Ellen, your post makes my point exactly. The flood program is a disaster. There is only one reason why big insurance companies want the government involved in wind cover for the coast…MONEY. The big companies with BIG exposure want to offload the exposures they have on the REST of us via the govt AND still be able to do biz in those states.
I’m sorry but your position with respects to the govt subsidy for coastal states is pretty weak. The flood program the govt has in place is a disaster. After Katrinta, the program ran a $ 17 BILLION deficit. So basically, you want the rest of the country to send their tax dollars to the coastal states so they can rest easy that they are insured for wind. You and I both know the rates would NEVER be enough to cover the losses (as they are now). This is why you see the big players in personal lines whining about a national program. The big companies want it both ways. They want to do business in those states without the risk of paying out big after THE BIG ONE. And I wonder where you live? I am not paying my tax dollars for the perils that coastal state homeowners may endure.
All too often we read about helping secure property coverage for homeowners, which is obviously important, but commercial risks are also important, lets not forget them. In Florida, commercial risks in coastal counties, not just ocean-front condos, have had a difficult to impossible task in finding coverage at any price – it is just beginning to ease, thanks to a quiet year in 2007.
Why should the taxpayer in the midwest and west pay for wind cover for the Southeast and East coast? A Federal reinsurance program? What a crock. This is code for taxpayer funded program. The reason FL and other states in the south are a mess with respects to wind cover is because they don’t charge enough for it, period.
The big carriers like these two (and others that don’t need to be named) want all taxpayers to subsidize the coastal states whether you live in IL, IN or IA. This is BS.
If such a program were “actuarially sound”, it wouldn’t be a bail-out. In theory, the government could provide the reinsurance priced at cost, without the load for profit margin needed by the private market.
The tricky bit is getting the politicians to allow the “actuarially sound” rates, and adequate values, to be used. Existing government pool coverages don’t appear to be actuarially sound (and therefore subsidized) so there would likely be pain for some/many to have them replaced.
Getting the politicians to understand and buy in to what actuarial sound rates are is probably the largest obstacle. They know the flood program is not actuarially sound, but there are far too many politicians fighting against raising the rates for certain risks. With the pending House and Senate bills some of this will be addressed – if passed………….
The problem with actuarially sound rates, especially as it relates to wind and flood exposures, is that the average, Main Street America homeowner would be priced out of the insurance market entirely. They would not be able to afford to insure their homes. While I understand that there are many exceedingly wealthy people who own properties on or near the coast, who can easily afford to buy insurance or choose to self-insure their asset, there are many more who own homes near the coast that are truly Main Street Americans; they are not at all wealthy and could not afford to pay actuarially sound rates. Is the suggested ‘4 pillars’ program designed to address this issue?
How about they buy a house on a property they can afford to keep and insure properly. It’s not my job to subsidize their insurance because they choose to live in a coastal property. Move away from sunny Florida and you wont have the problem
We need to find a solution for personal AND commercial.
My sister & brother-in-law own a business in Florida. They bought property, built their own building and moved in. Before they moved from the rental space their broker told them they would not write the new location. Since the loation has a different address they had to reunderwrite the risk and due to “coastal restrictions” they could not write them. Their new location is three blocks from their old location and is fire resistive. They live in Orlando which is in-land,
Luckily one of my MGA has an office in Florida and we were able to obtain coverage for them.
This was bad news for their old broker because they got so upset over not being able to get any help from them they moved thier auto, home and umbrella to the new agent. Their two sons who also used the same old agent them moved thier business.
This industry needs to come togther and find some solutions.
I find it very interesting that there are so many posts on IJ where the poster says the solution to a problem is to move…like from sunny Fl or CA because they have fires. I wonder if these people have families and roots where they are.
I have no issue with government evaluating public policy to subsidize insurance as part of a welfare package for those with demonstrable financial need, but I think that debate should be separated from the cost of the insurance.
Having luxury beachfront condos accessing subsidized capacity doesn’t make sense to me. At cost, maybe, below cost I take issue.
I agree with you there…and with my fellow bloggers who feel there needs to be a workable solution. Moving/relocating is not the answer. Catastrophes of different stripes affect different areas…Wildfires & EQ’s in CA, hurricanes along the coast, flooding in the midwest (and lots of other places too), etal. Relocating just gives you another set of potential catastrophes to deal with. I believe that the peril of windstorm will get to the point where there will be no alternative but federal subsidization, like the peril of flood. The private sector will no longer be able to manage it. We are well on our way.
For all you bloggers who think otherwise, support your position.
Peony, I still don’t understand why someone should be subsidized on their insurance. Rates should reflect the risk. The markets will factor in the costs to own, and adjust the property values accordingly. In your example, if the property is the homestead, I suspect, even with property values down, the value is many multiples of the owner’s original cost of the property so there is plenty of equity to borrow against if they so choose.
I would like to own a lake front home in my area, however I cannot afford it. How about you subsidize my purchase and help me pay for it? A person should only live or own property in areas that they can afford.
I wonder how much the coastal areas puts into the taxes for this country. Since about 50% of the population lives within a 100 miles from the coast and about 80% of the business commerce is conducted there. How about the inland areas send more tax dollars to Washington. Would that make sense? This is a national problem!
Chuck, you completely miss the point. Its not that the “big companies” are looking for a bail our or hand out. They are trying to figure out how to provide a market. The alternative for them is to protect their stakeholders and exit the market and let everyone fend for themselves.
I agree with a few of the posters that it would be great to live in Key West, but if I do, I should know the area is prone to hurricane and other issues not common in Iowa. Thats a no brainer.
Flooding is similar. If you live near a river (in the midwest) with the scenic view, the boat and dock, you should expect that you are open to flooding compared to the guy on the bluff over looking your home. I don’t really agree with the govt helping those folks either, but we do live in civilized world.. most of the time.
As far as kens remark about the taxes generated in the coastal areas versus inland..I’m ok with paying more taxes if you are willing to grow your own food and raise your own beef/pork. Where do you think much of the exported product comes from that is shipped from the coast?
This was a society of giving when you can and taking what you need..Alas no more. We have created a nation of takers.
The whole issue is about doing what is right for an insured. There is an exposure that needs to be covered. How do we do that while keeping the insurance company from going belly up? As far as “big insurance” trying to make money.. sure they are, since when did any of them become non-profits? Any agents out there looking to lose money? I didn’t think so.
All of us are upset with the flooding that happened in the Midwest, however, your example of a factory flooding with parts shortages means what? I would think this large company would have a very solid insurance program that included flood and BI loss due to a flood. The Fed gov’t and the taxpayers would not make their situation any better because they have most likely insured their property against this loss.
I’m sorry, I missed the people living on the river with a dock and a view. What I saw was a whole lot of farmers losing everything. No views. No docks. No boats. Just fields. Small houses that had been standing for generations washed into the next state. People who were barely getting by, like the rest of us in this economy.
Not everyone in Fla lives on the water. Donald Trump’s $100M estate that he just sold and more like it take up most of the waterfront in Fla. They aren’t faltering in this economy. Those homes (mansions) are selling left and right. Working class lives inland. Those are the people that can’t afford to pay millions to CEO salaries. (AIG if you need ‘support’)
So, to sum up the opinion of some on this board, people who can’t afford to live in Ca, Fl, Indiana, Ohio, Kansas, Mississippi, Alabama, La, Georgia, S Carolina, N Carolina, Texas, Va, NY, Mass, Pa, etc should live in—-
I’m stuck. I can’t think of a state that HASN’T had a flood, fire, snowstorm, hurricane, or tornado disaster in recent history.
Arizona? Maybe all 500B of us should go there.
This is NOT just a coastal issue. Disasters effect every state. Pick your favorite and move there.
AZ may not be the place to flock to avoid disasters. Since I have moved here in 1996, we have had an earthquake (3.0), two tropical storms (or remnants thereof), flash floods (just this Monday for example) and monsoon storms with winds up to 100 mph. Not to mention the 110+ degrees in the summer!
The article sounds like the insurance agents associations are endorsing their BIG Government Program, but as I understand it the association favors a pre-event bond and a post event bonding program to cover these types of losses.
All insurance in the area in question would be at a very slight increased rate to pay for the pre-event bonding.( People in high risk areas should pay a little more for the exposure…this program would raise their rates about 3%.) If, and only if, a large storm occurred then the entire state would have a modest increase for a matter of two to three years to pay for the post event bonding program. This would seem a much more favorable solution than another government agency and the tax base necessary to fund it on an ongoing basis. However the bonding program would not have the deals attached that the program and government interaction would have….so the simple solution will probably not be used…not enough room in it for the graft and greed.
After several years of hearing all the sides of the coastal, NFIP, windstorm, firestorm debates, my opinion hasn’t changed:
1. The Coastal Issue is over-rated….Big Insurance Co’s want the cheapest and easy way out. They are cream skimmers with the incentive to put their stockholders and their own performance first (sometimes not in that order).
2. Insurance is a market driven business which is commonly driven by performance, with stockholders, eventually and usually slowly driving decisions.
3. Insurance Co’s usually go with the pack; heaven forbid they get left behind in following the latest trend (no matter how stupid or dumb or public relations damaging); once one company starts they all seem to follow (credit scoring, non-renewal of coastal, denial of wind/flood claims, high wind deductibles/exclusions, going paperless by directing agents go into the web site and print off their own copy (now that’s efficiency).
4. There may come a time where no growth in the industry will take place, as a result of the actions previously taken and/or newly emerging markets. It may be already occurring at some companies. This should spur stockholder intiatives to put pressure on the managements of a few companies (Travelers)to come up with some real solutions to the many concerns many IJ bloggers made concerning responsible decisions that need to be made; they should have been addressed years ago.
5. We need a Steve Jobs or a Bill Gates -type of individual to give this industry a kick in the pants. How about some real leadership Mr. Fishman and Mr. Rasmussen?
Floods, hurricanes, tornadoes….some devastating natural occurrence is happening all over our country. The location of these disasters is not the issue. The issue is that rates should be set based on the risk of these occurrences and level of coverage and not subsidized by other taxpayers.
The flood insurance program is a mess. Rates should be raised to be commiserate with the risk and coverage. Same for coastal properties. Same for all insurance programs. The market should be allowed to function.
How do you determine the risk? Memphis had more (and stronger) tornados this year then ever before.
Arizona had earthquakes- Reno even had earthquakes. Not much of a history of that.
The entire world has seen more disasters on broader scales then ever before in the last few years.
I’m not being argumentative. Just asking.
My honest opinion is that Federal Funds should be used for our own people and cities before it’s sent abroad. I know a lot of people on this board don’t want to help the flood victims, or hurricane victims, or any other natural disaster victims in our country. BUT- we do end up paying in one way or other.
The Cummings Factory flooded. Parts are now more expensive and out of stock all over the country for heavy equipment and diesel engines. I’d rather see the Feds help get them up and running as quickly as possible so the 50 or so industries that depend on them stay solvent. Cost us all a lot less in the long run.
No matter what happens, we’re all going to pay. Either share the risk of insurance, share the cost of rebuilding, or absorb the cost to the economy.
I’m just saying that sharing the cost of insurance would be cheapest way to go for the average person.
I don’t agree with your position. The reason flood insurance is subsidized by the feds in the first place is b/c the exposure is just too large for the private market. When flooding occurs, it is catastrophic in that it affects many, many properties at the same time. If the peril of flood was not subsidized & private carriers were forced to provide it, many of them that did enter the flood market (& scant few would) would be completely bankrupt after the first major flood. The private sector could not charge nearly enough to cover losses b/c if the rates were actuarially sound, very few would be able to afford it. I agree, the fed program needs some overhauling, but doing away with it is not the answer. The peril of wind will follow suit in due time.
It was just what I said. Yes, Cummings will get their factory up and running, hopefully. (with the economy in the condition it’s in, who really knows) The point is that the economy is effected by these disasters in one way or another. It’s a snowball effect.
Look at La after Katrina. Yes, I’ve heard all the arguements that the people there should have had insurance, they should have left, they should have done a thousand things to avoid the situation they ended up in. But they didn’t. So, we, the taxpayers, foot the bill. Would have been cheaper in the long run to subsidize their flood insurance and rebuild then to just hand out money, trailers, transportation as we have done for the last 2 years.
(Would have been a lot cheaper to just fix the levees in the first place, but since our infrastructure is the last place anyone wants to spend money the bridges collapse and the levees fail all over the country)
A federal disaster plan is the best our gov’t can come up with. Not saying much, I know. But I’d rather see subsidized premiums with a sound reinsurance plan then billions spent on ‘handouts’ after the fact. Structured correctly, it would save millions in the long run. Millions we have to pay as taxpayers.
In one the answers I heard “Share THe Risk”
That is exactly what the pre event bonding and post event bonding programs do, and I might add without the Federal Government having to set up another agency and federal funding mechanism…Does anybody get it…We can take care of ourselves on a State to State basis without big brother, and at very little expense and with no appreciable waste.
Now I know you either didn’t read our didn’t understand what I said. I oppose the Travelers and Nationwide Plan. So does the IIAT Texas. The plan I referred to would be administered by the State, not the companies. The Pre Event Bond would not be a Federal Program and would not be persae an insurance policy, but a mechanism to put the money into a bonding program that would cover the losses. The rates to cover the bond program would be of a short duration and would be at minimal cost. First it would be borne(Pre Event) by the people living in the storm prone areas and then on a (Post Event Basis) after a storm took place. It would cost about 3% of current rates,so $30.00 on a person paying $1,000.00 for insurance, and then only for a limited amount of time. This would not be a company program or a bloated federal program. Hope you are beginning to see the light.
So what you’re saying is that the exposure would be handled on the state level and the expense borne only by those who suffer losses? Each state who has the potential for catastrophic loss would have their own program to handle it? And a different program for each type of loss, like flood, wind, EQ, etal? How do you know how much to charge if you don’t know in advance the amount of the catastrophe or where it will occur?
Fl is trying to do that right now. Bonds are their one size fits all answer.
Your 3% is a very unrealistic amount. A large number of states are already in the aftermath of an event, so trying to create a bond program for furture losses while trying to recover from current situations would drive the cost to more like 10% to 25%. (Fl has faced 125% rate increases and are still fighting more 50% increase requests)
As I said before, IF the states could do it on their own, the NFS wouldn’t have to exist.
NC Wind Policy from Travlers would not cover any of my damages during Irene. $19,000 deductible is crazy. If I had that much money I would not need the Wind Policy.
Ellen, your post makes my point exactly. The flood program is a disaster. There is only one reason why big insurance companies want the government involved in wind cover for the coast…MONEY. The big companies with BIG exposure want to offload the exposures they have on the REST of us via the govt AND still be able to do biz in those states.
I’m sorry but your position with respects to the govt subsidy for coastal states is pretty weak. The flood program the govt has in place is a disaster. After Katrinta, the program ran a $ 17 BILLION deficit. So basically, you want the rest of the country to send their tax dollars to the coastal states so they can rest easy that they are insured for wind. You and I both know the rates would NEVER be enough to cover the losses (as they are now). This is why you see the big players in personal lines whining about a national program. The big companies want it both ways. They want to do business in those states without the risk of paying out big after THE BIG ONE. And I wonder where you live? I am not paying my tax dollars for the perils that coastal state homeowners may endure.
Is commercial really an issue? We have plenty of commercial property capacity here in coastal Texas…
All too often we read about helping secure property coverage for homeowners, which is obviously important, but commercial risks are also important, lets not forget them. In Florida, commercial risks in coastal counties, not just ocean-front condos, have had a difficult to impossible task in finding coverage at any price – it is just beginning to ease, thanks to a quiet year in 2007.
Why should the taxpayer in the midwest and west pay for wind cover for the Southeast and East coast? A Federal reinsurance program? What a crock. This is code for taxpayer funded program. The reason FL and other states in the south are a mess with respects to wind cover is because they don’t charge enough for it, period.
The big carriers like these two (and others that don’t need to be named) want all taxpayers to subsidize the coastal states whether you live in IL, IN or IA. This is BS.
Chuck, is this the same concept where the taxpayers will be bailing out all the people that did not have flood insurance in the midwest?
If such a program were “actuarially sound”, it wouldn’t be a bail-out. In theory, the government could provide the reinsurance priced at cost, without the load for profit margin needed by the private market.
The tricky bit is getting the politicians to allow the “actuarially sound” rates, and adequate values, to be used. Existing government pool coverages don’t appear to be actuarially sound (and therefore subsidized) so there would likely be pain for some/many to have them replaced.
Getting the politicians to understand and buy in to what actuarial sound rates are is probably the largest obstacle. They know the flood program is not actuarially sound, but there are far too many politicians fighting against raising the rates for certain risks. With the pending House and Senate bills some of this will be addressed – if passed………….
The problem with actuarially sound rates, especially as it relates to wind and flood exposures, is that the average, Main Street America homeowner would be priced out of the insurance market entirely. They would not be able to afford to insure their homes. While I understand that there are many exceedingly wealthy people who own properties on or near the coast, who can easily afford to buy insurance or choose to self-insure their asset, there are many more who own homes near the coast that are truly Main Street Americans; they are not at all wealthy and could not afford to pay actuarially sound rates. Is the suggested ‘4 pillars’ program designed to address this issue?
How about they buy a house on a property they can afford to keep and insure properly. It’s not my job to subsidize their insurance because they choose to live in a coastal property. Move away from sunny Florida and you wont have the problem
Many of these homes are family homesteads, inherited from the deceased parents.
We need to find a solution for personal AND commercial.
My sister & brother-in-law own a business in Florida. They bought property, built their own building and moved in. Before they moved from the rental space their broker told them they would not write the new location. Since the loation has a different address they had to reunderwrite the risk and due to “coastal restrictions” they could not write them. Their new location is three blocks from their old location and is fire resistive. They live in Orlando which is in-land,
Luckily one of my MGA has an office in Florida and we were able to obtain coverage for them.
This was bad news for their old broker because they got so upset over not being able to get any help from them they moved thier auto, home and umbrella to the new agent. Their two sons who also used the same old agent them moved thier business.
This industry needs to come togther and find some solutions.
I find it very interesting that there are so many posts on IJ where the poster says the solution to a problem is to move…like from sunny Fl or CA because they have fires. I wonder if these people have families and roots where they are.
I have no issue with government evaluating public policy to subsidize insurance as part of a welfare package for those with demonstrable financial need, but I think that debate should be separated from the cost of the insurance.
Having luxury beachfront condos accessing subsidized capacity doesn’t make sense to me. At cost, maybe, below cost I take issue.
Sounds like they want to privatize the profist but socialize the risks.
I agree with you there…and with my fellow bloggers who feel there needs to be a workable solution. Moving/relocating is not the answer. Catastrophes of different stripes affect different areas…Wildfires & EQ’s in CA, hurricanes along the coast, flooding in the midwest (and lots of other places too), etal. Relocating just gives you another set of potential catastrophes to deal with. I believe that the peril of windstorm will get to the point where there will be no alternative but federal subsidization, like the peril of flood. The private sector will no longer be able to manage it. We are well on our way.
For all you bloggers who think otherwise, support your position.
Like you did….
Peony, I still don’t understand why someone should be subsidized on their insurance. Rates should reflect the risk. The markets will factor in the costs to own, and adjust the property values accordingly. In your example, if the property is the homestead, I suspect, even with property values down, the value is many multiples of the owner’s original cost of the property so there is plenty of equity to borrow against if they so choose.
I would like to own a lake front home in my area, however I cannot afford it. How about you subsidize my purchase and help me pay for it? A person should only live or own property in areas that they can afford.
I wonder how much the coastal areas puts into the taxes for this country. Since about 50% of the population lives within a 100 miles from the coast and about 80% of the business commerce is conducted there. How about the inland areas send more tax dollars to Washington. Would that make sense? This is a national problem!
1. Curious, why only homeowners and not commercial as well?
2. The issues of underinsurance and exposure data quality also need to be addressed.
Chuck, you completely miss the point. Its not that the “big companies” are looking for a bail our or hand out. They are trying to figure out how to provide a market. The alternative for them is to protect their stakeholders and exit the market and let everyone fend for themselves.
I agree with a few of the posters that it would be great to live in Key West, but if I do, I should know the area is prone to hurricane and other issues not common in Iowa. Thats a no brainer.
Flooding is similar. If you live near a river (in the midwest) with the scenic view, the boat and dock, you should expect that you are open to flooding compared to the guy on the bluff over looking your home. I don’t really agree with the govt helping those folks either, but we do live in civilized world.. most of the time.
As far as kens remark about the taxes generated in the coastal areas versus inland..I’m ok with paying more taxes if you are willing to grow your own food and raise your own beef/pork. Where do you think much of the exported product comes from that is shipped from the coast?
This was a society of giving when you can and taking what you need..Alas no more. We have created a nation of takers.
The whole issue is about doing what is right for an insured. There is an exposure that needs to be covered. How do we do that while keeping the insurance company from going belly up? As far as “big insurance” trying to make money.. sure they are, since when did any of them become non-profits? Any agents out there looking to lose money? I didn’t think so.
Dawn,
All of us are upset with the flooding that happened in the Midwest, however, your example of a factory flooding with parts shortages means what? I would think this large company would have a very solid insurance program that included flood and BI loss due to a flood. The Fed gov’t and the taxpayers would not make their situation any better because they have most likely insured their property against this loss.
I’m sorry, I missed the people living on the river with a dock and a view. What I saw was a whole lot of farmers losing everything. No views. No docks. No boats. Just fields. Small houses that had been standing for generations washed into the next state. People who were barely getting by, like the rest of us in this economy.
Not everyone in Fla lives on the water. Donald Trump’s $100M estate that he just sold and more like it take up most of the waterfront in Fla. They aren’t faltering in this economy. Those homes (mansions) are selling left and right. Working class lives inland. Those are the people that can’t afford to pay millions to CEO salaries. (AIG if you need ‘support’)
So, to sum up the opinion of some on this board, people who can’t afford to live in Ca, Fl, Indiana, Ohio, Kansas, Mississippi, Alabama, La, Georgia, S Carolina, N Carolina, Texas, Va, NY, Mass, Pa, etc should live in—-
I’m stuck. I can’t think of a state that HASN’T had a flood, fire, snowstorm, hurricane, or tornado disaster in recent history.
Arizona? Maybe all 500B of us should go there.
This is NOT just a coastal issue. Disasters effect every state. Pick your favorite and move there.
AZ may not be the place to flock to avoid disasters. Since I have moved here in 1996, we have had an earthquake (3.0), two tropical storms (or remnants thereof), flash floods (just this Monday for example) and monsoon storms with winds up to 100 mph. Not to mention the 110+ degrees in the summer!
But then come October…..
The article sounds like the insurance agents associations are endorsing their BIG Government Program, but as I understand it the association favors a pre-event bond and a post event bonding program to cover these types of losses.
All insurance in the area in question would be at a very slight increased rate to pay for the pre-event bonding.( People in high risk areas should pay a little more for the exposure…this program would raise their rates about 3%.) If, and only if, a large storm occurred then the entire state would have a modest increase for a matter of two to three years to pay for the post event bonding program. This would seem a much more favorable solution than another government agency and the tax base necessary to fund it on an ongoing basis. However the bonding program would not have the deals attached that the program and government interaction would have….so the simple solution will probably not be used…not enough room in it for the graft and greed.
After several years of hearing all the sides of the coastal, NFIP, windstorm, firestorm debates, my opinion hasn’t changed:
1. The Coastal Issue is over-rated….Big Insurance Co’s want the cheapest and easy way out. They are cream skimmers with the incentive to put their stockholders and their own performance first (sometimes not in that order).
2. Insurance is a market driven business which is commonly driven by performance, with stockholders, eventually and usually slowly driving decisions.
3. Insurance Co’s usually go with the pack; heaven forbid they get left behind in following the latest trend (no matter how stupid or dumb or public relations damaging); once one company starts they all seem to follow (credit scoring, non-renewal of coastal, denial of wind/flood claims, high wind deductibles/exclusions, going paperless by directing agents go into the web site and print off their own copy (now that’s efficiency).
4. There may come a time where no growth in the industry will take place, as a result of the actions previously taken and/or newly emerging markets. It may be already occurring at some companies. This should spur stockholder intiatives to put pressure on the managements of a few companies (Travelers)to come up with some real solutions to the many concerns many IJ bloggers made concerning responsible decisions that need to be made; they should have been addressed years ago.
5. We need a Steve Jobs or a Bill Gates -type of individual to give this industry a kick in the pants. How about some real leadership Mr. Fishman and Mr. Rasmussen?
Floods, hurricanes, tornadoes….some devastating natural occurrence is happening all over our country. The location of these disasters is not the issue. The issue is that rates should be set based on the risk of these occurrences and level of coverage and not subsidized by other taxpayers.
The flood insurance program is a mess. Rates should be raised to be commiserate with the risk and coverage. Same for coastal properties. Same for all insurance programs. The market should be allowed to function.
How do you determine the risk? Memphis had more (and stronger) tornados this year then ever before.
Arizona had earthquakes- Reno even had earthquakes. Not much of a history of that.
The entire world has seen more disasters on broader scales then ever before in the last few years.
I’m not being argumentative. Just asking.
My honest opinion is that Federal Funds should be used for our own people and cities before it’s sent abroad. I know a lot of people on this board don’t want to help the flood victims, or hurricane victims, or any other natural disaster victims in our country. BUT- we do end up paying in one way or other.
The Cummings Factory flooded. Parts are now more expensive and out of stock all over the country for heavy equipment and diesel engines. I’d rather see the Feds help get them up and running as quickly as possible so the 50 or so industries that depend on them stay solvent. Cost us all a lot less in the long run.
No matter what happens, we’re all going to pay. Either share the risk of insurance, share the cost of rebuilding, or absorb the cost to the economy.
I’m just saying that sharing the cost of insurance would be cheapest way to go for the average person.
I don’t agree with your position. The reason flood insurance is subsidized by the feds in the first place is b/c the exposure is just too large for the private market. When flooding occurs, it is catastrophic in that it affects many, many properties at the same time. If the peril of flood was not subsidized & private carriers were forced to provide it, many of them that did enter the flood market (& scant few would) would be completely bankrupt after the first major flood. The private sector could not charge nearly enough to cover losses b/c if the rates were actuarially sound, very few would be able to afford it. I agree, the fed program needs some overhauling, but doing away with it is not the answer. The peril of wind will follow suit in due time.
P.S. The word is commensurate, not commiserate.
It was just what I said. Yes, Cummings will get their factory up and running, hopefully. (with the economy in the condition it’s in, who really knows) The point is that the economy is effected by these disasters in one way or another. It’s a snowball effect.
Look at La after Katrina. Yes, I’ve heard all the arguements that the people there should have had insurance, they should have left, they should have done a thousand things to avoid the situation they ended up in. But they didn’t. So, we, the taxpayers, foot the bill. Would have been cheaper in the long run to subsidize their flood insurance and rebuild then to just hand out money, trailers, transportation as we have done for the last 2 years.
(Would have been a lot cheaper to just fix the levees in the first place, but since our infrastructure is the last place anyone wants to spend money the bridges collapse and the levees fail all over the country)
A federal disaster plan is the best our gov’t can come up with. Not saying much, I know. But I’d rather see subsidized premiums with a sound reinsurance plan then billions spent on ‘handouts’ after the fact. Structured correctly, it would save millions in the long run. Millions we have to pay as taxpayers.
In one the answers I heard “Share THe Risk”
That is exactly what the pre event bonding and post event bonding programs do, and I might add without the Federal Government having to set up another agency and federal funding mechanism…Does anybody get it…We can take care of ourselves on a State to State basis without big brother, and at very little expense and with no appreciable waste.
But we don’t.
The flood program wouldn’t exist if we could.
We need a plan that can spread the risk on a far greater level, and isn’t in it to pay their CEO’s $42M dollars.
Now I know you either didn’t read our didn’t understand what I said. I oppose the Travelers and Nationwide Plan. So does the IIAT Texas. The plan I referred to would be administered by the State, not the companies. The Pre Event Bond would not be a Federal Program and would not be persae an insurance policy, but a mechanism to put the money into a bonding program that would cover the losses. The rates to cover the bond program would be of a short duration and would be at minimal cost. First it would be borne(Pre Event) by the people living in the storm prone areas and then on a (Post Event Basis) after a storm took place. It would cost about 3% of current rates,so $30.00 on a person paying $1,000.00 for insurance, and then only for a limited amount of time. This would not be a company program or a bloated federal program. Hope you are beginning to see the light.
So what you’re saying is that the exposure would be handled on the state level and the expense borne only by those who suffer losses? Each state who has the potential for catastrophic loss would have their own program to handle it? And a different program for each type of loss, like flood, wind, EQ, etal? How do you know how much to charge if you don’t know in advance the amount of the catastrophe or where it will occur?
Fl is trying to do that right now. Bonds are their one size fits all answer.
Your 3% is a very unrealistic amount. A large number of states are already in the aftermath of an event, so trying to create a bond program for furture losses while trying to recover from current situations would drive the cost to more like 10% to 25%. (Fl has faced 125% rate increases and are still fighting more 50% increase requests)
As I said before, IF the states could do it on their own, the NFS wouldn’t have to exist.
NC Wind Policy from Travlers would not cover any of my damages during Irene. $19,000 deductible is crazy. If I had that much money I would not need the Wind Policy.