Sens. Clinton, Nelson Introduce Homeowners Defense Act to Address Cats

November 7, 2007

  • November 7, 2007 at 10:25 am
    Gill Fin says:
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    I’m with you. What I don’t understand is
    this….

    ‘The Consortium program would allow multiple states to pool their catastrophic risk in hopes of achieving an economy of scale and risk diversity that will lead to a lower cost of reinsurance than states could achieve independently.’

    What economy of scale? It seems to me insurance companies lately want to further and better underwrite in order to place specific risk with specific cost. Isn’t the Hillary/Nelson idea going backwards when it comes to placing risk?
    And I find it hard to believe that anyone is lining up to reinsure that area anyway. Thanks to our politicos who are not afraid to throw their weight around on issues they know nothing about.

  • November 7, 2007 at 11:22 am
    Mighty Joe Young says:
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    How can she truthfully say she will combat global terrorism when she and Bill pardoned the Puerto Rican FALN terrorists during the infamous “Midnight Pardons.” Hillary pardons terrorists, she won’t protect you against them. Google it and vote with your brain.

  • November 7, 2007 at 1:01 am
    Tom says:
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    Another terrible idea – making insurance cheap simply defers facing the hard decisions about appropriate use of coastal areas. Not to mention spreading the cost of the Florida beachfront risk over states like Nebraska, thus taxing Nebraska residents for the risks the Floridians CHOOSE to accept.

    Oh, and don’t tell me that Nebraska has tornados – of course they do, but on a bad day a tornado in Nebraska doesn’t cause one percent of the damage resulting from a Florida hurricane.

    And also don’t tell me that we pay for it anyway through federal disaster declarations and the NFIP. The fact is, the coastal residents are trying to leverage the country to pay their way out of an insurance pricing crisis largely of their own making. I don’t often agree with the Prez on anything, but his threat to veto this bill is right on target.

  • November 7, 2007 at 1:10 am
    Pat Beranger says:
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    Even if you like the idea, it’s tough to obtain support since the Florida Governor and Legislature have done everything wrong. If they were taking steps to 1. work with the industry 2. make coverage more available and affordable, and 3. mitigate risk, they would be in a much better position to garner support.

    How can you repeatedly make decisions that drive insurers out and increase risk and expect states behaving more rationally to bail you out?

  • November 7, 2007 at 1:16 am
    Scott Betz says:
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    What does Nebraska have to do with people living along the seaboard? The majority of US Citizens live close to the coast. Would you have them all move further inland? Good Idea! The reality is that they are there and the cost of insurance is reaching prohibitive levels. Spreading the burden over the coastal states and allowing for them to spread the risk by using economy of scale does make sense. The president might speak to his brother before he makes a drastic decision.

  • November 7, 2007 at 1:17 am
    Gotta Be Crazy says:
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    To think that either of these airheads can be trusted to come up with a workable solution to a complex problem requires a leap of faith that is unfathomable. What makes it even more scary is the thought that they may have worked together on this one.

  • November 7, 2007 at 1:26 am
    FL CSR says:
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    Sounds like Hillary is looking for votes in Florida, since she hasn’t done anything worth mentioning in New York.

  • November 7, 2007 at 1:28 am
    Wondering says:
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    When did the First Lady obtain the right to grant pardons?

  • November 7, 2007 at 1:30 am
    Dan Reynolds says:
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    is for the repeal of the National Firearms Act of 1934 (NFA) & Gun Control Act of 1968.

  • November 7, 2007 at 1:36 am
    Little Frog says:
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    … ever since she took out the mortgage on Bill’s manhood.

  • November 7, 2007 at 1:50 am
    nebcat says:
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    They are not any worse than the fine pair we have leading our country!!

  • November 7, 2007 at 2:01 am
    Cut the Crap says:
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    the same old communism they’ve been spreading for years.

  • November 7, 2007 at 2:04 am
    ad says:
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    Nebcat, you just keep on trying to convince yourself of that.

  • November 7, 2007 at 2:08 am
    Scott says:
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    I have noticed that the opinions that are against the idea tend to be from the “I hate Hillary” crowd and not much more on the pros and cons of the bill. Are there any real thoughts out there?

  • November 7, 2007 at 2:12 am
    Brian says:
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    Scott,
    The population is split between inland and coast. And, the way insurance companies charge premiums, they spread the risk or cost of it across all insureds.

  • November 7, 2007 at 2:14 am
    bob says:
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    good point, Scott, but most of us sane individuals get slightly insane at the thought of Hillary messing with laws affecting the insurance industry. bear with us: we are just human and are aware of what and who she is, and what she stands for. and besides hating Hillary, I hate the concept of the bill, too.

  • November 7, 2007 at 2:15 am
    ad says:
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    Brian, But they’re lending money to the states. Does that mean they will be reinsuring and pooling amongst states, the insurance companies or the state plans?

  • November 7, 2007 at 2:25 am
    caffiend says:
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    A point that people seriously seem to be missing here, “The Consortium program would ALLOW multiple states to pool their catastrophic risk…etc”

    Please note that ALLOW, this legislation does not say a State MUST put into this pool. I can see the coastal states that have a hurricane exposure putting into the pool but Nebraska will probably say no thanks.

    By the way, does Nebraska even have a wind pool? As they are not truely subject to any major natural disasters (meaning hurricanes), most insurance companies would probably not exclude Wind as a cause of loss.

  • November 7, 2007 at 2:34 am
    caffiend says:
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    On a side note, the article didn’t specify hurricanes… just Natural disasters. Do you think California would like to put their earthquake exposure into this pool? Or how about Hawaii’s volcanos and their tropical storms?

  • November 7, 2007 at 3:56 am
    Mary B. says:
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    Wondering, she never did. The post from Joe is just your typical neo-kkkon response from a hater with blinders on and no brains. Since Joe has knows nothing and has nothing productive or constructive to add it’s best to ignore his erronenous post.

  • November 7, 2007 at 4:00 am
    geoff says:
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    When I heard our own Barney Frank was going to solve the insurance availability crisis, I knew we could all rest more easily. Seriously, the problem began with taxpayer subsidized NFIP insurance to overdevelop our coasts. Continued government intervention will corrupt the natural pricing mechanism again: capital markets figured out how to price reinsurance and solve the capacity problems of two years ago. The problem today lies with people who moved to the coast under the false assumption that spread of risk means subsidizing their insurance costs by their inland neighbors. Here in MA, we have a huge problem with our FAIR Plan – largest, still fastest growing “company” in the state because of this government intervention. Let the markets solve this, lest it get worse again.

  • November 7, 2007 at 4:13 am
    WooWooWoo says:
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    Mary B.:

    1. Check spelling and syntax before posting.

    2. Don’t be led astray by misguided bimbos who seek nothing but power.

  • November 7, 2007 at 4:20 am
    caffiend says:
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    Umm… this is an insurance forum. Please lets have an intelligent discussion about the topic at hand.

    Otherwise please take your political hatreds & biases to a different forum that hosts such discussions.

  • November 7, 2007 at 4:23 am
    caffiend says:
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    See my prior comment to WooWooWoo, but I think it applies to everyone. Let’s keep this discussion insurance related and take the political talk elsewhere unless it relates.

    No Flame wars please.

  • November 7, 2007 at 4:36 am
    WooWooWoo says:
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    Point well taken as to the venue for comments.

    However, we as insurance professionals, and everyone else as consumers of insurance, have a great deal to gain/lose by the actions of elected representatives.

    Politicians play by different rules and adhere to different standards than does business: their goals, by and large, are re-election and advancement of sometimes misguided and disproven ideology; many will say or do that which is necessary to reach those goals. Political power is far different and more dangerous than economic power, if only because a consumer can choose to take his/her business elsewhere, while bad public policy is forever.

  • November 7, 2007 at 6:16 am
    SP says:
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    Maybe I missed somthing in the article about terrorists. But these posts seem to be way off the mark of a discussion of the article.

    Please keep your personal agendas, that have nothing to do with the articles, out of the discussion.

    Thanks.

  • November 7, 2007 at 6:35 am
    Scott says:
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    The capital markets have done a great job in the mortgage business. Do not always have blind trust in the market place. There are a lot of businesses that will do anything for a buck and have total disregard for the long term. The facts are that most of the population lives near and sometimes to near to the coast. They also live in river basins that flood and destroy. It seems to me that spreading the risk makes sense.

  • November 8, 2007 at 9:15 am
    another guy named Rick says:
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    ..Stabilization Program???

    While we focus on a plan to regionalize cat risks on a voluntary (I hope) basis, the Treasury will be free to recharge depleated state reinsurance programs after cat losses. One question–where does the “loan” come from? Why, it comes from the US Treasury, filled with tax dollars collected from across the entire USA. Of course the Treasury could also just print more money…..and stoke the fires of inflation.(pretty dramatic, eh?)

    While sitting through a Midwest winter, I am “warmed” by the knowledge that people in Florida/Tx/La/MS/Al etc will be able to rebuild on the coast.

    BTW, I don’t hate Hillary, however, for those of you old enough to have voted for Bill, do you not remember we elected them as a ‘team’?? Was that not why Hillary was “appointed” to design and jam an ill conceived health care plan through a reluctant Congress? If you don’t think she was sitting right next to Bill while the pardons were signed, you my friend are sadly mistaken.

  • November 8, 2007 at 10:16 am
    Nebraskan says:
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    I was truly going to stay out of this because i do not live on the coast…but when i read what caffeind wrote…

    “By the way, does Nebraska even have a wind pool? As they are not truely subject to any major natural disasters ”

    you have got to be kidding me. right? you never watch the news? you live in a cave that is on the coast?

    seriously?

    it takes a uneducated person to think hurricanes are the only natural disaster on the planet.

  • November 8, 2007 at 10:18 am
    Nebraskan says:
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    and please, please, PLEASE caffeind, do not ask other people to post intelligently when you yourself live in a box.

  • November 8, 2007 at 10:53 am
    Fred White says:
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    I see a couple of major problems with this idea. First, the pools probably will be set up a a peril specific basis; i.e., hurricane/flood, earthquake, etc. It seeks to me that the only states voluntarily participating in a hurrican/flood pool will likely be those with huge, unmanaged exposures–i.e., LA, FL, AL, MS and perhaps GA and NC. Likewise for earthquake (CA, HI,..). Why would any state with a controlled exposure choose to participate.
    The second issue is that a “pooling” of similar exposures in a concentrated area does little to spread or diversify the risk since in most cases, most will suffer at the same time. This is kind of like health insurance–more insureds just mean more losses.
    The last issue is that of capability. I seriously doubt that states currently need federal approval to form a multi-state pool for cat risks. It probably does, however, require enabling legislation at the state level to permit that state to participate. Once enough states “permit” themselves to participate and agree to participate, any CPCU worth his/her designation should be albe to write a reciprocal risk sharing agreement for the risk. Again, the real problems are whether or not you have really diversified the risk and whether or not you can actually get affordable re-insurance.

    Lastly, I agree that I don’t wnat my state to be forced to participate in a pool like this.

  • November 8, 2007 at 11:31 am
    SouthernBelle says:
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    I seem to recall that in the definition of insurance spreading the risks is an important component. With all of the Natural Disasters occuring yearly (i.e.
    Floods, Fires, Earthquakes, Tornadoes, Down Bursts, Straight Line winds, NorEasterns (?spelling), Hurricanes, Drought, and etc., it seems to me that every state is effected. Also, keep in mind that higher rates= higher cost of living,which eventually is translated into higher prices for consumer goods.
    It’s a vicious cycle. And if insurance
    premiums keep getting higher, and the deductibles increasing to ridiculous amounts, our customers are going to reach a point where they refuse to give up that much of their income for a possible loss.
    The industry is going to price themselves out of business in some areas. We need a stabalization factor. The insurance industry needs to find ways to offset the costs. At least this bill has openned a dialog on change and solutions.

  • November 8, 2007 at 11:48 am
    Scott says:
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    Why do you suppose the BIG I thinks it will work? For those that are put off by the authors of the bill maybe if McCain & Dole had been smart enough to write and sponsor this it would be more acceptable. It seems that everyone is focused on ‘Canes and coastal flooding. Flooding is a cat disaster in many inland states. Ice storms like the one in Okla this year and the fire storms in Ca. are just examples of other cats’. We are all affected and when some companies pull out of an area to avoid risk something has to be done. If all the ins companies pulled out of the coastal areas would it make more sense if 150million folks moved to Kansas?

  • November 8, 2007 at 11:55 am
    Fred White says:
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    The Big I probably doesn’t really think it will work as it is advertised. What the Big I likes about it probably it that it virtually guarantees that insurance will be easily available and easy to sell. It’s all about the market, sales and commissions!

    As for inland floods, etc., again, I say that, unless the pools are peril-specific, you probably won’t get a lot of voluntary takers. And the takers will not be really diversifying the risk.

  • November 8, 2007 at 11:58 am
    SP says:
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    SouthernBelle is right. Something has to be done one way or another. She is also right in saying that eventually the premiums will be so high that people will start making the choice of insurance or none.

    I don’t agree that any of the States be forced to participate, however if a State does not participate they also cannot ask for the help when they have cat losses and insurance companies stop writing there also.

    The risk needs to be spread out, the best way to do that is still very unclear. It does need to happen sooner, rather than later. As the cost of building materials, labor, property values, etc increase the cat’s will be bigger and bigger. Insurance companies are in it to make money, just like the rest of us. If they can’t raise rates to mitigate the losses they will leave States. And the choices will become smaller and smaller.

  • November 8, 2007 at 12:50 pm
    Stat Guy says:
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    When he summed it up…..:The fact is, the coastal residents are trying to leverage the country to pay their way out of an insurance pricing crisis largely of their own making.” This is what my cohorts in legal have been saying all along; consider that companies, like ours, have been paying assessments for Florida exposure even though we don’t even write homeowners, because the politicos in Tallahassee find biting the bullet is too much to ask of Florida homeowners, who want something (wind, hurricane coverage) for nothing. this program is nothing but an entitlement which benefits too few at the expense of the many, NO MATTER how you slice it!

  • November 8, 2007 at 1:00 am
    caffiend says:
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    Nebraskan,
    I’m quite aware that the world is subject to quite a few things that are natural disasters, BUT Nebraska is generally not subject to Volcanos, Tsunamis, Earthquakes (correct me if I’m wrong), Hurricanes. I am also of the belief that Lahars, Avalanches, Lightning strikes, and tornados are too localized to be considered a Major disaster.

    Let me ask that question slightly differently. What Major natural disasters (think 100s of millions of dollars damage done) is Nebraska subject to that is covered by standard HO & BOP policies (excluding flood, as it is subsidized by the Federal government)? And are these disasters subject to exclusion by endorsement by the insurance companies frequently enough that a Cat Pool has been set up by the State of Nebraska to cover said peril?

    Also I asked DO they have a wind pool (or anything similar). If they do please feel free to correct me.

    The reason why I ask is that in a fair number of coastal states, Wind/Hail coverage is an excluded peril by a majority of HO companies for coastal territories. In North Carolina for instance it is quite difficult to find a standard carrier east of I-95 that does cover wind at a reasonable price. As a result two policies are frequently written; A primary Hazard policy (under an HO or DP policy form), and a secondary Wind/Hail policy written thru the North Carolina Insurance Underwriting Association (aka the NCIUA, or Beach plan).

    As well, If you take offense at me asking that the discussion be polite (I was not the one calling Clinton a “bimbo”, nor insinuating that someone lives in a cave), or have an issue with what I have said; please make your counterpoint with some dignity and not by trying to insult my intelligence.

  • November 8, 2007 at 1:20 am
    Nebraskan says:
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    I suppose I had a knee-jerk reaction, but quite truthfully, the ONLY (in my opinion) natural disaster East Coasters deal with annually are hurricanes. and well, i lived in japan for a year and a half and lived thru some of the worst typhoons (same as a hurricaine but generated out of the south pacific as opposed to the carribbean) they have seen since world war II. and truth be told…i’ll take a hurricane/typhoon any day of the week over a tornado.

    Also, tornados have been known to generate all over the world.

    from an insurance perspective, i won’t argue with you because i will openly admit, i am not as knowledgeable as you. BUT PLEASE, do not sit here and tell me and others that the devastation of a tornado which ANNUALLY destroys homes and towns is not as significant as a hurricane. At least with a hurricane, you know it’s coming, you know you can leave and potentially save your life and some of your belongings. Tornado victims aren’t afforded that right.

    I’m so tired of people on the coast playing the victim card, and frankly you do. i don’t care if you want to live there, that’s your choice, but do not ever state that you are subject to a worse fate because of it. that’s all.

  • November 8, 2007 at 2:12 am
    caffiend says:
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    You do have a point on the tornados, I find it most unfortunate that middle America sees more in a month then most countries do in a year. I also agree that you do not need to help subsidize coastal hurricane risks… unless you move into a coastal region ;)

    I do believe though, that the Cat risk pool is a good idea for disaster prone areas such as the Southeastern states and California (I include California in this due to earthquakes). However, I am of the belief that your state would not be very likely enter into a National Cat pool, nor do I think it is a good idea for you to do so, as your overall exposure to such major losses is minimal.

    On the other hand, I also see the point of some of the others here that the Federal Loan/bailout of the individual state’s Cat pools is not a good idea.

  • November 8, 2007 at 2:17 am
    Ratemaker says:
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    While a tornado may be every bit as devastating as a hurricane to those affected by it, from an insurer’s standpoint it is a far easier event to deal with.

    From any given incident, there are usually fewer claimants after a tornado than after a hurricane. Also, the damage is more clear-cut — no Wind vs. Water arguments. It’s easier to adjust and settle the claim.

    Also, the more regular occurrence of tornados means that it is FAR easier to determine an appropriate rate for coverage in Tornado Alley than it is for the Gulf Coast.

    Hailstorms in Nebraska give insurers more headaches than tornados.

  • November 8, 2007 at 3:11 am
    Nebraskan says:
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    And I agree with pretty much all of what you just said. :) I can see where coastal states would get together and have a catastrophe fund, but i can also see why Nebraska wouldn’t participate (although I know the midwest gets large chunks of change from the government for disasters, so maybe it would be an idea to have neb participate).

    and no offense to you, I just find it tiresome when people throw the midwest around as an example when they have no idea of what goes on here. it floods, the farmers suffer severe droughts, tornadoes can wipe out a city in a matter of minutes…but for some reason…that’s not good enough for the east/west coast to matter.

    not to sound idealistic, but sometimes, i wish, in these circumstances, we would look at things from the perspective of the country as a whole not as each individual state.

    Thanks for the “conversation” caffeind. Have a great day!

  • November 8, 2007 at 3:55 am
    Mary B. says:
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    WWWW – get a life. Obviously you have nothing important to add except pointing out one misspelled word. I am quaking in my boots. Sucks to be you.

  • November 12, 2007 at 1:48 am
    New Democrat says:
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    It’s going to be great having a female President. Of course, it will take years to rid ourselves of the mess we’re in with the current bunch! We love you Hillary.

  • November 12, 2007 at 2:07 am
    juan paulino says:
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    Way to go Hillary, I can’t wait for you to become president to clean up the mess that the Republic are leaving behind.

  • November 13, 2007 at 7:31 am
    ad says:
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    She’ll do just great, as long as every event in the White House is scripted.

  • November 21, 2007 at 8:53 am
    JT says:
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    The people that are against this idea are assuming there is some tax involved. They simply don’t understand the concept. Further, they are not Americans. The first word in United States is United. Just for the record, tornado’s could cause 10 times the devistation a hurricane does due to wind speeds.320 mph verses 150 mph.

  • November 23, 2007 at 10:33 am
    JT says:
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    Remember , If we rationalize statistics, we will always have problems. What price do we put on human lives and safety?

  • November 24, 2007 at 12:00 pm
    JT says:
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    The plan is sound. Human nature reflects fear of change. This is a change for the better. Now is the time to stand together. Unity as Americans.



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