Take a look at the “blame game” in action in this story from the Insurance Journal.
A Mississippi congressman on Tuesday reintroduced legislation that would add wind coverage to the National Flood Insurance Program—something the industry said is already widely available in the private sector and would be unnecessarily costly to taxpayers.
The legislation, the Multiple Peril Insurance Act, is sponsored by Rep. Gene Taylor, D-Miss., the primary sponsor of similar legislation in the last Congress.The bill was added as an amendment on the House floor to the Flood Insurance Reform and Modernization Act of 2007, which passed the House overwhelmingly, but which failed to win support in the Senate.
Its inclusion in the House bill is the primary reason a stalemate holding up reauthorization of the NFIP has existed since last September.
Makes you want to say, “Well, excuse me but wind v water policy disputes are holding up the recovery from Hurricane Katrina.” Congressman Taylor’s website with background information on the legislation features a “hall of shame” – “before and after” photographs of 10 damaged properties with coverage that paid not a dime until the homeowner/policyholder filed suit.
Currently, legislation extending the old version of the NFIP until Sept. 28—so the differing versions of the bill passed by the House in 2007 and the Senate last year can be reconciled—is awaiting action in the Senate.
A provision extending the program is included in the budget reconciliation bill passed by the House last week. It is awaiting action in the Senate. The current extension expires Friday.
The Property Casualty Insurers Association of America immediately issued a statement voicing opposition to the bill, saying it is “misguided and would needlessly displace the private market, disrupt existing state funds and create a significant burden for U.S. taxpayers.”
The rest of the industry, both carriers and agents, also oppose adding wind to the program. The reinsurance industry opposes the legislation as well. David Sampson, PCI president and chief executive officer, said the trade group’s members oppose the bill, the Multiple Peril Insurance Act of 2009, because wind coverage is already available either through private insurers or state wind pools.
Mr. Sampson, the PCI and the “rest of the industry” have confused coverage with paying covered claims; and, there is a world of difference. The Times Picayune reports on today’s visit of HUD Secretary Donovan and HHS Secretary Napolitano.
“What we have seen today makes us disturbed — angry, even — to see the numbers of the families living the way they have, ” Housing and Urban Development Secretary Shaun Donovan said at a news conference with Homeland Security Secretary Janet Napolitano after a morning tour of hard-hit areas…”we are getting a view of what has not yet happened and what needs to happen, ” Napolitano said.
In a police-escorted motorcade, the visitors saw houses and businesses that had been repaired, houses and businesses that apparently had not been touched since Hurricane Katrina hit in August 2005, and buildings reduced to nothing more than stacks of lumber. As the convoy crossed into New Orleans from St. Bernard Parish, the entourage passed a hand-lettered sign on white poster board on the side of a ravaged house: “PLEASE HELP OUR COMMUNITY.”
Meanwhile, Mr. Sampson continued:
“While this legislation is well-intentioned, it is both unnecessary and fraught with unintended negative consequences, and it ultimately will not help homeowners in need,” Mr. Sampson said.
“Right now, we can best serve homeowners by reauthorizing the National Flood Insurance Program and by educating insurance consumers about the options that already exist to protect their homes, their families and their financial security,” he said.
Mr. Sampson said that private or state residual markets for windstorm coverage already exist for more than 99 percent of all coastal properties in the United States. “Only properties in significant disrepair, representing less than 1 percent of the total, are uninsurable through these programs,” he said.
Sampson simply doesn’t “get it”.
After reintroducing the bill, Rep. Taylor said, “Apparently, the insurance industry no longer wants to cover people for wind damage in coastal America or will not provide that coverage at a cost that is reasonable.”
He said, “Throughout coastal America, property insurance companies have dramatically increased premiums on existing policies, canceled existing policies, or have stopped writing new policies altogether for our nation’s home and business owners,” adding that his bill “will solve this problem.”
Mr. Taylor also said that passage of the bill “will also stimulate the economy throughout coastal America, particularly here in the Katrina area of the nation.”
Wow, a “hall of shame”–what a great way to phrase it. For some reason, I kept reading “wall of shame”. Must be the early morning hours.
Also LOVED “Mr. Sampson, the PCI and the
These guys are lobbyists. I doubt they have any clue what a functioning private market would look like so they can’t see the overwhelming and indisputable evidence of complete market failure in ever Gulf and S. Atlantic state. The state by state wind pool/Citizens/FAIR numbers leave no room for doubt.
The disconnect from reality at the PCI is absolutely stunning.
sop
Where are Louisiana’s congressmen and women?
Also, every judge in the Eatsern Distirct of Louisiana should be forced to look at those pictures and then re-think their position on the flood offset position.
Where is Mr. Rossmiller’s comment about Congressman Taylor’s comments? I guess the owners of those home are trying to get “something for nothing”, right? Manufacturing coverage where none exists, right?
For the sake of clarity, this Sampson is not Mr. Sampson. I have been recovering from a computer crash and hope to rejoin the discussion soon when the topic is right and I feel I can add a little insight/ info or attitude.
Good to see you back. Feel free to suggest a topic. : )
Glad you clarified Sampson. I was way confused. However, I will tell you that you experience in the real reinsurance market is valuable to the discussion here. I support Mr. Taylors bill but I understand there are arguements against the bill. Perhaps you can give insight into the way a proper functioning reinsurance market could work. Etc. Don’t be afraid to tell us your true opinion is what I’m trying to say. We appreciate a diverse opinion pool. Just not a phoney sheep in wolf clothing type person. Keep it real.
PCI Sampson is a Bush Crony
From Wikipedia:
David A. Sampson is the president and CEO of the Property Casualty Insurers Association of America (PCI), headquartered in Des Plaines, Illinois. He joined PCI in September 2007.
He was previously United States Deputy Secretary of Commerce and took the oath of office on July 27, 2005.
…Previously, Sampson served as Assistant Secretary of Commerce for Economic Development.
…Sampson also served on President Bush’s management council and was a member of the Board of Directors for the Overseas Private Investment Corporation.
Sampson is a B.A. graduate of Lipscomb University and holds the degree of M.Th. from New Orleans Baptist Theological Seminary, being the valedictorian in both classes at both institutions. He was the first individual to receive the D.Min. degree at Abilene Christian University.
Other Appointments
Board of Directors of the Insurance Institute for Highway Safety
Member of the U.S. Chamber of Commerce’s “Association Committee of 100”
Chair of the Texas Council on Workforce and Economic Competitiveness
Vice Chair of the Texas Strategic Economic Development Planning Commission
President and Chief Executive Officer of the Arlington, Texas Chamber of Commerce
I still feel trashed….maybe a name change is in order.
While I do not want to go to great lengths hammering at the reinsurance issue, if we look at the State of Florida in 2008 we see a major business entity and icon accepting millions ($200M+) to basically “reinsure ” the state’s insurance carrier against catastrophic loss. Warren didn’t have to pay so he won the “bet”.
Is it wrong for him to keep all of the money?
Now I read he doesn’t want to ante up for 2009. Is that wrong? While he is not an insurer per se (unless you consider the caveman and the lizard), it appears he is unwilling to remain in the market….IMHO because the return is not sufficient in his thinking to justify the risk.
I hear a lot of national debate and discussion regarding the viability of capitalism in our great land. The above situation along with many kissing cousins in the insurance family (i.e. carriers leaving states or areas, restriction of coverage or limits, etc.) could be fashioned into a pretty salient discussion examining and deciding “what are we promised by capitalism” v. “what are we promised by gummint?” ( and what SHOULD we be promised?) We could go 24/7 365 and never get that ball of yarn unwound.
Remember this Sampson is not the Mr. Sampson of PCI (wish I was in a way as it sounds like he has lived a charmed life!). In my next life I may be Rush Limbaugh or Allan Colmes…..
How about “the-commenter-formerly-known-as-Sampson” or you could be Prince since he no longer uses his name?
If you want a new name, I can even make it retroactive or just edit my post and make him Mr-not-our-commenter-Sampson.
Your wish is my command (of the edit button, that is)
Mr. Sampson’s Wiki page looks like one he made himself. Which is OK. But I suggest he go back and correct a little error. He list the ISS organization of which he is the President as having 900 billion in member policies written but when you follow the link to the ISS they list 115 billion in member policies written. If your going to write your own Wiki page and you are the President of a Statistics company probably you should have the numbers right?
“In addition to serving as PCI president & CEO, Sampson is also president of the Independent Statistical Service (ISS), a wholly owned subsidiary of PCI and one of the industry’s largest and most trusted statistical agents. ISS works with more than 450 property casualty companies of all sizes that report more than $900 billion in annual premiums.” Wikipedia
VS,
“”The Independent Statistical Service Inc. (ISS) serves more than 450 companies reporting in excess of $115 billion in annual written premium. “” ISS website
Sampson, I for one really appreciate your last comment. I’ll admit I wondered as to the identity. 🙂
The reinsurance portion is what I really liked as the time comes to welcome Warren Buffett to slabbed. Perhaps Mr Buffett and his Berkshire Hathaway aren’t
putting money back in the sunshine state beause they are too busy shipping it to Switrzerland and Swiss Re, which was a big derivitives counterparty in Europe. I agree with your assertion BRK is not an insurer per se, as they are a big time reinsurer. Stay tuned.
sop
I am probably commenting in the wrong spot but now I have yet another theory as to why Warren may not have taken Florida’s money for 2009. An interesting connection to today’s Warren post. OBTW, hope no one giving future testimony on either side of the debate uses my “new” name!
your message should now be here and there – so do tell us your other theory over there – and you’re a great sport, btw! thanks.