Barack Obama on Multiperil Insurance: I was for it before I was against it….

Barack Obama is proving himself a typical lying sack of shit politician that will say anything to get votes and then break promises once elected by backtracking on Gene Taylor’s multi-peril insurance bill. Playing the candidates off each other, our good friend and occasional contributor Steve was instrumental in getting that email from Hillary in support of Gene Taylor’s Multiperil insurance bill in the process landing in the AP report after he confronted former Prez Bill Clinton during his March 2008 campaign visit to the coast.

There was another news report published the day after Mr Bills visit  by Anita Lee at the Sun Herald who interviewed Obama when he was in Mississippi campaigning. Lets go back in time to that old story and see if you don’t agree with me that Obama has hoodwinked us all and in the process revealed himself as a common politician more in love with Wall Street ca$h and the crooks at AIG than the little people who elected him. There is no link to this article but it is reprinted here with the permission of Ms Lee and the Sun Herald (who have our thanks for sharing this with us):

March 9, 2008 Sunday

Candidates have recovery plans;
Insurance, FEMA among issues addressed

ANITA LEE, [email protected]

SECTION: A; Pg. 10

Republican nominee John McCain is the only candidate who has visited the Mississippi Coast since Hurricane Katrina, but the Democratic contenders have turned their attention here in preparation for a competitive primary on Tuesday.

Hillary Clinton and Barack Obama previously offered passing references to the devastation in Mississippi as they outlined recovery plans for the New Orleans area, although Bill Clinton has visited and raised funds for the Coast. Both Clintons were campaigning in Mississippi at week’s end, with Obama planing a visit Monday. Neither scheduled stops on the Coast, but Bill Clinton did visit once again on Saturday.

Hillary Clinton on Friday sent a letter to Senate Banking Committee Chairman Chris Dodd, D-Conn., that endorsed adding wind insurance to the National Flood Insurance Program. It’s the issue uppermost on the mind of U.S. Rep. Gene Taylor , a Democrat from Bay St. Louis who holds great sway with his constituents.

The federal flood insurance bill Taylor sponsored and helped pass in the House was stripped of its wind provision in Dodd’s Senate committee. Taylor recently met with Dodd and is lobbying other Senators to reinstate wind coverage in the flood bill.

While Obama supports the concept of wind insurance through the flood program, he said in an interview with the Sun Herald that he would need to be convinced any legislation encourages responsible development and protects homeowners.

McCain sees the solution in the private market, through broader pooling of risks and a prohibition against insurance companies “cherry picking” individual states.

Taylor plans to let his constituents know where the candidates stand on multiple-peril insurance.

“I’ve made it real clear I wanted to see who would stick their necks out for South Mississippi on this issue,” Taylor said Friday. “This really is a people vs. the lobbyists issue. I would certainly remind people, at every instance, who is helping them and who isn’t.”

Clinton and Obama also are pushing their own insurance measures. Obama wants a federal backstop for catastrophes that the insurance industry would fund through premiums collected. Clinton helped introduce the Homeowners Defense Act, which would allow coastal states to pool risk and provide federal loans to states after catastrophes.

As they campaign, both Clinton and Obama talk about the need to improve FEMA’s disaster response. Both are suggesting structural changes in the agency. McCain wants to see an official, coordinated disaster response from the business community. He said Wal-Mart and other businesses have the infrastructure to respond, as they proved in Katrina, which would alleviate a bloated bureaucracy.

Clinton said on a campaign stop Friday, “We do not yet have the level of response and urgency that a national disaster, which turned into a national disgrace, deserves.”

Obama told the Sun Herald he supports the extension of tax credits beyond 2010 to help the Gulf region recover from Katrina. “I know that entire communities in Mississippi were wiped off the map,” he said, “and to some degree, many of these communities had so little to begin with that recovery efforts are very difficult.”

8 thoughts on “Barack Obama on Multiperil Insurance: I was for it before I was against it….”

  1. The issue brings out some interesting combinations:

    The second is linked in the first, but worth noting. What it is really saying is that environmentalists don’t like development in coastal areas. Of course some environmentalists pretty much don’t want development anywhere.

    But it is a pretty important part of the issue. In North Carolina we have our version of a wind pool that is so low cost that the supposed back stop holds the majority of coverage on the coast, and is so underfunded that a 10 year hurricane (whatever that really is supposed to mean) would wipe it out: little less the 100+ year types of the Katrina variety.

    In our neck of the woods the coastal development groups run the wind pool so it tilts in the favor of coastal interests. The situation is not exactly anti-insurance industry, but somewhere in between. But in most states the regulators are captured by industry. and that is part of the problem with flood insurance.

    Flood insurance probably is too inexpensive, but obviously if the insurance industry was not also regulating the flood insurance policies they sell, the payouts on the flood insurance would not be as excessive and the NFP would not be so much in debt. This problem is of course not mentioned as part of the problem.

    I am somewhat on the fence with HR1264, but I am certainly willing to entertain thoughts and ideas on the issue. What I find stunning is that the supposed conciliator is not. The new FEMA person is from Florida. They certainly have to be aware that there are many sides to the issue. But they sound like very much the captured Bush era regulator that they are (in this case Jeb Bush).

    As for Obama flopping on an issue: well given that he tried very hard not to be pinned down on anything more then a general message of “hope” which many people read into them what they wanted, disappointment is not surprising. What is surprising is that so much of the disappointment comes from his policy decisions being so closely aligned with G. W. Bush’s.

    http://www.insurancejournal.com/news/national/2009/05/13/100471.htm

    http://www.insurancejournal.com/news/national/2009/03/13/98660.htm

  2. russell,

    Another big difference between the federal flood program and hypothetical private flood insurance policies is there is no way the private guys would pay for flooding after government levee and floodwall failures. If most of New Orleans had private flood insurance before Katrina, the federal government would have bailed out the industry for Katrina claims behind the levees and floodwalls that failed.

    With NFIP, the flood program pays after levee failures and is beat up over its debt with criticism that the flood premiums were not high enough, not that the Corps’ levees were not high or strong enough.

    The environmental groups claim that the flood program encourages risky development but that is one of those things everyone believes despite no evidence that it is true and plenty of evidence that it is false. If you look at the Mississippi Coast now, the only thing preventing risky development is NFIP. Without the flood program mandating elevations and building standards, most of the Coast would have been built back where it was before Katrina.

    The enviromental groups that are in league with the insurance industry claim that people build in risky places because they can get flood insurance, but the truth is that everyone tries to build just outside the flood zone so they don’t have to buy it. Most people don’t buy flood insurance unless the government makes them, so it is hard to see it as an incentive and enabler. The Sierra Club, National Wildlife Federation, and their Bermuda Reinsurance Industry talking points are wrong.

  3. Also, as for North Carolina’s Beach Plan, I don’t think the premiums are the problem as much as the lack of reserves. If you raise premiums all that money goes to buy reinsurance but on horrible terms. Reinsurance premiums are 5 to 7 times higher than the expected losses. The math doesn’t work for a single state pool. Yoi can’t account for the capital and reinsurance to pay on a major event that affects a large portion of the pool. You have to spread the risk in a larger national pool so that even monster hurricane only affects a small portion of the pool.

  4. When a politician says, “I support the concept, but…”, it means he/she doesn’t care enough about your issue to take a position on it.

    We knew the Administration would have to be persuaded; we just expected to have an opportunity to make our case.

  5. “we expected to have an opportunity to make our case”

    No point wasting time trying to educate them on the issue. The name of the game now is hardball and Gene is batter up.

  6. The argument that inexpensive insurance is not a necessary agent for over development, can be quickly turned into inexpensive insurance is not required for development. Which very quickly makes a better case for the environmentalist side than they make themselves. You are better off arguing the merits of development.

    The NC pool is supposed to be the insurer of last resort. When an insurer of last resort is less expensive and more widely used than private sector policies, all within a price regulated market, you pretty much have the definition of a price being set too low. The funding is inadequate because too many people are using the policy relative to its price. This is exactly what coastal developers would want. The group in charge of setting the windpool rates is captive to the development interests. A situation just as dangerous in the long run as having the insurance regulators captive to the industry.

    My primary problem with any sort of insurance (private or government) is that the premiums are not nearly equal to the upper limits of the policy payout. Using the Federal Government simply puts the federal government at risk of massive surprise payouts. This is particularly true if (as you would expect would happen) earthquake policies were added into the mix.

    Within the United States if you have clout, like Wall Street, you get help. If you do not, like North Carolina after Floyd, or MS, AL and LA today you get some help for a little while until the opportunities for photo ops fade and the crowd moves on to the latest story. I don’t see “playing hardball” in what has become a peripheral issue to much of the country as being a particularly successful strategy.

    I believe I told Sop this fairly shortly after Katrina when I voiced my concern that the people of MS where going to find themselves disappointed in the long-term Federal response: and that was before I knew what the full extant of the Bush Administrations ineptitude would be. I was actually basing it more on the real-politics experience from the Clinton years.

  7. The local solution is to cash build, run naked for wind and max the flood insurance since it pays regardless of the cause of loss.

    if you can’t beat ’em join ’em.

    sop

  8. I find it interesting that Gene writes a letter to the Seacoast Echo slamming Obama for not supporting his proposal. Has he supported anything that the Obama administration has done so far? I agree that we need a solution, personally I’m not sure multi-peril would ever get through Congress and perhaps Obama knows it wouldn’t. Before Gene screeches about “this administration” not supporting him he might want to complain that neither did the last one. Perhaps there is another solution and Gene should consider looking at alternatives that have a possibility of getting enough support to be passed through Congress – then maybe Obama will support it as well. Obama is already proving that he has less of a vested interest in the insurance companies than Bush & co did. Stronger regulation is already being put in place – he has asked them for billions in healthcare savings over the next 10 years. I’m sure Big Insurance would rather have the Repubicans in charge – then we would stand NO chance of getting any insurance reform.

    It would be nice if Gene would try working WITH others this time instead of grandstanding….not likely, hard to teach an old dog new tricks.

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