From the mailbag: Stupid is as stupid does part deux. Angela Rouse of the Kansas City Star would like a word with the Slabbed Nation. A Guest Post.

A Slabbed reader comment by Angela Rouse:

I was forwarded the link to your site, specifically the one that references my name . . . “stupid is as stupid does” by a friend who felt she had hit a Google landmine.

I suppose it is easy to write stuff like that when you don’t actually have to sign a name to it.

Anyway, because my post you address is no longer accessible, I have copied it below for you to post if you choose to give your readership the benefit of actually reading what you critique with such vehemence.

And, for the record, I grew up in Louisiana, and am extremely sensitive to the travails of life there during and after Hurricane Katrina.

The point of the post (which was evidently misunderstood) is that nationwide we need to take a look at responsible development. Nobody, including myself, will argue that we can predict natural disasters without fail in all scenarios. If that were the case, the insurance companies would be out of business.

Likewise, any realist, myself included, knows that every locale has risk.

However, just because we have insurance or disaster relief funds and programs available does not negate the need for responsible development, especially when given historical data, good risk modeling scenarios and predictors.

Risk analysts drew attention to the inadequate levees and predicted the effects of a Hurricane Katriina-level storm on New Orleans years before it actually happened.

Very specific areas in California have a recurring history of landslides, and yet people continue to rebuild.

In my post, I state ” . . . should more be done to restrict current and future development in areas that are at an abnormally high risk for certain natural disasters, such as hurricanes, earthquakes, volcanic eruptions, mudslides, floods and forest fires?” Highlight in your mind the words “current and future development” and “abnormally high risk” to understand that there are indeed parameters around this argument.

Re-read my post, (which follows) again or in its entirety to begin with, as I suspect you need to, and you will see that “stupid is as stupid does” is better suited for people that ignore history, facts and sound risk modeling, and build where they want to in order to “make a buck” or for a good million-dollar view.

Anyway, it will be interesting to see if you have the courage to post all of this (my comments included), along with your name. I suspect not.

Sincerely,

Angela Rouse

*************************

Natural Disasters and Responsible Development Should Not Be Mutually Exclusive

The devastation in Haiti reminds us all of the conflicting, paradoxical fact that human life can be both fragile and resilient at the same time. Despite knowing one’s homeland or region is prone to such catastrophes, oftentimes, the general population, usually poor and hampered by geographic boundaries, is unable to relocate to safer residences in anticipation of such an event. Add to the very real political and monetary barriers, the fact that earthquakes, tsunamis, mudslides, and forest fires happen with virtually little to no warning, is a recipe for disaster that occurs, unfortunately, with relative frequency. Countries plagued by such disasters, like Haiti, of course, need help in both their immediate response to and long-term recovery from these disasters.

Hurricane Katrina and the aftermath of this catastrophe’s effect on the city of New Orleans is a more recent example of this type of disaster occurring on the soil of a large and wealthy nation, one that has more options than the country of Haiti. While it may be argued that many of the casualties of Katrina were due to similar economic and physical challenges, it can also be argued that many deaths were avoidable.

These situations of devastation and human loss pose the question whether, when given the resources, such as here in the United States, should we require people to relocate permanently to avoid the loss of human life? Furthermore, should more be done to restrict current and future development in areas that are at an abnormally high risk for certain natural disasters, such as hurricanes, earthquakes, volcanic eruptions, mudslides, floods and forest fires? For example, why were developers ever given the green light to build new homes in the coastal community of La Conchita, California or other Bluebird Canyon communities that have a long history of landslides? Why do people continue to build ocean-front homes in hurricane-prone areas like Florida? Why do people choose to live dangerously close to volcanoes? When considering risk to human life, saying a volcano is dormant doesn’t mean a whole lot. Both Mt. St. Helen’s and Mt. Pinatubo were considered dormant shortly before they erupted. Are million-dollar views worth the loss of human life and the billions in rescue, recovery and reconstruction costs?

There will always be natural disasters that are unavoidable. However, as our populations expand and our sense of entitlement to live wherever we choose grows, have we allowed our appreciation for convenience and aesthetics to overstep our own common sense? Some will answer “yes” with insurance providing us the ability to live precariously perched on scenic hilltops, or under the shadow of a beautiful, yet potentially deadly mountain, or with literally “killer” views of the Atlantic Ocean. However, practically and ethically speaking, is it right, insurance or not, to establish and expand communities in such areas, especially when it is more than the foolhardy that pay the costs when disaster occurs? While it is acknowledged that rate increases as a result of catastrophes do occur more in the general region in which the disaster occurred, there is a widespread acknowledgement that the country does absorb some of these costs through more moderate rate increases, assistance to
disaster-stricken states and drastic population shifts.

During his campaign, President Obama lobbied for a national catastrophe fund to more adequately prepare and help victims of natural disasters and the insurance industry. While Obama states that responsible development must go hand-in-hand with the implementation of such a fund, what are our guarantees that this will actually occur? How can we be assured that developers, communities and the government will be responsible with residential and commercial development and planning when we have the example of the Bluebird Canyon area of California? Landslides with significant human and financial costs occurred there in 1978 and 1998, and yet development continued despite another landslide in 2005 that destroyed 17 multi-million dollar homes. Let us not forget places like Galveston, Texas. In the last century, Galveston endured three major hurricanes, with estimates of over 8,000 people lost and approximately 3 billion dollars worth of damage total. According to the National Oceanic and Atmospheric Administration, one of these hurricanes, the Great Galveston Hurricane of 1900 still holds the record for the “deadliest natural disaster in the nation’s history.” Call it the fortitude of the human spirit to “never give up” or an awfully bad stubborn streak, but with those statistics, one wonders why anyone would want to live there, and yet they do. Putting aside the debate on the implications to private insurance, with our track record of haphazard community planning, and without established and strict development restrictions, couldn’t a national catastrophe fund just simply make it a whole lot easier to repeat our past mistakes?

30 thoughts on “From the mailbag: Stupid is as stupid does part deux. Angela Rouse of the Kansas City Star would like a word with the Slabbed Nation. A Guest Post.”

  1. I’ve read this column again and sadly Angela, I must conclude your rightous indignation at me terming this column stupid, while understandable, is misplaced. Angela, quite simply you assume facts not in evidence to support your conclusions.

    I’ll add that most newspapers break links and 404 out pages precisely so bloggers like me won’t have archival access without paying a fee to a large, equally clueless and sure to be bankrupt newspaper chain no one will remember in 30 years. That said we did link Angela’s original story and a whopping 5 people actually cared enough to take the time to click over read her column early last year. Risk mitigation is a niche topic for sure.

    Since Angela brings up modeling, insurance and the like it is my hope she reads this and takes the time to catch up with Paige St John’s and now Jeff Amy’s pioneering work on how insurers misuse risk models (and their inherent limitations).

    sop

  2. ” Putting aside the debate on the implications to private insurance, with our track record of haphazard community planning, and without established and strict development restrictions, couldn

    1. And that is exactly my point because yes, if you remove all the flies there is no longer the proverbial fly in the ointment just the ointment.

      People make money off disasters. People make money creating the coming disasters. The problem here is not private property rights.

      sop

  3. Angela, you would not know anyone in Jefferson Parish government, wouldya by any chance? Chris Roberts, maybe? Tom Capella perhaps?

    SOP I started looking at New Orleans, SELA and MS blogs after Katrina, while holed up in coffee shops and pubs waiting to get back hom. I can’t remember when I first came upon yours but I do remember it was during the period when what I was doing was getting as much info about levees, the mistakes of the past (local and federal), topography, the Federal Flood, the Broussard Flood, and the insurance issues that surrounded the aftermath (which is a tragedy unto itself. Sometimes the issues are too emotional to really post about any more without getting insanely wound up.

    I know I read this incredible report here by you here; I have friends in MS who had a similar epoch. I direct Ms. Rouse’s attention to it.

    http://slabbed.wordpress.com/stories/roof-surfing-sop-survives-katrina/

    Sometimes we still with the absolute insanity of past mistakes still being made:

    http://www.wwltv.com/outbound-feeds/social/Corps-again-using-floodwall-design-that-failed-in-Katrina.html

    Sometimes we have to deal with the stupid, foolish (really, ignorant) slanders of those who really, honestly don’t have a clue. One of the earliest new Orleans bloggers had a name for these folks if I can be so impolite:

    http://ashleymorris.typepad.com/ashley_morris_the_blog/2006/11/he_for_whom_the.html

    http://ashleymorris.typepad.com/ashley_morris_the_blog/2007/02/none_dare_call_.html

    But we’re all calmer now, right? I dunno, after reading this, I’m not, I suspect Ashley would have gladly focused his laser beam on Ms. Rouse and donned her with the FYYFF / FM mantle.

    In terms of insurance, like so many other issues here it desrves its own treatment in length. I do know this: insurers made money here before and they can do so again. No one is saying that insurers should not be able to make policies and profit, build their own homes and lives for their own families, that’s what it’s all about. What’s not right is when someone pays 40 years of policies and then the other contracting party brings in some F`ook from Missouri who doesn’t know a pothole from a levee breach on a contract basis who basically defrauds X years of investment because in his expert f’mook opinion the damage was caused by water and not by wind or maybe was even preexisting.

    Ms. Rouse:

    Your article/post is not about insurance, risk or any federal flooding program.

    Here’s something Kansas City doesn’t know: they don’t know what it means to have your city and your way of life threatened and just when everyone says you’re a dying city (area) (and by axillary you yourself are SOL as well) you show them otherwise. This area has more fight in it than most anyone anywhere in the rest of the USA given the present circumstances and I’d wager we’ll be around longer than KC, no matter how long it takes. That’s just a fact.

    “Responsible development”: That’s not a euphamism for something more cynical, more sinister?

    “These situations of devastation and human loss pose the question whether, when given the resources, such as here in the United States, should we require people to relocate permanently to avoid the loss of human life?” Excuse me? Cherokees? Trail of Tears? How about a nice Warsaw ghetto?

    “Should we require people to relocate permanently”: Lady, yes, I will say it, that is a *fascistic* comment. And the rest of your paragraph is an poorly shrouded imperative despite all its question marks. The question never should have been asked but in *your* context your manner of answering it is a epic moral failing.

    “Sense of entitlement to live wherever we choose”? Do you know what country YOU and WE (most especially) LIVE IN? Ma’am, we are fellow Americans. We have thousands of men and women who have spilt blood for Missouri and the USA since the 1700’s and the word now is that sorry that was all for naught, you’re really not entitled to keep what’s yours, to live in your home, the land you love?

    So, wait, you “grew up in Louisiana” but you are allowed to live where you want, and let me guess our way of life is not your cup of tea, right?

    And there’s no need to drag California in to it to prove you’re not prejudiced; right, I know, California with its 6th largest economy in the world, numerous billionaires and milkionaires, and its 49 Congressmen are really on the chopping block. Hardly. Actually, not at all. Louisiana & Mississippi, especially South Louisiana and South Mississippi, not so much, they get mentioned as good candidates for contraction all the time. Just ask the NBA.

    “However, practically and ethically speaking, is it right, insurance or not, to establish and expand communities in such areas, especially when it is more than the foolhardy that pay the costs when disaster occurs?” Wow, did you actually use the word “ethically” in there? Your post has no ethics. You may not realize it but people HERE payed not only with decades of premiums payments but also with their lives in more ways than one. And if you take risk sharing out of the principles of economics and capitalism then you have a pretty crappy vision of the national market and you will end up with a poor one at that.

    “One wonders why anyone would want to live there”: well, “one” might wonder why any “one” might want to be you. It’s because of heart, soul, the right to be free, liberty, and most essentially the ethical, moral, contractual and legal duties that intercourse our nations and its citizens. Would anyone wonder why one would want to save one’s mother, one’s father? That’s how it is, either you have it or you don’t deep inside, and let me tell you Ms. Rouse these people down here have it in large quantities.

    Come and take us, come and try.

  4. I read this post a couple of times this morning and closed out of it in disgust without commenting. Then I returned to the post this afternoon and read Telemachus’ comments. He said much of what I would like to have said, just in a more eloquent manner.

    Ms. Rouse begins the last sentence by writing, “Putting aside the debate on the implications to private insurance . . .” How in the world are we supposed to put aside the very thing that hindered our recovery the most? Private insurance stomped on so many longstanding customers after Katrina, the industry unintentionally redefined the way the collective populations of Southeast LA. and South Miss. heard the phrase “trial lawyer.” This phrase used to be synonymous with “child-molester.” But after Katrina people realized, in no uncertain terms, how insurance fraud from the private insurer side could take their lives in a completely different direction than where folks intended for their lives to go. Many people who hated lawyers (and often with good reason) realized they could not get their lives back without the assistance of the dreaded trial lawyer.

    There’s so much of what Tele said that I’d like to echo. But the fairly common theme among the moderators and commenters here at slabbed is that we can afford to live wherever we want. We choose to live here. If private insurers were not making a fortune insuring properties on the Gulf Coast, they’s be gone; pure and simple. Insurance companies are motivated by greed. And yes, I’ve done work for insurance companies so I am not speculating here.

  5. I quite agree that Telemachus has most eloquently said that which I would say……yet without having said directly what I here append: “Ms. Rouse, you are a fucking moron.”

  6. “A killer mile-wide twister with at one time 205-mph winds ripped through the small farming town of Greensburg, Kansas, on May 4, leaving nearly the entire town demolished or heavily damaged.” One more list of morons to add to the list of stupid people and the places they live. Also those idiot farmers and their damn CAT crop insurance program. Rewarding them for crop failures only encourages losers to remain in farming.

    Catastrophic crop insurance (CAT)

  7. Good news. I found some more morons to add to the list. Seems Kansas is full of risk takers who look for insurance or the community to help them when their choice of dangerous places to live doesn’t pay off. These idiots built in what is known as Tornado Alley. Funny part is they look so surprised when their homes and cities are destroyed by guess what—A tornado. How pathetic these losers are with their surpised looks. Thank goodness their local paper and crack reporter let them know just how stupid they were to move to Kansas. I haven’t found the exact article yet but I’m sure they have set the locals straight?

    http://www.youtube.com/watch?v=ZDiVyf8j3Ew&feature=fvw

  8. Her argument is not based on facts. The issue is not about new coastal development. The insurance industry writes insurance for the big new developments, the condos and hotels and casinos and McMansions in Florida and along the Gulf Coast. The insurers can’t say no to big shot corporations and developers who also need other lines of insurance and financial services.

    The older homes, locally owned small businesses, and middle-range homes that are not right on the water and survived decades of storms before Katrina are the properties that can’t get anyone to write coverage and whose owners don’t have the resources to wait out a 3 or 4 year law suit so they take a bad settlement.

    New Orleans is an old city. When it was built, it was not nearly as threatened by the Gulf of Mexico as it is today.
    Look at this map from 1861: http://usgwarchives.net/maps/louisiana/statemap/la1861alluvial.jpg
    The railroad went all the way to the Port of Proctorville in St. Bernard Parish, an area that is now a sunken island separated from the mainland by MRGO.

    For 200+ years, all the focus of protection was on keeping the Mississippi River out of New Orleans. That effort has been successful but the levees also kept sediment from feeding the marshes and MRGO and other navigation projects accelerated the erosion.

    The truth about insurance is that coastal residents are paying several times more in premiums than insurers expect to pay in claims. Residents are building higher and better but are not getting comparable relief in premiums. The insurance industry is saying that if you spend thousands of dollars to improve your home to a high wind standard, then some company might be willing to sell you a policy for one year but will not lock in premium discounts that would cover the costs of your improvements, will not be bound to pass on most of their savings in expected losses, and would retain the right to drop you every year when your policy comes up for renewal. They are lobbying the Governors and legislators to require you to build better without locking in premium discounts. They don’t care about mitigation programs except as another backdoor subsidy.

    Insurance companies should be required to make the models public, make the expected loss estimates public, and show exactly what the premiums are based on. Or shut up.

  9. The lady from Kansas is absolutely correct. Ya’ll just don’t want to accept what she’s saying because to do so would require you to admit that YOU have your heads up your collective asses.
    Telemachus, your comment regarding engineers from the Midwest is just plain ridiculous. Are you suggesting that you have to live in a big house overhanging the Gulf of Mexico in order to understand the mechanics of wave actions or to calcuate the pressure per square foot exerted by water and use that information to model damage to a structure from a tsunami?
    And ALL of you who continue to state – as if it is an undisputed fact – that insurance companies are making money, hand over fist, writing Homeowners insurance along the Gulf of Mexico sound like a bunch of third graders whining “it’s not fair” every time they don’t get their way. Nothing – I repeat, NOTHING is stopping you people from investing your OWN money in a company to provide insurance coverage – at a price YOU think is fair – for homeowners on the coast of MS and LA. Go ahead! What are you waiting on? Just think, if you had started right after Katrina, you’d have raked in, literally, BILLIONS of dollars in premiums by now. And, since the wind hasn’t blown in all this time, it would ALL BE PROFIT. Right? Uh…NO! Maybe instead of just working “with” insurance companies, some of you ought to try working “for” an insurance company for a while. Might learn something if you did.
    And, stop trying to compare tornados and hurricanes as if they are just opposite sides of the same coin. They aren’t. See, tornados can strike anywhere. Hurricanes tend to stay close to the ocean. Tornados, although quite destructive, tend to be tiny in scale, compared to hurricanes. Even the most destructive tornado will cause damage over only a few hundred acres, compared to a hurricane like Katrina that spread its devastation over several THOUSAND square MILES. If you actually UNDERSTOOD the insurance mechanism, you’d see how insuring for tornado damage is SO different than trying to insure for hurricane damage. If I insure a home in Podunk, Kansas, chances are VERY good that home will NEVER be damaged by a tornado. A similar statement can NOT be made for a home overlooking the Gulf of Mexico.
    Furthermore, NOBODY is suggesting that the entire population of the US be moved to Kansas. You can enjoy living on the coast without having your home perched out over the water and DARING the next wave to wash it away. Just to move it inland a few hundred feet and/or elevating it to protect against storm surge is NOT asking too much of you….especially since you think the cost of your insurance should be shared with people like me who don’t even get to SEE the water because it’s blocked by houses and casinos.

    And, you DO understand, don’t you, that people living in, say…Olive Branch.. who don’t qualify for “standard” insurance have to pay a 5% penalty on their property insurance to subside YOUR windpool. Let me restate that: If a person in far-north Mississippi has less than ideal fire protection, that person will probably have to buy fire insurance through the non-standard insurance market…and pay a substantially higher rate BECAUSE of their increased risk of total loss by fire. IN ADDITION TO paying this higher rate because of their OWN increased risk of loss from FIRE, they are ALSO paying 5% ADDITIONAL PENALTY to subsidize the Windpool so YOUR wind insurance can be made more affordable. Just like the people in Kansas subsidize the Federal Flood program that allows you to build your house overlooking the Gulf of Mexico. How would you like it if you had to start subsidizing OUR fire insurance? You think you might want to tell us we should build more fire resistive homes? Or move closer to town? Yeah, I suspect that is exactly what you’d say. Bottom line, since we ALL contribute (significantly) to YOUR ability to live on the coast, (or any other high risk area) we DO have the right to ask for more restrictive building codes for “current and future” development. Or, to tell you to pay for it yourselves. (And that “we” includes insurance companies.)

    1. We have nothing in common with Olive Branch, Lynda so I’d be careful about head in hiney comments. But we can’t spread our risk with folks in Tampa because of that anti competitive, anti trust exemption insurers have.

      To take it a step further the people in Olive Branch could not exist in their current impoverished condition without us down here providing the economic activity to fund their teachers and the like.

      What stuck on stupid Angela and evidently you don’t get is the reason we will be here when places like Olive Branch and KC are ghost towns is our location is strategic, which probably has something to do with all the asscoiated economic activity. Maybe that is why the Navy doesn’t build ships in BF inland Mississippi or Kansas City.

      Like I said when you remove all the flies from the ointment Polly Anna spew like that column begins to sound reasonable. We’ve a bit further along the knowledge continum here at Slabbed and Angela will have to do far better to be taken seriously on this forum.

      sop

  10. Lynda throws a baby-fit like a second grader. Funny she does not mention that a significant portion of damages from hurricanes (and tropical storms) are not covered anyway because “asleep at the wheel” (or worse) insurance commissioners permitted the implementation of these fraudulent “named storm deductibles.” So any “light” to “moderate” damages to gulf coast properties from tropical systems are absorbed by the property owner. This is certainly not the case with tornado damage (unless, of course, the tornado is spawned by a tropical system). No doubt she earns most, if not all, of her income from an insurance company(ies).

  11. Just curious does that same homeowner, using your example, in Olive Branch have to buy earthquake insurance? Is it required by the fed loan programs like wind insurance is for homeowners down on the Coast? We are actually trying to pre-pay for our own disaster needs while others like Olive Branch are hiding their heads in the sands of the New Madrid fault not setting aside anything for their risk needs. We are just asking for the creation of a vehicle to use to prepay for our own risk needs and then some dumb ass comes along saying we should just move—to where Olive Branch where we wouldn’t have to worry about the risk needs? Just rely on the fed’s to help when it comes. Not our style. We are trying to prepare for the problems which living in our area pose. What about the Olive Branch earthquake risk? Gotta have insurance or is it optional?

    “If a true “killer earthquake” struck along the New Madrid fault zone today, cities such as St. Louis, Missouri and Memphis, Tennessee could potentially be completely destroyed.”—

    http://www.activistpost.com/2011/01/is-new-madrid-fault-earthquake-zone.html

  12. Federal taxpayers have subsidized Kansas City, Missouri, and Kansas plenty.
    First of all, the Corps of Engineers has built levees, dams, and other extensive flood control projects on the Missouri River and its tributaries so that people could live in Kansas City without the city being inundated on a regular basis. That is what we do to protect our cities. Your city was built in a flood plain also but we changed the flood plain.
    Second, if you add up all the agricultural subsidies, the all-perils crop insurance, the disaster assistance, the irrigation projects, and on and on, surely it would equal if not exceed the value of our hurricane relief.
    Third, the whole region was settled and developed by federal subsidies, especially the grants of millions of acres of federal lands free to railroads and homesteaders.
    And of course, without New Orleans to turn the Missouri-Mississippi River trade into international shipping trade, St. Louis would not have been nearly as wealthy or important as it was, and without St. Louis, Kansas City would not have been wealthy or important at all.

  13. In Fiscal Year 2009, the federal government spent $67.9 billion in Missouri but collected only $44.3 billion in all federal taxes from Missouri.

    The federal government spent $34.7 billion in Kansas but collected only $20.4 billion in all federal taxes from Kansas.

    People who live in places that need so much federal taxpayer subsidies should not be so self-righteous and critical of people who were displaced by a catastrophe.

    No one in Mississippi or Louisiana wants to build or buy a house that they expect will be destroyed. I have no patience for this beach envy argument based on the false assumption that coastal residents are too stupid to prepare for hurricanes.

    Why don’t we move all the coastal residents to Kansas City? Who needs ports and oil and gas and seafood and shipyards and Navy bases and refineries and all the other industries that have to be located near coastal areas and shipping routes?

  14. Oh and there is more folks. Seems reality is not reflected in our guest post is it?

    Potentially contrary to this seemingly plausible explanation, yearly data from 1955 to 2003 show that the mean and standard deviation for flood losses are greater for the state of Missouri than for the state of Florida.4 (Hurricane damages from wind are not included in this comparison and wind damage is not covered by NFIP policies.)

    In the 10 years after the 1993 flood, new development occurred in floodplains of all
    Midwestern states, despite buy-out programs by FEMA to remove some properties from risky
    areas. Out of seven states examined, Missouri ranked first in new development and accounted for
    almost 78 percent of the total new floodplain development, with the majority occurring in the
    greater St. Louis metropolitan area (Hipple et al. 2005).

    http://opim.wharton.upenn.edu/risk/library/J2010NatHzRv_CK,HK.pdf

    There is of course development in Kansas City going on in the flood areas of 1993.

    Read and learn my dear clueless in Kansas City. It is you who are the great flood plane developer of our Nation—

    [DOC] MISSOURI FLOODS:File Format: Microsoft Word – Quick View

  15. Sop, you actually have a LOT in common with folks in…say..Olive Branch. People in Olive Branch work, pay taxes, own homes. Their homes are, like yours, exposed to loss from a myriad of causes. The only difference is that the home ownwer in Olive Branch must bear the full market price for ALL his insurance coverages HIMSELF. He doesn’t have a publicly subsidized fund to help him out. And….I’m glad someone thought to bring Earthquake into the discussion. It makes for a PERFECT comparison.

    You people on the coast are at much greater risk from hurricane damage than the home owner in Olive Branch. But…the guy in Olive Branch is much greater risk from earthquake than you. And BOTH can be very destructive. So, can we agree that these two perils sort of balance each other out? Ok. Now, pay attention because…this is an important distintion….There IS NO earthquake pool where N. Mississippians can go buy earthquake insurance when the standard market gets too expensive for them…or to take those customers the standard market rejects (like that house on the cliff overlooking the Mississippi River). The homeowner must pay the full price himself, if coverage is available, or do without when its not. And..the deductible…well, whaddya know?? It looks JUST LIKE your “fraudulent” named storm deductible!! In fact, named storm deductibles were modeled after earthquake deductibles. So…tell me again…. what makes you so special that you should not have to participate on the cost of your hurricane exposure the exact same way the folks in Olive Branch do for our earthquake exposure?

    As for the Federal Govenment coming to the rescue after an earthquake…maybe they’ll get the same low interest loans to help them rebuild like YOU got …after Camille…& after Georges…& after Katrina….And, maybe the Dept of Insurance will enact a regulation that imposes a hefty penalty of your coastal homeowners premium to fund a pool for earthquake insurance ‘cuase you KNOW, after the big shake, EQ coverage in going to become as scare as hens teeth. Maybe that will happen. And if does, I KNOW you are all going to smile and say “Oh, that’s ok. I really believe people should be able to live any where they want, regardless of the hazard so I don’t mind subsidizing their EQ insurance AT ALL. After all, New Madrid EQs only happen every 150 years or so” Right? You ARE going to say that, aren’t you????

  16. Oh…and SOP….I take it you haven’t been to Olive Branch lately. Maybe a road trip is order. There is nothing “impoverished” about the area. In fact, Olive Branch is square in the middle of the fastest growing MOST economically stable areas of the state.

  17. You don’t understand the basic economics here.

    The wind pool does not subsidize homeowners.

    It subsidizes the insurance and reinsurance industries.

    The homeowners pay far more in premiums than their expected losses, but the surplus does not build up in the pool. The money goes to the reinsurers and their inverstors in a noncompetitive nonmarket transaction between the insurance industry representatives on the wind pool board and the insurance brokers and reinsurance representatives who divide up the layers of coverage and fix the prices.

    The wind pool then subsidizes the insurance companies by endorsing the market manipulation that allows them to cherry pick the expensive properties so the Insurance Commissioner can let them charge high risk prices for lower risk properties.

  18. Lynda is the personification of that saying that someone with a little knowledge of something can be very dangerous. If she is right, and the average homeowner from Kansas (or even California for that matter) is paying a fraudulent earthquake deductible, I’d like to see a copy of one of those relative to a property 100 miles from a fault. More fraud by the insurance industry on the underwriting side (whether it’s a named storm deductible or an earthquake deducible) is just more fraud. More outrageous adhesion that the homeowner cannot bargain away anymore.

  19. The earthquake insurance market is different than hurricane or flood insurance mainly because people are not required to buy earthquake coverage in order to get a mortgage. Wind and flood are required to get a mortgage in any high risk area. So there are not enough people buying earthquake policies to spread risk or build up reserves to pay claims. For earthquake insurance to work, a pool would have to save and invest the surplus every year without an event to build up the capital to pay a lot at once after an earthquake. No private company is going to sit on that money. They will pay dividends and bonuses. If a company did have a large cash reserve, some corporate raider would take it over and cash it out. So without enough policies to spread risk and without accumulated reserves to pay on a major quake, the only available option is a high deductible policy that would not make economic sense to the homeowner. Someone with earthquake risk would be better off setting aside and investing a self-insurance pool than paying high premiums for a high deductible policy.

  20. That is why only 10 percent of California homeowners carry earthqauke insurance. These are probable people who actually pored their foundations on an indented piece of property which was formed by a prior earthquake IE they are high risk. Thus high priced. Oh and those policies do kick in at about 20 percent of home value for the deduction. Which in California is big money. Here is the kicker for Los Angles and other SOCO insurance customers. They have a lot of fires in the area which result in some deaths and somewhat large property loses. Thus they pay big money for fire insurance. Here is the kicker for them. When a fire comes in any sequence etc etc earthquake funny language small print etc etc don’t understand whay I am saying. Ha You don’t have fire insurance. Poof. Concurrent clause for earthquakes. A big earthquake hits Southern California and it happens during the fire season. Los Angeles county burns to the ground and the insurance industry denies all fire claims based on the law. Their policy didn’t cover fires when they occured in any sequence of an earthquake. Same law that was used to deny claims to us after Katrina. Mmm. That is the facts jack.

  21. February 25, 2010

    Missouri Department of Insurance: Earthquake insurance market feeling some tremors
    Jefferson City, Mo. – February is Earthquake Awareness Month, and Missouri Insurance Director John M. Huff says earthquake insurance is available across the state, but with some significant shortcomings in coverage. A new survey shows that while homeowners in all parts of Missouri can find coverage, they may face extremely large deductibles or have to leave their current homeowners insurance company.

    The department recently collected data on earthquake coverage from the 20 largest homeowners insurance companies in Missouri. The report showed several positives, including the availability of coverage and the relative affordability of premiums. In most parts of Missouri, the insurance will cost about $10 per month on a $200,000 home. In St. Louis and southeast Missouri – areas most likely to be affected – the insurance averages about $40 per month.

    Huff, however, says he’s concerned about several findings:

  22. Brian, I understand the windpool. YOU don’t. It does NOT subidize insurance companies or reinsurers. It’s absolutely, 100% the other way around!!!

    Homeowners buy wind insurance from the MWUA at a rate that is far below actuarial indications for what it SHOULD be. Therefore, the wind pool does not collect enough money to cover claims for a storm like Katrina. Then, after a hurricane, when it can’t cover all its claims, the shortage is assessed to every property insurer in the state. These insurance companies do not receive ONE DIME in premium from the wind pool yet they still have to help it pay claims. After Katrina, several insurance companies paid windpool assessments equal to 6 TIMES the premium they wrote in Mississippi in 2005. UNDERSTAND what I just said. These insurers paid windpool ASSESSMENTS that wiped out 6 years of premium earned. Not just 6 years worth of profit, 6 years of PREMIUM…before expenses and taxes. And that’s not counting the claims they paid for their own policyholders.

    In addition, since 2007, there has been a 5% premium surcharge on every surplus lines policy issued in Mississippi and that money goes to the windpool to be used (first) to buy reinsurance and (2) for reserves to pay your claims when the next storm comes through. In other words, those policyholders are paying 5% more than they would otherwise have to pay but for the fact that, by law, they have to subsidize YOUR windpool.

    As for EQ being required…I don’t know if mortgage companies require EQ coverage on a home located in earthquake zones but I suspect that many do. I think they are shortsighted if they don’t but that’s their right, I guess.

    Regardless of that, Sock Puppet, I think, if you read the posts by NewMadrid, you’ll see that the “little knowledge” I have is, in fact, REAL KNOWLEDGE based on FACT. It is a FACT that EQ insurance has the same deductible structure as many coastal “wind” insurance policies. And, all the people living on New Madrid and all the people living in California and all the people in between have the same Concurrent Causation clause for EQ or flood (or other excluded peril) as you people on the coast. The only difference between the rest of us and you is that we UNDERSTAND and ACCEPT the fact that they have to have EQ insurance AND flood insurance AND fire insurance and that the limits on ALL these policies have to be high enough to cover the replacement cost of our homes. Ya’ll want to buy one or the other, for an inadequate amount, then call “foul” on the insurance company when you can’t rebuild your homes. The time to learn what your policies cover…and what they do NOT cover…is BEFORE the loss, not afterward. (And don’t give me that “my agent told me I didn’t need it” crap ’cause I ain’t buying it.)

    Furthermore, if you can’t afford to PROPERLY insure your house, then you can’t afford THAT house. Get one you CAN afford – even if that means moving off the beach…and quit blaming insurance companies for the fact that you can’t afford it. Fact is, sir…you probably would not even have an opportunity to buy a house if the Big Bad Insurance Industry didn’t exist. The bank wouldn’t loan you any money if their collateral could not protected with an insurance policy. So, next time you make your house payment, THINK about that fact…and thank your insurance company for making it possible for YOU to live the American Dream. (You’re welcome.)

  23. Brian, you are just plain delusional. You need to get a grip.

    And, New Madrid, do you really think the Feds are going to ante up to replace private structures destroyed by EQ if the owner has no EQ coverage? No way.

    Oh, as I said before, those homeowners might get a Govt backed low interest loan to rebuild….IF they can afford the new, low interest loan PLUS their existing mortgage payment. Some will. But many others will just be out of luck. They’ll file bankruptcy. Then, of course, the Govt will bail out the banks that made loans on those homes and didn’t require EQ insurance to keep THEM from becoming insolvent. But the irresponsible homeowner will be living in a FEMA trailer…..just like all those people on the coast of Mississippi who didn’t buy flood insurance. Then, they’ll get a lawyer and sue their homeowners insurance company and claim a rouge wind weakened their homes just before the EQ and THAT is the ONLY reason that EQ destroyed their homes. Otherwise, it would have just broken a couple of window panes and cracked a couple of brick on the front porch. And, then SOP will have a whole new set of insurance companies hijinks to “discuss” on Slabbed.

  24. MY, my, my LYNDA, what a burden you must bear assuming you are right…poor Brian…the fool you imply that he is when you write:

    “I understand…YOU don’t…”

    “you are…delusional…”

    I’m sure Brian has your attention now ! Yea…right…

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