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Insurers pay at least $2.2 billion in claims from
Alabama tornadoes
Read 12/28/2011 Birmingham News article by Robin DeMonia
 Insurers
have paid at least $2.2 billion in claims arising from the April tornado outbreak in Alabama, and more than 2,500 claims are still pending eight months after the storms, the Alabama Department of Insurance said.
The figures include amounts that insurance companies regulated by the state have paid for homes, cars, businesses and other property damaged on April 27. They do not include claims paid by companies such as Lloyd's of London, which insure some Alabama property but are not regulated by the state.
If all claims were resolved and counted, state insurance officials said the total would probably approach $3 billion.
"These numbers are not surprising to us," said State Insurance Commissioner Jim Ridling. "They fall in line with the estimates we have seen."
To date, 117,400 claims have been filed, and 2,600 are still open. The insurance department said 9,400 claims weren't filed until June or later.
Posted 1/6/2012 (Hat tip to Stan Virden)
Disaster Losses Hit Record Levels in 2011
From 12/16/2011 WSJ article by Erik Holm & Leslie Scism
The disasters that plagued the globe this year will send 2011 into the record books as the most costly year for catastrophes on record. Japan's powerful tsunami, earthquakes in New Zealand, floods in Thailand and a series of severe tornadoes in the U.S. all contributed to $350 billion in disaster losses, according to a new estimate from reinsurance company Swiss Re AG.
Insurance and reinsurance companies are likely to shoulder about $108 billion of the losses, though the tally could creep higher, Swiss Re said. While insurers absorbed less than one-third of the year's disasters, 2011 is the second-most costly year for the insurance industry, behind only 2005, when Hurricanes Katrina, Rita and Wilma helped push the global tally to $123 billion.
In response to the near-record claims this year, insurers are increasing how much they charge for catastrophe coverage around the globe, re-evaluating their exposure to disaster-prone areas, and tightening policy terms. How much ultimately will be passed on to U.S. consumers, however, is unclear, as most states regulate home-insurance rates. Disaster modelers are studying the science behind each calamity to improve their predictions of losses for future events, and underwriters are examining their clients' supply chains for signs of weakness.
Read complete article
Posted 12/18/2011
Carriers Understand Market Challenges; Discuss Strategies Beyond Pricing
From 10/6/2011 article by
Mark E. Ruquet, PropertyCasualty360.com
Insurance carriers understand that there are no easy answers to the earnings challenge the industry is facing, and some of them believe that competing on price alone is not the answer to finding new commercial markets.
Paul Krump, president of commercial and specialty lines for Chubb Group of Insurance Companies, says insurers are experiencing significant pressure on their business.
He says the current situation is “corrosive” for the industry as it deals with a significant catastrophe year that is eating away at reserves. Earnings have seen additional erosion with an investment environment that is not producing significant returns.
Insurers are feeling pressure to get rate through underwriting, but
Krump cautions that the industry needs to balance that desire against the objectives of its policyholders.
“We must not lose sight of our primary mission—to take care of our customers, but we must also take care of ourselves,” says Krump.
Insurers, he says, must not add to the angst clients are experiencing in these very turbulent economic times. “They are seeking some semblance of certainty in uncertain times,” Krump says.
Read complete article
Posted 10/7/2011
Your problem, not ours
Northen Alabama Counties still don't understand how insurance
crisis affects them
It is wrong for the rest of Alabama to “share the pain” of high homeowners’ insurance costs with residents of south Alabama.
So says conservative talk show host Dale Jackson, of WVNN radio in Athens.
“What they’re looking at is people in north Alabama paying more so people in south Alabama who live on the beaches can pay less,” Jackson said in a “Daily Doctrine” message to his listeners on Friday.
“Here’s how insurance works, folks. You pay on the risk. And if I live in north Alabama, the risk of hurricanes is not as good as the risk in south Alabama. So those people should pay more, not me.”
From MPR's George Talbot 9/26 column on AL.com
posted 9/26/2011
AFFORDABLE HOMEOWNERS' INSURANCE
A MATTER OF LIFE & DEATH
Alabama's suicide rate reaches 51-year high
After five years of steady growth, Alabama's suicide rate is at its highest point since 1960, outpacing the national rate and prompting health experts to call for a public discussion of how suicide can be prevented.
The suicide rate in Mobile and Baldwin counties increased 33 percent after Katrina, said Debra Hodges, research unit director for the ADPH's Injury Prevention Branch.
 Suicide
is almost always linked to a mental illness and
often substance abuse and when job loss or mortgage foreclosure is added to the mix, a "perfect storm" of suicide risk is created, said
Judith Harrington, president of the Alabama
Suicide Prevention and Resource Coalition.
"There is a definite connection with the
economy" and suicide, Hodges said. "You lose
your job, your home is foreclosed on ... Life is
suddenly uncertain," Hodges said
From 7/10/2011
article by Jeremy Gray in The Birmingham News
Posted 7/12/2011
Next Bank Scandal? Forced-Place Homeowners Insurance
MoneyTalkNews
article by Stacy Johnson (11/15/2010)
If you don’t buy insurance on your house, your mortgage company can legally do it for you. This makes sense, because your home is the collateral for your home loan – without insurance, an accident or natural disaster could wipe out the investment. So your lender insures you’ve got insurance, and if you don’t, they buy it and bill you for the premiums.
It’s called forced-place insurance, and it’s been around for a long time. But some are now accusing lenders of using these policies to generate excessive profits at the expense of hapless homeowners. And thanks to the huge volume of foreclosures and the massive amount of securitized mortgages, these inflated policies could also be impacting Wall Street investments, which in turn might trickle down to Main Street mutual funds.
To better understand the issue and its potential effect on both homeowners and investors, meet a homeowner who was billed $33,000 for one year’s worth of forced-place homeowner’s insurance – insurance that could have been purchased for $4,000. Check out the
following news story, then meet me on the other side
for more.
Read earlier
post on forced-place insurance
Posted 6/29/2011
Insurance has to be a statewide issue now
By Press-Register Editorial Board, May 29, 2011 - Read original
item
There's no getting around the fact that the tornado damage in northern Alabama will change the conversation about storm risk and homeowners insurance in the state.
It is clear that the risk of catastrophic damage from weather can no longer be relegated to the coastal areas. Neither should the conversation be.
In fact, now is the time for state leaders to ramp up the dialogue about ways to build stronger so that more people can survive storms when they hit.
Coastal leaders and lawmakers are already pressing for related insurance reform in Montgomery. One of their bills would offer an income-tax deduction to property owners who retrofit their homes to withstand storms. Another would create an insurance fraud unit within the state Department of Insurance.
Next, state leaders can address the fact that Alabama sorely needs a statewide building code.
Continued:
Posted 6/7/2011
DID YOU KNOW???
The state average for full homeowners’ insurance coverage is $854 – wind, hail, fire, liability and a small deductible. The coastal counties pay 200 – 500% higher premiums, and much higher deductibles.
During the last century we were charged at about the state average. The current crisis results from suddenly treating coastal counties dramatically different from the rest of the state.
The DOI has no historical data, by locality, to support its approval of such differentials.
If you own your house, and have no liquid assets to rebuild, you’re not self-insured if you have dropped your wind-and-hail coverage, you’re gambling!
If you have a mortgage and do not have the insurance deductible in the bank, you are functionally un-insured and still paying the premiums!
Historically, upstate Alabama experiences 500 tornadoes for every one hurricane.
Sixty-five of Alabama’s 67 counties were declared disaster counties in need of taxpayer and insurance funds after Hurricane Ivan struck the coastal counties. Hurricanes don’t stop at county lines.
Coastal counties pay well above the state average for fire insurance!
The Alabama State Fire Marshal said there are fewer fires in south Alabama than in the northern part of the state.
The Alabama Department of Insurance has publicly acknowledged that insurance companies charge higher fire premiums in southwest Alabama. An officer of the department said publicly that the premium differences are not based on actuarial findings.
Revised 6/2/2011
BACKGROUND READING
SETTING THE STANDARD FOR INSURANCE REFORM
REFORMS TO IMPROVE THE MARKET (Texas Watch)
MASS. HOMEOWNERS INSURANCE ACT OF 2010
PRINCIPLES FROM OTHER SOURCES
SPECIAL COMMISSION TO REVIEW THE
CURRENT STATE OF THE HOMEOWNERS
INSURANCE MARKET IN THE
COMMONWEALTH
Updated 8/7/2011
THE INSURANCE CRISIS IS A MORAL ISSUE
This web site tries to keep you informed of the latest insurance
company actions and political happenings. But HHII is
about more than dropped coverage, premium increases, and
legislative bills. It is about individual homeowners.
The pain, frustration, and anger they feel when faced with impossible
choices.
Read two recent homeowner
stories.
Then read Sr. Judith Smits' essay
on Insurance & Morality.
We are not helpless. Working together, we can bring about
a just resolution. Join HHII and add
your hearts, minds, and voices to this grass roots effort.
Posted 4/14/2011
LOWERING PREDICTED LOSSES IS WAY TO REDUCE PREMIUMS
Read Citizens for Homeowners Insurance Reform
recommendations on how to get to lower insurance rates
.
Posted 1/14/2011
FORCED-PLACED INSURANCE
If a careless borrower allows her homeowners
insurance policy to lapse, it can cue the servicer to purchase its own
policy, at a premium two to three times higher than that paid by the
borrower, from an insurer with whom the servicer has a financial
relationship. The same thing can happen when a loan is in default, in
which case the servicer profits at the expense of the investor.
Read more in Motley Fool 11/11/2010 article
Posted 11/16/2010
Insurance Discount for Fortified Buildings Makes Progress
HHII has not been pushing this legislation because it does
not offer immediate premium reductions or coverage guarantees for
existing homes.
Several admitted carriers will be increasing the Fortified
credits to as high as 50%. Two admitted carriers are willing to insure
new clients that meet the Fortified standards. One major carrier is
offering the Fortified program nationwide, and is crediting Alabama as
the first state to endorse IBHS Fortified for Existing Homes program.
One non-admitted carrier will be issuing wind and hail only policy that
will compete with AIUA starting May 10th. Have a new A rated carrier
(Non-Admitted) entering the state next week. They are willing to insure
several thousand new policies. Mobile Bay will not be an issue. They
require detailed inspection but will give credits for Fortified homes
even though they are not required. More carriers looking to enter market
with the passage of seasoning bill. Fortified Habitat Open House is scheduled for May
27th., 2010
To find more information concerning insurance discounts applicable
to fortified buildings and how to apply, go to the undernoted links.
Requirements to qualify as fortified home
Alabama insurance discount benchmarks
Application Form
Originally posted 5/2010;
Revised & reposted 11/10/2010
Citizens in Massachusetts want Homeowners' Insurance
Reform!
HHII is linking with other coastal communities to help
law-makers explore multi-state Coastal Counties solutions. Read
related email
and
about the Homeowners'
Insurance Reform Massachusetts wants.
Edited & reposted 10/16/2010
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Irene on Path to Test Coffers of State-Run Insurers
By ERIK HOLM And LESLIE SCISM, WSJ
Hurricane Irene could be a major test of "insurers of last resort" created by U.S. states to protect homeowners marooned by private insurers.
Of the 14 U.S. states in Irene's projected
path as of late Wednesday, at least 10 of them run insurance
pools for homes in vulnerable areas. Those insurers, which have
ballooned in size in recent years, now have about 677,000
policyholders and overall exposure of $196.2 billion, according
to the states.
But in many states, such pools rely on homeowners far from the coast to pay for any funding shortfalls if a mega-storm drains the pool's capital. In Florida, for example, people insuring their cars, boats and small businesses can also get hit with surcharges to help pay for the state pool's hurricane claims.
Read complete 8/25/2011 WSJ article
Posted 8/25/2011
Policyholder complaints after tornadoes show
discontent with delays, disputes over damage
By Jeff Amy, Press-Register, Sunday, August 21, 2011
Larry Kidd was getting a little frustrated.
His neighbors in Santuck were already making repairs after a tornado hit the Elmore County hamlet on April 27. Kidd was still haggling with Allstate Corp. over how much money he would get to fix the roof, siding, windows and other parts of his 1,900-square-foot home.
"We were not getting any response back," Kidd said, explaining that adjusters working for the Northbrook, Ill., insurer weren't replying to emails.
So on June 21, he contacted the Alabama Department of Insurance, one of at least 475 homeowners to complain to the regulator in the wake of the April storms.
Kidd was not the only unhappy Allstate policyholder. Among Alabama's largest insurers, Allstate received more complaints than its market share would have predicted, according to a Press-Register analysis of complaint data.
Read
complete MPR article here
Posted 8/22/2011
HHII DISCUSS CAPTIVE INSURANCE WITH JUDGE RUSSELL
8 representatives from HHII met with Judge Russell and Judge
Whetstone on Friday, July 22, 2011. They graciously gave us two hours
of their time and we had a candid discussion on the
possibilities of captives.
Judge Russell is strongly committed to developing two captive insurance entities.
The primary question remains: will these two entities fix the problem for all people. At the moment, the answer is seems to be No, but the design of the entity is in progress. Properly designed, some of us think it could fix the coastal insurance problem
and the Judge seemed open to our suggestion.
Judge Russell also expressed support of the Clarity Bill.
He is in favor of
procedural rules that would enhance conversation and dialogue
at the commission -- a rolling up of our sleeves and actually
working to fix the problem.
Posted 7/28/2011
HHII TO RESEARCH CAPTIVES FURTHER
The possibilities captives imply for significant reform of the housing insurance seem worth closer study, according to our conversation with national expert Robert Hunter. Judge Russell has agreed to chat with
HHII some more about the specifics of the captives he has in mind.
A meeting in Foley, Friday July 22 or Tuesday
July 26 at 9.00 a.m. at a location TBA is
being considered. HHII has asked that the conversation explore two additions to
Russel's ideas of captives:
(1) the designs should be consistent with multi-state operations;
(2) the designs should entail the possibility of official state-to-state insurance compacts,
which was fine with him.
Posted 7/14/2011
Travelers Coastal Wind Zone Plan
AS THE 2011 hurricane season progresses, it’s time for community leaders and their elected representatives to solve the growing crisis surrounding homeowners insurance on the Gulf Coast.
One idea — which has received more attention in Mississippi than in Alabama — that deserves consideration is the Travelers Coastal Wind Zone Plan. It is a federally-guaranteed catastrophic wind insurance plan written in 2009 by the Travelers Institute, which is a think tank related to the Travelers Companies, a property casualty provider.
Don’t tune out the plan just because it is linked to the industry, though. The Travelers Plan offers promise for several reasons: It recognizes that states shouldn’t have to solve their own insurance problems alone. It also involves the insurance industry, as well as Congress and consumer groups.
Read Mobile Press-Register 6/19/2011 editorial
Posted 6/20/2011
Where Does Alabama Rank on
Property & Casualty Insurance?
How free are consumers in Alabama to choose the property and casualty insurance products they want? How free are insurers to provide those products? The fourth edition of
The Heartland Institute's
Property
& Casualty Insurance Report card finds a modest, uneven, but nonetheless real trend towards more freedom for consumers and businesses in the homeowners’ and automobile insurance realms.
Posted 7/8/2011
Investment Firm Gives Personal Lines Insurers Thumbs Up
The financial and investment banking firm Stifel Nicolaus
released its “2Q11 Insurance Industry Earnings Preview,” saying
that personal-lines insurers are a good place for investors
because personal-auto and homeowners premium rates are
continuing to increase on a year-over-year basis while the
commercial-insurance market remains mired in a soft market.
Read complete article by Mark E. Ruquet, PropertyCasualty360.com
Posted 7/8/2011
Seeking Business, States Loosen Insurance Rules
Read this May 8, 2011
article by
by Mary Williams Walsh and Louise Story in New York Times to
learn more about the risks associated with captive insurance
companies.
Posted 6/15/2011
For Insurers, Bad - but Not Bad Enough
Ahead of the Tape by Kelly Evans, WSJ
5/31/2011
Only in the bizarro world
of insurance can a string of
calamities portend good.
news.
The deadly outbreak of
tornadoes across the U.S.
since late April is expected to cost the insurance industry more than $5 billion, according to disaster-modeling
firm Eqecat. That puts
weather-related losses in
the U:S. so far this year in
the range of $13 billion to $15 billion, three to four
times a typical year. Add in
catastrophes such as the
earthquakes in New Zealand
, and Japan, and disaster-related losses for the industry
are estimated to be upward
of $50 billion this year.
That eye-watering sum
has spurred talk that a
"hard market" - insurance
talk for a time in which insurers can charge higher
premiums - may finally be
within reach. The industry
has been mired in a soft
market, marked by falling
premiums, since 2004.
"I think things are now
bad enough to be good'
enough," says Meyer
Shields, an analyst at Stifel
Nicolaus.
Bad enough, that is, that the industry will be forced to start
raising premiums this year or early next.
That would quickly benefit such big insurance brokers as Aon
Corp. and Marsh & McLennan Cos. Indeed, their shares are up more
than 10% this year, roughly double the broader market.
Prominent hedge-fund manager Steve Eisman even cited the stocks
as appealing at last week's Ira Sohn conference. Reinsurers
should also get a lift.
But soft market conditions may prove tough to shake.
For starters, even the unusually high losses aren't expected to
fully drain the roughly $74 billion in excess capital the
industry had heading into the year, according to research firm
Advisen. That is what makes this year's . hurricane season,
which officially starts June 1, so important for insurance
stocks. Any storms that generate big losses, sopping up excess
capital, could force a firming of the market.
Even so, a time of higher premiums may end up being short-lived
- just as it was after Hurricane Katrina in 2005. This time
around, the weak economy may interfere.
"There just hasn't been much pricing power over the last couple
years," says David.Bradford, Advisen executive vice president.
And the bad news may not be bad enough to change that.
Posted 6/1/2011
CAPTIVE INSURANCE COMPANY
Legislators are considering the possibility of setting up a
state run captive insurance company to offer wind insurance to
coastal homeowners who have been dropped by the major insurance
companies.
HHII is opposed to this idea as it appears the captive company
would not be required to insure all comers and would still be
allowed to 'cherry pick' who it would cover.
Reserves would be funded by a 1 mil property tax increase.
Captive companies were the subject of a recent article in the
New York Times, quoted in part below:
"Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.
Now some states make it just as easy. And they have broadened the definition of captives so that even insurance companies can create them. This has given rise to concern that a shadow insurance industry is emerging, with less regulation and more potential debt than policyholders know, raising the possibility that some companies will find themselves without enough money to pay future claims. Critics say this is much like the shadow banking system that contributed to the financial crisis."
Read complete NYT 5/6/2011 article
Read Property Casualty 5/9/2011 rebuttal article
Posted 5/13/2011
Insurance companies have no doubts about global
warming
Insurance companies are taking into account the
potential for rising water levels and more aggressive hurricanes when
considering rates. Marketplace's Scott Tong reports.
Read full transcript and view slideshow
here
Posted 11/30/2010
Insurers set up Alabama trade association
Stan Diel -- The Birmingham News
Many of the largest insurance companies doing
business in the state have established a new nonprofit, non-lobbying
trade association, the group announced today.
The Alabama Insurance Information Service, based in Montgomery,
will provide information about issues related to auto, homeowners,
renters, flood, earthquake and workers compensation insurance. The
organization also will provide information related to consumer safety.
David Colmans, a television reporter in Birmingham in the 1960s and
1970s and most recently executive director of the Georgia Insurance
Information Service, will run the organization.
The nonprofit group will work with organizations including the
Insurance Institute for Highway Safety, the National Insurance Crime
Bureau and state law enforcement, it said in a prepared statement.
The group's new web site,
www.aiisnews.org,
offers free home inventory software to help homeowners catalog their
possessions.
Insurance companies participating in the association include State Farm Insurance, Alfa Insurance, Allstate Insurance Co., Progressive
Insurance, and many others.
Posted 11/30/2010
RAND CORPORATION INSURANCE REPORT
Residential Insurance on the U.S. Gulf Coast
in the Aftermath of Hurricane Katrina
A Framework for Evaluating
Potential Reforms
Click
to read preliminary report from
GULF STATES POLICY INSTITUTE
A Study by the Institute for Civil Justice
This product is part of
the RAND Corporation restricted draft series. Restricted drafts
present preliminary research or prepublication versions of research
documents that need to be distributed outside of RAND to the client, a
formal reviewer, or potential journal or book publishers. Restricted
drafts have not been formally reviewed, edited, or cleared for public
release.
Posted 10/21/2010
The
Ten Worst Insurance Companies in America
Read who they are
here
Reposted 10/18/2010
Small businesses lose Zurich insurance policies in Farmers cutback
Read
5/19/2010 MPR article here
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