The forum’s title, Gulf Coast Insurance Forum: What’s Wrong with the Insurance Market Along the Gulf Coast and How Do We Fix It? pretty much says it all. It is being held next Wednesday, October 20 9:00 AM sharp at the Fleming Education Center Auditorium at USM Gulf Park in Long Beach.
According to the folks at Source Watch RAND Corp “ranked fifth in the latest survey of think tank media citations by FAIR (Fairness & Accuracy in Reporting)” and is considered centrist. IMHO their work in the area of insuring right tail catastrophes like hurricanes has been very good as they tackle the issues from a broader standpoint that is not found in the insurance industry’s bought and paid for university research from places like U Penn.
The panel includes folks in the trenches with this issue everyday in David Treutel, Gene Taylor and Steve Scalise. Senator Wicker will have his policy guy there as well. This forum is sponsored by the Gulf Coast Business Council, the regional voice of the Mississippi coast business community.
I’d like to issue a special invite to the Slabbed Nation and especially our friend Lynda in central Mississippi to come join me and party the day away cussin’ and discussin’ the very real problem of the dysfunctional coastal wind insurance market.
sop
Why the shot at UPenn and obviously by extension, Howard Kunreuther at Wharton?
In my opinion, Kunreuther and Wharton are the preeminent thinkers/researchers on catastrophe risk/insurance…..I’ve read all his work post-Katrina and find him extremely well-informed.
Moreover, he is a supporter of MANDATORY Multiperil Insurance….as the second-best economic solution. Of course the best approach is to maximize the mitigation of loss…like the elevated Brad Pitt homes in N.O…..
Also, Kunreuther’s research (“low probability event”) goes back 30+ years. People have short time horizons regarding hurricanes so they skip the flood insurance. Moreover, once the catastrophe happens, they can readily expect to free ride the government aide. The government wants to act as the Good Samaritan, but that tends to undermine responsible behavior.
I can’t imagine any economist not advocating internalizing the free rider problem. Everytime there’s a major storm the U.S. Government is expected to bailout the uninsured….that’s moral hazard and is insane…and the insanity is compounded by the insurance companies gaming the system…which by the way is a topic Mr. Kunreuther has spoken on repeatedly.
As to RAND…Institute for Civil Justice was the organization that attacked mass tort litigation (ala asbestos) back in the 1980s…of note, Sheila L. Birnbaum (I know how much you love her work as State Farm’s lead dissembler) was a primary author of much of their work and Mr. Feinberg cut his teeth on the “trust” work as a preferred method of handling claims. Maybe you should ask Mr. Dixon’s opinion about Ms. Birnbaum?
Sorry if I went ballistic on your off-handed reference to UPenn…but there are all kinds of strange bedfellows in the legal world. One of the things that bothers me about many lawyers is there readiness (and willingness) to take either side of a hot argument. Call me old-fashioned but if you do what you do for MONEY….that makes you a ……
Hope you learn something at the Forum.
James I’ve already seen Howard Kunreuther at Senator Wicker’s forum. Yes they had some innovatiove ideas but they were within the current system which I see as inherently broken. I think that outlook is reflective as to whom funds much of their research in insurers like the Travelers.
Tweaking things around the edges won’t solve this problem.
sop
James,
The Wharton guys do good research but then they pull their punches on the conclusions because they are heavily funded by the industry. They objected to my use of their data to criticize the industry. When they report that premiums can be 5 to 10 times higher than expected claims because of capital costs apparently that can only be cited to justify the high premiums, not to suggest that the current setup is gouging policyholders.
I’d also like to add we do not discriminate against Wharton as I’ve taken shots at Dr Duett at Mississippi State as well. In comaprison I was nice to the U Penn folks.
sop