Well, we knew it was coming, but the first lawsuit against insurance companies resulting from the denial of Katrina claims has started. Unfortunately, most people did not have flood insurance, either because they felt they were protected by the levee system (those people may have a legitimate beef with the Army Corps of Engineers or others, in thinking the levees should have worked) or they thought they were far enough from the water to be safe.
In the recent flooding in some upstate New York counties, it has been estimated that only one per cent of the people had flood insurance. If you live in a mountainous area, it's hard to imagine needing flood insurance, but FEMA estimates that 25% of all flood claims come from areas that are NOT considered 'special flood hazard areas.'
Here on Long Island, and especially in Suffolk County (the further east you go, the more Long Island is considered vulnerable to hurricanes and other such big storms) we have a slightly different situation for those right down by the water. Since most homes have been built or in some way refinanced over the past 35 years (since the National Flood Insurance Program started), most have been required by their banks to carry both wind (homeowners insurance) and flood insurance. Many people should probably review their limits to be sure they are enough, but there is a lot of flood insurance in force near the South Shore.
Move a few blocks north of the water, however, and the situation is quite different. That's where the flood zones change to something other than 'A', and the banks have, until now, not been mandated to require flood insurance. That is all about to change as congress works on the 2006 Flood Insurance Act which will change the whole system to require more participation based on what happened with Katrina.
A few weeks ago Newsday published a map that clearly shows what our Emergency Preparedness people have been telling us for a long time. Based on elevation (facts, not guesses), water from a hurricane the size of Katrina would bring flooding past Sunrise Highway in many places, and certainly much further from the shore than has been seen in the memories of most of us.
Still, flood insurance in those Long Island areas outside the hazard zones can be as little as $352 (even less for a house on a slab), so many people are buying it anyway, since it seems a small price for a lot of peace of mind.
As always, for more info on flood insurance, visit our site at www.FloodInsuranceNY.com.
Saturday, July 15, 2006
Thursday, July 6, 2006
Hilary Confused about Homeowners vs. Flood?
Well, I never had any doubts that it is very common among the average 'person on the street' to be somewhat confused about just what is covered under homeowners insurance as opposed to FEMA's National Flood Insurance Program. But I would have hoped that a U.S. Senator and Presidential hopeful would have been able to get better information.
Hilary Clinton was touring some of the flood-ravaged areas of upstate New York recently, and took the opportunity to call on Allstate Insurance Company to reconsider their position of not writing new flood insurance policies on Long Island and other downstate areas, along with the cancellation of tens of thousands of existing policies. (Note that 'flood' in that case was her word, not ours)
Unfortunately, the flood damage she was looking at would ONLY have been covered under flood insurance policies issued by the National Flood Insurance program! While it's great that she is advocating on behalf of us here on Long Island and other areas that are prone to hurricane damage, Allstate would not be the culprit here, nor would they be the problem if we had major flooding here on the South Shore or anywhere else for that matter.
According to the article in National Underwriter magazine, Mrs. Clinton stated more than once that it's a shame that Allstate is no longer willing to provide flood insurance to their customers in Long Island, NYC, and Westchester. This kind of misinformation can only add to all the confusion and problems currently surrounding the market for coastal homeowners insurance.
Unfortunately, from what I have read, only about 1% of the people affected by last week's flooding actually carried flood insurance. That's most likely because they live in mountainous areas and would never have expected floods. But here on Long Island, and specifically on the South Shore, you need both a homeowners insurance policy AND a flood insurance policy if you want to be properly protected.
As always, for more information, please visit our web sites at www.nyinsurancewithservice.com and www.floodinsuranceny.com
Hilary Clinton was touring some of the flood-ravaged areas of upstate New York recently, and took the opportunity to call on Allstate Insurance Company to reconsider their position of not writing new flood insurance policies on Long Island and other downstate areas, along with the cancellation of tens of thousands of existing policies. (Note that 'flood' in that case was her word, not ours)
Unfortunately, the flood damage she was looking at would ONLY have been covered under flood insurance policies issued by the National Flood Insurance program! While it's great that she is advocating on behalf of us here on Long Island and other areas that are prone to hurricane damage, Allstate would not be the culprit here, nor would they be the problem if we had major flooding here on the South Shore or anywhere else for that matter.
According to the article in National Underwriter magazine, Mrs. Clinton stated more than once that it's a shame that Allstate is no longer willing to provide flood insurance to their customers in Long Island, NYC, and Westchester. This kind of misinformation can only add to all the confusion and problems currently surrounding the market for coastal homeowners insurance.
Unfortunately, from what I have read, only about 1% of the people affected by last week's flooding actually carried flood insurance. That's most likely because they live in mountainous areas and would never have expected floods. But here on Long Island, and specifically on the South Shore, you need both a homeowners insurance policy AND a flood insurance policy if you want to be properly protected.
As always, for more information, please visit our web sites at www.nyinsurancewithservice.com and www.floodinsuranceny.com
Wednesday, June 28, 2006
Comments on Newsday Column
I'm taking a break from the issues surrounding the hurricane threat and it's effect on Long Island homeowners and flood insurance to talk about another area that is making our lives more interesting these days. It's another issue that is causing homeowners insurance policies to be canceled or restricted and is only going to get worse.
This morning's Newsday had a column by Ellis Henican entitled 'Hey Grownups! Stop stealing fun from our kids'. It talks about things like the disappearance of diving boards for home pools, changes in playground equipment in the name of safety, and the like. I enjoy his writing and he is, to a great extent, on the mark here. And I give him credit for NOT taking it as an opportunity to bash the insurance industry, which is part of the reason some of this stuff is disappearing.
The insurance industry was a major influence in the 1960's when car manufacturers were forced to stop building 'muscle cars' because of injuries and lawsuits. Cars are faster now than they were in the Sixties, but with air bags, anti-lock brakes, and other improvements, they are much safer too.
The key word in the above is LAWSUITS! We are the most lawsuit-crazy country in the world, and in particular, the corridor from Washington, D.C to Boston is just out of control. Every time someone injures themselves, whether it's spilling hot coffee in their lap or cutting themselves while illegally breaking in to a school, there is a lawsuit, and claims get paid. All you have to do is turn on some late night TV, and you will be sure to find some attorney saying 'if you've been hurt any time for any reason, call 1-800-FRIVOLOUS and we will get you some money.
To give you a further example, I am very active in the service group Rotary International. Clubs in our part of the world were asking the parent organization to provide a type of insurance known as Directors and Officers coverage, which has to do with being sued for not doing your proper job as a Director or officer of the group. They advised that we would have to purchase it ourselves, because the Northeast U.S. is the ONLY place in the world (ok, maybe California too) where people will sue charitable organizations and volunteers for this sort of thing, and they could not justify making clubs all over the world contribute to it.
Long Island homeowners insurance carriers, in addition to being worried about hurricanes, flooding, and the like, have started to crack down on trampolines, certain breeds of dogs, and other areas. Every time a dog nips someone, there is a lawsuit, and most times a payment. With trampolines and diving boards, and other things cited in the Newsday column, the problem is that nobody takes any responsibility for their own actions. We have been conditioned that there is always somebody to blame, and that money helps.
As always, for more information or assistance with a homeowners, flood, or any type of insurance question, visit our web site at www.NYInsuranceWithService.com.
This morning's Newsday had a column by Ellis Henican entitled 'Hey Grownups! Stop stealing fun from our kids'. It talks about things like the disappearance of diving boards for home pools, changes in playground equipment in the name of safety, and the like. I enjoy his writing and he is, to a great extent, on the mark here. And I give him credit for NOT taking it as an opportunity to bash the insurance industry, which is part of the reason some of this stuff is disappearing.
The insurance industry was a major influence in the 1960's when car manufacturers were forced to stop building 'muscle cars' because of injuries and lawsuits. Cars are faster now than they were in the Sixties, but with air bags, anti-lock brakes, and other improvements, they are much safer too.
The key word in the above is LAWSUITS! We are the most lawsuit-crazy country in the world, and in particular, the corridor from Washington, D.C to Boston is just out of control. Every time someone injures themselves, whether it's spilling hot coffee in their lap or cutting themselves while illegally breaking in to a school, there is a lawsuit, and claims get paid. All you have to do is turn on some late night TV, and you will be sure to find some attorney saying 'if you've been hurt any time for any reason, call 1-800-FRIVOLOUS and we will get you some money.
To give you a further example, I am very active in the service group Rotary International. Clubs in our part of the world were asking the parent organization to provide a type of insurance known as Directors and Officers coverage, which has to do with being sued for not doing your proper job as a Director or officer of the group. They advised that we would have to purchase it ourselves, because the Northeast U.S. is the ONLY place in the world (ok, maybe California too) where people will sue charitable organizations and volunteers for this sort of thing, and they could not justify making clubs all over the world contribute to it.
Long Island homeowners insurance carriers, in addition to being worried about hurricanes, flooding, and the like, have started to crack down on trampolines, certain breeds of dogs, and other areas. Every time a dog nips someone, there is a lawsuit, and most times a payment. With trampolines and diving boards, and other things cited in the Newsday column, the problem is that nobody takes any responsibility for their own actions. We have been conditioned that there is always somebody to blame, and that money helps.
As always, for more information or assistance with a homeowners, flood, or any type of insurance question, visit our web site at www.NYInsuranceWithService.com.
Thursday, June 22, 2006
Insurance Fraud Warnings Not Very Helpful?
The New York State insurance superintendent has sent out a 'public service announcement' sort of thing to try to warn the public against fraudulent insurance companies. It stems from the horrible boat accident last October when 20 people were killed on Lake George when a tour boat capsized. Here are several paragraphs from the article in National Underwriter and then I will add why I think this is not very helpful.
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"New York ’s insurance superintendent has taken to the airwaves to warn consumers about fake insurance as his inquiry continues into a phony insurance operation that was exposed by a fatal accident, a spokesman said yesterday.
Superintendent Howard Mills announced he had distributed a video to television stations telling consumers how to protect themselves from being hurt by fake insurance companies.
The issue was spotlighted in New York on Oct. 2 when the Ethan Allen tour boat capsized on Lake George, killing 20 people, and it was revealed that the insurance purchased by the vessel’s operator was bogus." Quoted from a National Underwriter article, and here is a link to the full text.
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The problem I see here is that the 20 victims were not a party to the fraudulent insurance. They just got on a boat for a nice afternoon ride. I have tremendous respect for Insurance Superintendent Howard Mills, but does he expect that every time we walk into a building, ride in a bus, go on an amusement park ride, stay at a hotel, or whatever, we are going to do some sort of investigation as to the whether the owner has valid and sufficient insurance?? That would be virtually impossible! This is where our government is supposed to design and implement regulations in and for the public interest.
If the people on this boat had even thought of asking whether the boat owner carried proper insurance, at best he probably would have shown what he thought was a valid policy (since apparently they thought they had purchased valid coverage) and that would not have helped.
Yes it's good to be aware and alert to help fight fraud, but in this case there is not much the victims could have done, and I believe it's the regulatory system that could have done a better job.
_________________________________
"New York ’s insurance superintendent has taken to the airwaves to warn consumers about fake insurance as his inquiry continues into a phony insurance operation that was exposed by a fatal accident, a spokesman said yesterday.
Superintendent Howard Mills announced he had distributed a video to television stations telling consumers how to protect themselves from being hurt by fake insurance companies.
The issue was spotlighted in New York on Oct. 2 when the Ethan Allen tour boat capsized on Lake George, killing 20 people, and it was revealed that the insurance purchased by the vessel’s operator was bogus." Quoted from a National Underwriter article, and here is a link to the full text.
__________________________________
The problem I see here is that the 20 victims were not a party to the fraudulent insurance. They just got on a boat for a nice afternoon ride. I have tremendous respect for Insurance Superintendent Howard Mills, but does he expect that every time we walk into a building, ride in a bus, go on an amusement park ride, stay at a hotel, or whatever, we are going to do some sort of investigation as to the whether the owner has valid and sufficient insurance?? That would be virtually impossible! This is where our government is supposed to design and implement regulations in and for the public interest.
If the people on this boat had even thought of asking whether the boat owner carried proper insurance, at best he probably would have shown what he thought was a valid policy (since apparently they thought they had purchased valid coverage) and that would not have helped.
Yes it's good to be aware and alert to help fight fraud, but in this case there is not much the victims could have done, and I believe it's the regulatory system that could have done a better job.
Tuesday, June 20, 2006
Insurance Industry Developments
Like all businesses today, the insurance industry is facing constant changes and challenges. One day I might see a study of various potential catastrophes. The current 'really bad case' scenario predicts losses over $150 billion in some major act of terrorism (that's double the size of Katrina), and the next day it's the Federal government trying to get involved in the supervision of insurance companies, which right now is done by the states.
That last part might not seem like a big deal, but if you're a State Senator or other official, or a believer in a more conservative interpretation of the Constitution (our country, after all, is a union of states, where the Federal government is supposed to leave matters of commerce to the states except where it involves interstate activities, which much insurance often does not) then you are pretty actively protecting your turf in this sort of battle.
States' Rights has been a huge issue over the years, but on the other hand, technological advances like the Web and computers have made it harder and harder to argue against one uniform set of rules for everybody.
Just yesterday Congress passed a bill that will attempt to make uniform regulations, but for just one part of the industry at this time. In this case, that would be the Excess and Surplus market. Many people will never actually buy a policy in this sort of company, but the best known of them would be Lloyd's of London. It is a vibrant and active market where all kinds of interesting coverages can be bought and sold.
Another HUGE issue these days is reinsurance company financial strength and premium charges. As end consumers of insurance, we never see where the insurance companies go to by their insurance against the big losses, but they do it, nonetheless. And some of them were hit pretty hard in the past few years. Costs are expected to rise 50% or more in the next couple of years and the impact on our rates will be widespread.
That last part might not seem like a big deal, but if you're a State Senator or other official, or a believer in a more conservative interpretation of the Constitution (our country, after all, is a union of states, where the Federal government is supposed to leave matters of commerce to the states except where it involves interstate activities, which much insurance often does not) then you are pretty actively protecting your turf in this sort of battle.
States' Rights has been a huge issue over the years, but on the other hand, technological advances like the Web and computers have made it harder and harder to argue against one uniform set of rules for everybody.
Just yesterday Congress passed a bill that will attempt to make uniform regulations, but for just one part of the industry at this time. In this case, that would be the Excess and Surplus market. Many people will never actually buy a policy in this sort of company, but the best known of them would be Lloyd's of London. It is a vibrant and active market where all kinds of interesting coverages can be bought and sold.
Another HUGE issue these days is reinsurance company financial strength and premium charges. As end consumers of insurance, we never see where the insurance companies go to by their insurance against the big losses, but they do it, nonetheless. And some of them were hit pretty hard in the past few years. Costs are expected to rise 50% or more in the next couple of years and the impact on our rates will be widespread.
Tuesday, June 6, 2006
Panic Mode in Insurance Companies?
Apparently Allstate just announced that they will be dropping all earthquake coverage country-wide except for four states (Kentucky, Connecticut, Rhode Island, and Florida) where it is legally required, and they are in negotiations in those states! They currently write this coverage for over 400,000 homeowners.
Earthquake, of course, is another 'catastrophic' insurance coverage, meaning that it has the potential to affect a large number of properties in the same event. And since we have had relatively little earthquake activity in the past few decades, there has been a lot of building in areas that previously were considered dangerous because of underground faults. This is similar to all the building that has gone on near the coast during the last couple of decades when we were in a 'low' time for hurricane activity.
It seems that the industry is going into full panic mode. This is going to be an interesting couple of years for homeowners because once this sort of ball gets rolling, it's going to be hard to stop it. Although hurricane and earthquake clearly fall into the catastrophe classification, if you start 'massaging' the definitions, there are other coverages that could be questionable in the next round. War is already excluded, but terrorism is not, at least on privately owned dwellings. What else will they be able to think of?
In a strange way, this might actually help the Long Island and New York homeowners situation. One of the problems has been that the parts of the country that are not subject to hurricanes and flooding have been less than excited about programs such as the FEMA Flood Insurance to help those areas that are so exposed. If earthquake coverage also necessitates a government program, then we may find more support in general for things like government catastrophe backstops that are now being sought by the insurance carriers.
The other good thing that will eventually come of this is better building codes to reduce damage when the storm or other event does occur. Those take many years to implement, but they have to start sometime. As always, for more info on these or other issues, you can contact us through our web sites at www.NYInsuranceWithService.com and www.FloodInsuranceNY.com.
Earthquake, of course, is another 'catastrophic' insurance coverage, meaning that it has the potential to affect a large number of properties in the same event. And since we have had relatively little earthquake activity in the past few decades, there has been a lot of building in areas that previously were considered dangerous because of underground faults. This is similar to all the building that has gone on near the coast during the last couple of decades when we were in a 'low' time for hurricane activity.
It seems that the industry is going into full panic mode. This is going to be an interesting couple of years for homeowners because once this sort of ball gets rolling, it's going to be hard to stop it. Although hurricane and earthquake clearly fall into the catastrophe classification, if you start 'massaging' the definitions, there are other coverages that could be questionable in the next round. War is already excluded, but terrorism is not, at least on privately owned dwellings. What else will they be able to think of?
In a strange way, this might actually help the Long Island and New York homeowners situation. One of the problems has been that the parts of the country that are not subject to hurricanes and flooding have been less than excited about programs such as the FEMA Flood Insurance to help those areas that are so exposed. If earthquake coverage also necessitates a government program, then we may find more support in general for things like government catastrophe backstops that are now being sought by the insurance carriers.
The other good thing that will eventually come of this is better building codes to reduce damage when the storm or other event does occur. Those take many years to implement, but they have to start sometime. As always, for more info on these or other issues, you can contact us through our web sites at www.NYInsuranceWithService.com and www.FloodInsuranceNY.com.
Thursday, June 1, 2006
FEMA Flood Insurance - Extreme Makeover
Well, the issue of hurricanes hitting Long Island and the New York metropolitan area continues to make big news. There was another big article in today's Newsday talking about storm preparedness, and I just got an invite today to a big conference at the New York Hilton on July 19. Called the Northeast Hurricane Conference, they hope to bring together all the various parties - government, insurance, emergency personnel, and so on. The idea will be to try to get information out to everybody, including us everyday folks.
Meanwhile, in Washington D.C., both houses of Congress have passed different versions of a major FEMA Flood Insurance reform act. Now of course they need to have a conference committee to iron out differences, but there are going to be some major changes in the Federal Flood Insurance program (NFIP).
It will be no surprise to most folks, I'm sure, to find out that Katrina bankrupted the FEMA flood insurance program. It required an infusion from the U.S. Treasury of $23 billion (so far). And although Long Island gets great benefits from the program, I'm sure you can understand that the folks in places like Arizona and New Mexico feel that those who live in flood areas should pay for their own claims through the FEMA program, not be subsidized by those not in flood areas.
There are two fundamental ways to financially beef up the flood insurance system so it's better prepared for the inevitable future claims. You can get more money in, and pay less money out. So some changes will be designed to get more people to participate in the program through changes to the flood zone maps and through requirements in federally backed mortgages (which means most loans.) In other words, more people will be getting letters from their bank advising that they need flood insurance. The second part of the 'more money in' equation is higher rates, unfortunately.
On the 'less money out' side, we might see more restrictions of coverage on buildings that have had multiple losses in the past, less available coverage for vacation and second homes, enforcement of penalty clauses for underinsurance, and other possibilities.
I stress that these are all possibilities at this point, though most of them are in one or the other of the bills already passed by Congress. The only real question is exactly what form the final bill will take. There is no question that action will be taken on some bill.
Next time, we'll talk a little about Excess Flood Insurance, over and above the $250,000 maximum available under the FEMA program. That's going to be another big issue as banks wake up to the fact that many many homes on Long Island and in New York would cost many times that much to re-build after a flood.
As always, for more info, visit our website at www.FloodInsuranceNY.com
Meanwhile, in Washington D.C., both houses of Congress have passed different versions of a major FEMA Flood Insurance reform act. Now of course they need to have a conference committee to iron out differences, but there are going to be some major changes in the Federal Flood Insurance program (NFIP).
It will be no surprise to most folks, I'm sure, to find out that Katrina bankrupted the FEMA flood insurance program. It required an infusion from the U.S. Treasury of $23 billion (so far). And although Long Island gets great benefits from the program, I'm sure you can understand that the folks in places like Arizona and New Mexico feel that those who live in flood areas should pay for their own claims through the FEMA program, not be subsidized by those not in flood areas.
There are two fundamental ways to financially beef up the flood insurance system so it's better prepared for the inevitable future claims. You can get more money in, and pay less money out. So some changes will be designed to get more people to participate in the program through changes to the flood zone maps and through requirements in federally backed mortgages (which means most loans.) In other words, more people will be getting letters from their bank advising that they need flood insurance. The second part of the 'more money in' equation is higher rates, unfortunately.
On the 'less money out' side, we might see more restrictions of coverage on buildings that have had multiple losses in the past, less available coverage for vacation and second homes, enforcement of penalty clauses for underinsurance, and other possibilities.
I stress that these are all possibilities at this point, though most of them are in one or the other of the bills already passed by Congress. The only real question is exactly what form the final bill will take. There is no question that action will be taken on some bill.
Next time, we'll talk a little about Excess Flood Insurance, over and above the $250,000 maximum available under the FEMA program. That's going to be another big issue as banks wake up to the fact that many many homes on Long Island and in New York would cost many times that much to re-build after a flood.
As always, for more info, visit our website at www.FloodInsuranceNY.com
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