies for my South Carolina policy holders in the coastal areas. I agree that the private sector always “does it better” but only when they accept the responsibility. Right now the private sector does not want to pay the rediculously high reinsurance rates so they exclude wind from the homeowner policy. Once the private sector fails to provide the needed coverage. it is immaterial as to whether it is the state that assumes the responsiblity or the Federal government. I hate to see the government involved in any kind of business activity but when there is no other choice, we must accept wha t we get.

  • September 28, 2007 at 2:09 am
    DWT says:
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    While there are many reasons…, the main one is that this is such a bad idea for everyone not living in a coastal area. The rates charged by the government would not be actuarially sound and any deficit would be covered by everyones tax dollars. Personally I would prefer to see my tax dollars put to better use.

  • September 28, 2007 at 2:09 am
    tinkerbell says:
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    Gene, Kudos to you for explaining it better than I could have.

  • September 28, 2007 at 2:21 am
    Cap says:
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    10% of the national average cost is what I said that people define as affordable, not what it actually costs. Read my post before you yell at me.

    State pools are there for a reason. The feds should not be involved. Insurance has been state-managed for years and should stay that way.

    BTW, Private sector WOULD pay the ridiculously high reinsurance costs if the state regulatory bodies would allow them to charge actuarily sound rates.

  • September 28, 2007 at 2:22 am
    BTS says:
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    I have a great idea. Since my car insurance rates went up when I moved to Louisiana, the government should provide an auto insurance program. Also, since gas is so expensive, there should be a government gas program. Also, since my health insurance is so expensive, there should be a government health insurance program. Oh yea, Hillary’s going to take care of that for us.

    The more government can get people to depend on them, the more powerful government is. Private sector is the way to go. Period.

  • September 28, 2007 at 2:33 am
    Dawn says:
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    HaHa Nobody Important owned you.

    Are we having a civil conversation on fighting on a basketball court?

    I will not apologize for being glad that my home is not on the foreclosure list this year.

    I will not apologize for saying that national companies create ‘shell’ companies in certain states so they can show a drastic loss when the parent company made billions.

    And I will not apologize for agreeing with Gene in saying that when the private market is unwilling or unable to assume the risk the gov’t has to step in. Do I think they’ll do it right? No. But something wrong is still better then nothing at all.

  • September 28, 2007 at 2:35 am
    Nobody Important says:
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    The private sector wants to charge adequate rates for the exposure. The people in these areas don’t want to pay that premium. The companies leave. How simple is the real world marketplace.

  • September 28, 2007 at 3:00 am
    Apparent says:
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    I applaud you in believing that the private sector will actually cover this type of risk, but you are wrong.

    Flood insurance is not nor will it ever be covered in the private sector. Simple answer, floods happen more often than fires in this country. So why would the private sector dabble in a losing game. Unfortuantely, there will not be a private flood insurance program and the goverment will probably always offer it. If they do not offer it, no one will and the taxpayer will still be left with the bail out of such natural disasters as Katrina.

    And if you’re wondering, I am an insurance agent.

  • September 28, 2007 at 3:01 am
    geoff says:
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    Here in MA, our FAIR plan has become the largest carrier in the state and is still the fastest growing, because they don’t buy adequate reinsurance and will assess the private market for the difference when a big one comes here. Wonder why the private market doesn’ like the coast? They have exposure through assessments before writing a single property.
    And Flood coverage is insanely underpriced for “on the sand” mansions that all taxpayers have to subsidize.
    Policiticans will play to loudest interest groups, developers and beachcombers. NFIP is why we overdeveloped our coasts in the first place. Giving gov’t any more control of a market they have made dysfunctional is nuts!
    Fortunately this bill is DOA at the Senate, and faces a veto at 1600, so someone actually understands reality.

  • September 28, 2007 at 3:10 am
    BTS says:
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    Who do you think pays for the NFIP. THE PRIVATE SECTOR. Yours and my taxes. The government does not have a good track record at all handling my money. We have lost scope of the founding fathers’ vision of the role of the federal government. It should be very limited. We should not be adding to this already oversized mammonth.

  • September 28, 2007 at 3:16 am
    Mark says:
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    Tinkerbell,

    It is very kind of you to be concerned about others, and want to help all who are affected by disaster. I’m sure you, as well as many others posting here give to relief organizations after disasters, and everyone should be commended for that.

    However, giving aid from the goodness of your heart, and having your hard earned money taken from you by the government and given to someone else are two different things. The latter is socialistic, plain and simple. There are already too many entitlement programs in this country which serve no other purpose than to expand the government’s grip on our lives.

    This country was founded by people that wanted freedom from government oppression and control. We have steadily allowed our freedom and control of our lives to be taken from us by power hungry politicians who feel we are too stupid to make our own decisions and take care of ourselves.

    Insurance is a private industry. Its purpose is to make a profit by providing financial protection to its insureds per the contract (policy) it has with those insureds. It is the insurance company’s duty to itself and its insureds to price the product adequately so they can maintain substantial reserves which are adequate enough to pay claims as they occur.

    State governments regulate the insurance industry in their state to ensure the financial stability of the insurers and protect the insureds from overly aggressive or unfair business practices. That is where it should end. The states should not be limiting the rates insurers charge to such a degree that an insurer can not make a profit. This is why companies leave markets; and with less insurers, i.e. less competition, the cost of insurance rises. If you want to see lower rates, then abolish your state’s insurance department and let the free market work.

  • September 28, 2007 at 3:20 am
    Nobody Important says:
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    I only have one problem with your post Mark. States no longer regulate to provide for the solvency of insurance companies. The now only care about the consumer being happy. Heck with the insurance company being solvent. Just think how happy the consumer will be when their insurance company can’t be found because they left the state.

  • September 28, 2007 at 3:25 am
    tinkerbell says:
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    Mark, I understand what you’re saying however, the private sector cannot seem to handle the windstorm exposure. It’s just too big and they are either writing policies X wind or are refusing to do business in windstorm prone areas at all. The whole of the east coast is experiencing this right now.

    Just like the private sector could not handle the flood exposure, we are moving in the direction of the Feds stepping in for the windstorm exposure.

    We are just trying to find a solution.

  • September 28, 2007 at 3:29 am
    BTS says:
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    Well I can tell you right now tinkerbell; the solution is not a government program. Just look at history.

  • September 28, 2007 at 3:45 am
    Sam says:
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    I never implied that because anyone lives in FL they are wealthy. I know there are many people everywhere that do their best to make ends meet. BUT, that would only be my problem if it were ME.

    I’m sorry there are problems in the private markets in hurricane prone areas. FL especially has a problem because of crippling legislation. If the hurricane prone states want to pool risks, let them. I should not have to purchase flood/wind from a federal program when I have a miniscule exposure to flood.

    I do purchase flood insurance, but the rates are so low due to the low exposure. I insure my wind/tornado exposure. I don’t expect Floridians or other southern states to subsidize my risk of wind, or blizzard, ice & snow that I face.

    The private market in OK and KY and the other states that have had large losses this year will have to adjust their rates, but that is how the market works.

  • September 28, 2007 at 4:07 am
    Sam says:
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    I have to disagree with your comment that my rates are going to skyrocket as they have in FL. I do have exposure to tornados, but I insure that risk. The risk does not include multiple catastrophes per year. There may be multiple tornados in my state, but I have never seen 4 tornados strike the same area in one summer. I have never seen one tornado destroy property on the scale of Katrina.

    I did not imply that you were wealthy or had high value property. That was another poster. You too are stereotyping me. I am sorry for your situation with regard to property insurance and high premium. However, I do not want to subsidize your exposure in FL when I live in a state with risk much lower than yours.

  • September 28, 2007 at 4:18 am
    RAL says:
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    Tinkerbell, you are right the private sector cannot handle the windstorm exposure. They can’t handle the flood. Why not let the Feds run the wind and the water programs.

  • September 28, 2007 at 4:26 am
    BTS says:
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    RAL

    Please point me to one piece of federal government history of subsidised programs to support your claim that the feds will miraculously start running the flood program without loosing millions by adding to it water and wind.

  • September 28, 2007 at 4:33 am
    Mark says:
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    Gene,

    If private insurers do not want to pick up the “insurance responsibility” for these high risk areas, maybe it is simply irresponsible to insure these high risk areas. Should our government then use our tax dollars to provide this irresponsible insurance coverage?

    I think not!

  • September 28, 2007 at 4:40 am
    Mark says:
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    Nobody Important,

    How right you are! The insurance Commissioners offices have been taken over by the same kind of consumer advocate politicians as the states’ Attorneys General offices.

  • September 28, 2007 at 4:48 am
    Mark says:
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    It’s not that the insurance companies can’t handle the windstorm exposure; it’s that the states won’t allow insurers to charge an adequate rate for it.

    As for the flood exposure, you are partially correct. Flood exposure is too large for any insurer to include in their coverage and be still able to provide an affordable product. The NFIP did not come into being due to insurers dropping flood coverage, as many believe, but rather, the Federal government got tired of paying 100% of the losses for every flood that came along. …again, and again, and again. The NFIP was created to have those living in flood prone areas at least pick up part of the tab through flood premiums.

  • September 29, 2007 at 7:13 am
    Bob says:
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    This is good for our state of florida, but does this solve our Sink hole troubles?……watch this YOU Tube video.

    http://www.youtube.com/watch?v=emA4xuyi16g

  • September 29, 2007 at 8:45 am
    Mark says:
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    Native South Floridian

    Whether or not you were born and raised in Florida is not be a factor in how much you should pay for your housing or insurance. Costs rise for many different reasons and just because your and your ancestors have been in Florida since whenever makes no difference. If you can’t afford it you will have to make a change.

    Florida’s insurance problems did not start in 2004, like you would have everyone believe. Hurricanes have been hitting Florida forever and will continue to do so. Rest assured you are not alone. Hurricanes will continue to strike the rest of the U.S. coastline, also.

  • October 1, 2007 at 10:27 am
    tom says:
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    Congresswoman Waters comments were pretty stupid: Storms are getting stronger. What? Is that why Congress felt the need to now get in the wind coverage business? Storms are no different now than 50 or 100 years ago. Maybe building has become more sophisticated and certainly more expensive. So there is a lot more to lose. But 150 mph wind in 1920 is pretty much the same as 2007.
    Okay, now that the government is getting into the wind business, if property owners in wind prone areas do not buy wind policies, will the federal government bail them out when they have a loss? How many people in flood prone areas have flood policies? When a disaster strikes, these uninsureds get on tv and cry the government needs to take care of me, wha wha wha. So now another government program is created, homeowners will not purchase the coverage and when a loss occurs it’s still the governments fault.
    Another fine usage of our tax dollars by geniuses like Maxine Waters.

  • October 1, 2007 at 10:49 am
    tinkerbell says:
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    As discussed in this forum, we are moving in the direction of federal intervention relative to the peril of wind in cat prone areas. As I see it, the private sector cannot and/or will not provide coverage for the windstorm exposure, as evidenced all up and down the east coast. Those that continue to offer wind coverage are charging premiums that are not affordable to most people. Although they may be actuarially sound premiums, they are not affordable. This means that more homeowners in these cat exposed areas go without wind coverage. When the big one comes and a large percentage of people who suffer devastating losses do not have the coverage, don’t the feds step in anyway? If this scenario occurs with regularity, like it did with the peril of water, there will be a federal program put in place.

  • October 1, 2007 at 11:12 am
    tom says:
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    Tink, what I have a hard time really understanding is a point you touched on – If a person buys a home on the beach, prime real estate, and cannot afford insurance, why do I have to feel sorry for them? It implies that they may have gotten into too much home and if they cannot afford ins., that tells me they probably are just making it with the home or cannot afford it at all. So if insurance companies, in the business to insure risks are charging the proper prices for the exposure, then why are we in the insurance industry getting beat up and insurance companies being berated, investigated and abused for providing a service that makes the insured whole and keeps the insurance company solvent when a CAT hits?
    So you say feds will make affordable, the flood program was affordable for those in New Orleans, yet many many people did not have flood insurance and yet Bush was raked over the coals, because no one ever thought a CAT Hurricane would hit their city. Now the federal government has to take care of me cause I was too stupid to not purchase insurance.
    Sorry I am just tired of watching Washington D.C. politicians piss our tax dollars away. This is yet another program that will continue to keep taxpayers beholden to government.

  • October 1, 2007 at 11:34 am
    tinkerbell says:
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    Tom, you raise some interesting issues. However, not all people who own homes where wind coverage is prohibitively priced live on or near the beach. There are many, many homes up & down the east coast that are not on the beach where the premium is not affordable or the coverage is not available & people are going without. This is also true in the states of FL & NJ & NY, etal…again all up & down the east coast. I don’t sympathize with those who buy homes on the beach & then cannot afford the premiums. I’m targeting the other group.

    As for those who live in flood prone areas and don’t buy flood insurance, they may not have been able to afford it either. Many of the Katrina victims lived in impoverished areas…eking by on a meager existence in homes that they put together themselves or inherited from their parents. The last thing they think about is flood insurance when they are trying to figure out where the next meal is coming from.
    There are no easy answers. The wind problem has not reached critical mass yet. However, given the insurance reform measure recently passed by the House, we are on our way to a federal wind program. I know most people take issue with this solution, there are many of who feel that something must be done.
    If a federal involvement is not the ideal answer, what is?

  • October 1, 2007 at 11:44 am
    Nobody Important says:
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    If you can’t afford something, don’t expect the government to bail you out. If I can’t afford a new car, the feds won’t buy me a new one. Were do we stop with more government programs and intervention? I know you will find my response simplistic and not sympathetic, but we all have to live within our means.

  • October 1, 2007 at 1:00 am
    Sam says:
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    Hey Tink, I believe you are counting your chickens before they are hatched. It is anticipated that this bill, as written, will have a very hard time getting approval in the Senate. AND, if it does make it through the Senate, Bush has indicated he will veto any NFIP bill that has a wind peril attached.

    The bill as proposed recommends ‘actuarially sound rates’, which is what carriers tried to do before getting shut down by various regulators. If the premiums is truly based on actuarially sound rates, then it will be almost as costly from the government as through private insurers. Also, what about the gaps in coverage that a wind/water policy will not cover?

    The bill as proposed does not allow the NFIP to renew policies or write new coverage as long as there is a deficit or borrowing to pay claims. What happens if there is another Katrina type storm in the first year of such a wind/water plan? The NFIP will have to non-renew all existing policies, and take no new applications. There is not any fix there, is there?

    I understand the issues with costly premium & taxes, but as I have said, I should not have to subsidize for that exposure, which I certainly will if there is a wind/water NFIP plan in place.

  • October 1, 2007 at 1:00 am
    tom says:
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    Tink,
    I see exactly what you are talking about. What gets my ire is the D.C. politico’s should just tell us what they are doing. We are going to take care of our own in time of crisis. I know it leaves open for everyone who even does not need it to stick their hand out when they have the means to pay for insurance.
    But what angers most people is local and state government did not do their part to educate their citizentry to be responsible and they put the onus on the federal government and yes I mean Naggin and Blanco were absolutely useless in my opinion. Gov’s of Miss & Ala handled the situation well, not all people on the Gulf Coast in their states are not made whole yet, but Miss & Alabaman’s must have done something right.
    So if we are to take care of the low income and indigent then just tell us what you are doing. It’s no different than the subsidies given to low income up north for heating oil.

  • October 1, 2007 at 1:50 am
    Observer says:
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    As one who worked for one of the largest flood marketing companies, I believe the government can fix this through a partnership with the private sector. The feds should require all homeowner, business property and dwelling fire insurers to offer federal flood as an endorsement to every property policy and require a signoff for rejection. The private carriers would adjust the losses (both wind and water), which is how the carriers currently make money. One payment is then made to the insured for both causes of loss and then the two (public and private) entities can fight it out as to what was wind and what was water – after the property owner is made whole. If the property owner rejects the coverage in writing then they have only themselves to blame.

  • October 1, 2007 at 2:06 am
    tom says:
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    Observer,
    Your analogy is good on paper and that is the way a partnership should work, both the flood policy and private ins (bop or ho3) coordinate to pay the claim. Then the fed program and private insurer hammer out the liability issue between the two. This would make the insured whole and take the attorney’s out of the process, so the insured can get back in business or their home built.
    I like the idea.

  • October 1, 2007 at 2:11 am
    Tinkerbell says:
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    Observer, What you suggest sounds like it might work. One question though, would the feds be subsidizing the wind rates like they do flood rates?
    There was a survey done several months back that showed that if each property insurance policy in the nation attached flood coverage to it for the maximum available limits, the premium for the policy would increase by only $28 to $50/year. However, I don’t know if a study such as this has been done for wind.

  • October 1, 2007 at 2:30 am
    Stat Guy says:
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    Tinkerbell:
    ….”There are no easy answers. The wind problem has not reached critical mass yet. However, given the insurance reform measure recently passed by the House, we are on our way to a federal wind program. I know most people take issue with this solution, there are many of who feel that something must be done. ” …sorry but there really is a simple answer: if you want to build a mansion in a flood or wind prone zone, make sure you think of everything, including, but not limited to, making sure you can AFFORD to insure it. If you can’t, then you can’t afford the whole package. But of course, the American way is to purchase homes we can’t make the mortgage on either (q.v. the sub-prime mess) so why should anyone have to purchase homes that they can afford?

  • October 1, 2007 at 3:06 am
    Tinkerbell says:
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    Stat Guy, I am on Long Island and one of my carriers is non-renewing all property policies in the county. Our agency has represented this carrier for 50 years. So the book is big. Coupled with these DNR’s is a shrinking property insurance market and ever rising premiums. For example, the expiring premium on a DNR policy is $991. The replacement premium is $3k+-. This is par for the course, not an anomaly. People cannot afford to go from $991 to $3k. These people don’t live on the beach, nor do they live in mansions. They live in the village; they are miles from the water. The reason the carrier is non-renewing all property policies is the windstorm exposure and the cost of reinsurance.

    Something needs to change.

  • October 1, 2007 at 3:45 am
    Observer says:
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    I’m not aware of any wind studies to determine a national premium load. Wind is a cause for concern in hurricanes zones, but if the concurrent causation clause continues to hold, I believe Wind will continue to be an insurable peril for the private sector – has been for years in the majority of the country.

  • October 1, 2007 at 6:45 am
    Stat Guy says:
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    Cap, Great post and spot on! the shame is that it won’t reach those who truly need to understand what the real issue is and THEN decide HOW to fix it. The mess in Florida is the biggest example of well-meaning people trying to help “helpless” people. I don’t doubt the motives but without understanding the reason, the response will always be off the mark. The vitroilic press doesn’t add anything of value to the debate either.

  • October 2, 2007 at 12:14 pm
    Stat Guy says:
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    Our reinsurance program is renewing at about 15% higher this year due to the expected increase in wind in the mid-atlantic and New England so I know what you are talking about. The problem is that your geographic area has been ignored in the models and forecasts for several years and now reinsurers want to catch up on that all at once. I know that the price is up and I am familiar with your neighborhood (my college roommate was from Lake Ronkonkoma and Smithtown. I also know that the proxmity to high value real estate in NYC makes the suburban areas high value real estate as well. But someone already said that it there is a price for living close to the beach, same as living on mountain tops in California, but that those intangibles are actually now a part of the price for the LOCATION. Location is what makes a two bedroom cape cod on Long Island an risk worth a half million bucks easy. We insure vehicles at Original Cost New and homes at Replacement cost, not how much you mortgaged. I do understand your plight, but I think that people are only now discovering that insurance was underpriced in the past and now after a couple of CATS, price needs to match exposure more closely. I am sorry that some people think it is government’s job to make an unfair proposition fair….as they say life’s a b**ch…

  • October 3, 2007 at 9:28 am
    Not for nothing says:
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    IF government has to get involved in private insurance, I would much rather it be to subsidize health insurance for children (although I have some opions about that toooo). Still think that might be a better idea.

  • November 26, 2007 at 5:48 am
    Tony says:
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    If you don’t live in a hurricane ravaged area and can’t get home owners insurance because the insurance companies had to pay out claims than you don’t understand.
    If the insurance companies don’t want the federal goverment to write wind than get back to the coast and write some affordable policies. Insurance companies are killing the economy along the coast by pulling out. They don’t want to write the policies than let the peoples goverment write them, or regulate insurance companies and force them to provide affordable insurance since the people are forced to purchase insurance when buying a home. I understand the large corporations run this country but the people still vote in the congress and senate. Everone that wants to change things needs to write there senator and congressman. The squeaky wheel gets greased first.



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