I’m severely pressed for time this morning so I’ll lump everything that caught my attention in one post so I can head out to my three county coastal tour today.
First off is an oldie but a goodie. Commissioner Chaney must be thinking I missed one but I didn’t. I had to put off the wind pool commission cut news as I was prepping to hit the State Farm agent’s place for pre-memorial day festivities:
Insurance Commissioner Mike Chaney said he expects to approve an operating plan today for the state wind pool that will lower the commission agents collect for writing policies and expand credits for building to stronger standards.
Chaney fought to lower the agent commission from 15 to 10 percent for renewals and to 12 percent for new business. “It’s not a lot of money, but it will enable the wind pool to build some reserves,” Chaney said. By accepting lower commissions, Chaney said, agents are contributing to lower costs for policyholders.
Good on you Commish and we certainly appreciate the help.
Next up is FEMA and their surprising letter to the City of Gulfport announcing they will cut the City’s flood rating. Knowing FEMA and their mysterious ways I suspect the letter was a surprise. Ms. Blocker no doubt eagerly awaits the angry phone call that is certain to come from Mayor Warr’s office. On the bright side we also find out Mayor Longo has positioned the coast’s lowest city, Waveland, with the highest flood rating in the State. Tommy takes alot of criticism, much of it unfair IMHO. It is good to know he is doing something right too.
A letter from FEMA landed in City Hall’s mailbox over the weekend, recommending Gulfport’s flood rating be dropped to the lowest level possible because the city failed to act on more than 200 properties that violate federal flood requirements.
Gulfport has a Class 8 ranking in the National Flood Insurance Program’s Community Rating System.
Communities are rated from 1 to 10, the lower the number the better. A good rating could mean substantial price cuts on flood insurance for homeowners.
Waveland has a Class 5 rating, which allows homeowners to benefit from the largest flood insurance discount of any community in the state – up to 25 percent.
However, Gulfport was the Coast’s first city to adopt FEMA’s more stringent flood elevation requirements, which were devised after Katrina, on the understanding that every Coast community eventually will be forced to adopt the new regulations.
“It’s almost like our residents are being penalized because we agreed to go along with FEMA’s program,” Mayor Brent Warr said.
Next up is yesterday’s Sun Herald editorial on holding our presidential candidates responsible for the insurance mess coastal America now finds itself. Besides Mississippi and Louisiana John McCain can kiss Florida bye too if he thinks the solution to the problem of a dysfunctional private wind market lies in letting private insurers with an anti trust exemption rape coastal policy holders even more. Here is the Op-Ed and please be sure to read the comments left by the insurance industry people and those with assorted mental defects that all completely miss the point.
Someone at the Columbia Journalism Review recently asked us: If you could pose one question about Gulf Coast recovery and emergency preparedness to the 2008 presidential election candidates, what would that question be?
In a way, we’ve already done that.
Prior to Mississippi’s presidential primaries in March, we reported on each of the principal contenders position on expanding the National Flood Insurance Program to include wind damage.
• John McCain said he sees the solution in the private market, through broader pooling of risks and a prohibition against insurance companies “cherry picking” individual states.
• Barack Obama said he supports the concept of wind insurance through the flood program but said he would need to be convinced any legislation encourages responsible development and protects homeowners.
• Hillary Clinton endorsed adding wind insurance to the flood program.
When the issue was put to a vote in the Senate earlier this month, it failed.
So now what?
Clinton and Obama are pushing their own insurance measures. Clinton helped introduce the Homeowners Defense Act, which would allow coastal states to pool risk and provide federal loans to states after catastrophes. And Obama wants a federal backstop for catastrophes that the insurance industry would fund through premiums collected.
Unfortunately, none of these approaches will be in place before hurricane season begins on Sunday.
Like McCain, if we had our druthers, we would rather the private insurance market solve this problem. Since half of all Americans live within 50 miles of salt water, a potential market certainly exists for a prudent business plan.
But we take little comfort in rumors of a possible private sector solution because our recovery cannot be financed and insured based on speculation.
We need results, not rhetoric.
Whoever the next president is, he or she must focus national attention on the increasing lack of affordable, accessible and accountable insurance coverage for homeowners on or near the nation’s Gulf and Atlantic shorelines.
We must find some sensible way to insure against the damage hurricanes cause homeowners.
Update: FEMA evidently did not take kindly to today’s Sun Herald article on Gulfport’s flood rating as they responded per this news update by Ryan LaFontaine. By now the NFIP program regs should have settled in with me via osmosis (they haven’t) but it seems to me that construction that predates the new flood plain should be grandfathered. We have not heard the last of this story and I bet it includes some bureaucratic bungling on FEMA’s part.
That is a positive step. The state pool should not be competitive in commissions as a market of last resort. The 15% is probably higher than agents were receiving from Excess & Surplus markets. The last thing the state pool should do is pay a scale that attracts business when other markets might be available.
I agree Ms. Supsalemgr and your post raises some interesting questions about the relationship between commissions and policy recommendations I did not consider.
A few points that might add some color to the post:
My read of the Commissioner Chaney is that he has heard a good bit of complaining from wind pool consumers as to the amount previously spent on commissions.
Against that is the tightrope of making sure the market of last resort is not cheaper than the private marketplace as that tends to make insurers cranky.
To this point Commissioner Chaney has done everything he promised except push to make the position appointed.