Tag: Coastal Insurance Crisis

And if you think he is good at pumping gas, wait until you see him spit shine John Boehner's shoes: The AP calls out Steven Palazzo for being a lying sack of shit politician.

Folks there is a difference between critical reporting and reporting on politics critically. No doubt some of the recipients of my barbs would insist my missives are unduly critical and there is likely a kernel of truth in that criticism but it is equally true the art of reporting on politics critically is missing from the Mississippi traditional media landscape save just a few souls, none of whom are in the 6 coastal counties. I say all this because the country is paying attention while the locals are being regaled with cheap pre-planned photo ops masquerading as news.

I’ll admit that last week when I saw on the WLOX late news Congressman Steven Palazzo in a near top of the news story pumping gas for his constituents in Jackson County while sharing their concerns over gas prices I was not surprised.  WLOX is part of a chain of small market TeeVee stations owned by Blue Cross so seeing such fluff there did not surprise me. I was disappointed though the next day to see the Sun Herald devote scare reporting resources to the topic, which is evidently a cheap GOP PR trick these days.

Now I was not the only person disappointed to see such fluff passed off as news as the readers (including moi) were not shy about sharing their views on the topic in comments. I mean Jeezus H Christ we have some of the very highest homeowner’s insurance rates in the country, a topic the State Farm supported Palazzo has not engaged.  Because it costs several thousand dollars to insure even modest homes it is no surprise the coast lead the nation in median real estate price declines in Q1 2011 as ordinary people, stretched to the limit by the triple threat combo of high insurance, high gas prices and high food prices are losing their property to foreclosure or are wholesaling it trying to hang on for a solution to the one problem that has not been addressed by the State’s GOP leadership in the 6 years since Katrina save throwing taxpayer money at Bermudan reinsurers for sky high re-insurance. Continue reading “And if you think he is good at pumping gas, wait until you see him spit shine John Boehner's shoes: The AP calls out Steven Palazzo for being a lying sack of shit politician.”

Market manipulation and price fixing explained to the point even a clown can understand. Paige St John exposes the State Farm shuffle in Florida for the Herald Tribune.

Louisiana Insurance Commissioner Jim Donelon

Folks rarely does a business writer nail and explain a very complex subject in the interplay between our fragmented insurance markets here in the US  and the world of high finance but Paige St John over at the Herald Tribune explains how State Farm really didn’t pull out of Florida’s hurricane insurance market, how they game the anti trust exemption insurers enjoy and how they are able to price gouge as a result.  These same forces are at work in Mississippi, Alabama, Texas and Louisiana.

We last featured Paige’s work last October in our post It’s a ‘Bermudan’ day in the neightborhood…Paige St John at the Herald Tribune exposes why ‘buying Bermuda’ is like being hooked on crack and it is clear Paige is on track for a big time business journalism award for her work in this area.  Finally it was our post on Paige’s reporting on the Allstate McKinsey papers that literally landed us on the national blawg scene as Victoria Pynchon covered our coverage.

Here are a few excerpts:

When State Farm stepped up its march out of Florida, it loudly and publicly claimed hurricanes were pushing it toward financial disaster.

The company argued it had to leave the Florida coast — and drop nearly half a million customers — because it could not profit in a state wracked by so many storms.

But State Farm never really left Florida. Continue reading “Market manipulation and price fixing explained to the point even a clown can understand. Paige St John exposes the State Farm shuffle in Florida for the Herald Tribune.”

So this time I actually put on a tie before the insurance forum…….

Being that I am a hard hat CPA a tie is not required in my line of work but I thought what the heck, I need to look my best for insurance commish Mike Chaney, who will certainly be at the RAND forum. Man o man was I disappointed though because I looked high and low for Mike, who we affectionately know as Mikey the Cook here on Slabbed due to his warm association with fellow Commish Jim “Jimbo the clown” Donelon.

Now there were several theories about Mikey the cook’s whereabouts.  One theory goes that he was in Bloomington giving an interview with the Pantagraph which is State Farm’s hometown newspaper. Such is not a far-fetched theory as Mikey has graced the pages of the Pantagraph before waxing nonsensical. Here is a snippet from their Katrina coverage which featured Mikey the Cook’s remarks:

“It was a win-win for State Farm, the state and the courts,” said Mississippi insurance commissioner Mike Chaney, who monitored the mediation program. A probe of State Farm’s claims handling by his department found questionable decisions and irregularities, but no elaborate scheme or illegal actions, he said.

Now we’ve always said Mike Chaney wouldn’t know insurance fraud if it bit him on the ass, unless that is, Continue reading “So this time I actually put on a tie before the insurance forum…….”

The Commish sets up a “Stakeholder” Meeting. If he’d only invited all the stakeholders…..

I’ve been hanging onto Anita Lee’s story from June 27th (H/t Editilla for the ease in finding the link) on Insurance Commish Mike Chaney’s upcoming insurance forum for almost 2 weeks now trying to figure out how to make all the puzzle pieces fit. Puzzle pieces? Now our readers are confused too but perhaps not as temporarily disoriented as I was left after seeing the Commish that same weekend being interviewed by WLOX’s Dave Elliot late that Sunday night. It was only this week that I figured out the Mike Chaney dichotomy to the point where I can convey the man’s fundamental contradictions and the differences between Mike Chaney the politician and Mike Chaney the ideologue. I’ll begin with Mike Chaney the politician and his upcoming forum designed to coincide with the National Governor’s conference scheduled for later this month in Biloxi as we visit with Anita Lee and the Sun Herald:

A wide variety of measures aimed at improving the coastal insurance market will be explored at a multi-state insurance forum scheduled on the eve of the National Governor’s Association conference.

Mississippi Insurance Commissioner Mike Chaney expects key stakeholders at the conference, including insurance commissioners from coastal states, insurance industry representatives and mitigation specialists. Chaney also hopes Gov. Haley Barbour, who is on the agenda, will bring coastal governors with him.

“It’s top-notch,” said Joseph Ammerman, a spokesman for the Mississippi Insurance Department, the host of the two-day forum July 16 and 17 at IP Casino Resort. “We’ve got a great lineup of speakers. The commissioner has been telling everybody who has agreed to speak, ‘We want answers.’

“We want to come away from this conference with some strategies about how to make things better on the Coast. We’re looking for solutions.”

I’d submit Mr Chaney and MID isn’t looking too hard for answers because the speaker lineup, while impressive, does not include a single consumer advocate. Mr Chaney is an industry guy who evidently doesn’t see the need for a consumer perspective at his forums. Mike Chaney the pol is always quick to take credit for the state funds given the windpool by the legislature to reduce premiums and that is what left me confused. You see, Mike Chaney the ideologue doesn’t believe in insurance subsidies for consumers nor any solution that involves governmental involvement beyond providing a free government backstop to for profit insurers …at least according to the 14th draft of the National; Association of Insurance Commissioner’s whitepaper titled: Natural Catastrophe Risk: Creating a Comprehensive National Plan. I’ll start with the AM Best story on the whitepaper before we delve deeper into Mssrs. Chaney and Richardson’s dissent: Continue reading “The Commish sets up a “Stakeholder” Meeting. If he’d only invited all the stakeholders…..”

Weather Modeling Pioneer Karen Clark Slams Use of Short Term Models

Yep it’s official ladies and gents, short term modeling doesn’t work too well according to Karen Clark:

Karen Clark & Company, independent experts in catastrophe risk, catastrophe models, and catastrophe risk management, today released a report on the performance of near term hurricane models. The report finds the models, designed to predict insured losses in the U.S. from Atlantic hurricanes for the five-year period ending in 2010, significantly overestimated these losses for the cumulative 2006 through 2008 hurricane seasons.

Slabbed readers can obtain a pdf of the report here. The press release continues:

Near term models were introduced in 2006 by the three major catastrophe modelers − AIR Worldwide (AIR), EQECAT and Risk Management Solutions (RMS). AIR initially predicted an overall annualized increase in hurricane losses of 40 percent above the long term average, but later lowered that figure to 16 percent in 2007. EQECAT predicted increases of between 35 and 37 percent, and RMS consistently predicted an overall increase of 40 percent above the long term average.

Assuming long term average annual hurricane losses of $10 billion for each year, these figures translate into cumulative insured losses for 2006 through 2008 of $37.2 billion, $40.8 billion, and $42 billion respectively, for the AIR, EQECAT and RMS models. The actual cumulative losses were $13.3 billion, far lower than the model predictions, and more than 50% below the long term cumulative average of $30 billion. Continue reading “Weather Modeling Pioneer Karen Clark Slams Use of Short Term Models”

Insurance and Affordable Housing: Habitat Homes Going Unused on the Coast

What happens when sky high insurance costs meets charity at the corner of Captured Regulator Blvd and Price Gouging Way? Easy, affordable houses go unused. AP reporter Sheila Byrd has the story for the Sun Herald along with quotes from our own Captured Regulator Mike Chaney who admits insurance rates have gone up and stayed up, despite his earlier proclamations on that subject. (No word yet if he has bothered to reply to the United Poloicyholders Inquiry – somehow I doubt it.) Belated H/T to Editilla at the Ladder.

In four states along the hurricane-ravaged Gulf Coast, Habitat for Humanity came with a mission to build hundreds of homes during a spring blitz so people pushed into poverty after Katrina would have the chance to own a home.

Many of the dozens of completed houses in Texas, Louisiana and Alabama are occupied or will soon be dedicated. But not in Mississippi, where only six of the 30 homes are filled. Continue reading “Insurance and Affordable Housing: Habitat Homes Going Unused on the Coast”

Travelers to Sop. Ummm, You Forgot Something Bub.

Indeed I did forget something earlier today when I profiled the latest coastal multi peril insurance plan, namely, the Travelers-Nationwide plan that was floated out 10 days or so ago. Before I get to the 4-pillars-plan I’m going to share a bit of insight I gained last night when, for the first time in literally months I was able to catch up with the guys from Soggy Bottom, shoot the breeze and a have few brews with them. What I heard last night reminded me my first finance board offline gathering after the storm in the Atlanta area, when my good cyberfriend Buford made a prediction about the coast real estate market after I described the problems with getting insurance coverage.

Don’t buy now, when the market capitulates you’ll be able to buy cheap.

Given real estate pricing here back in January 2006 I thought it was an awfully bold prediction but Buford, the sage college finance professor knows his stuff. Here is the dynamic of how the sky high costs of insurance can crater the real estate market despite pent up demand.

  1. Katrina floods but does not destroy the house. Owner, with help from the SBA, insurance and private lending fixes the residence and re-occupies. Or, house is destroyed and owner buys nearby at an inflated post storm demand driven price.
  2. Insurance renews for 2006-2007, the increase in premiums is astronomic. Family budgets are strained.
  3. Gasoline and rising food costs coupled with the out of sight costs of insurance pushes many residents into mortgage default, home is repossessed. Many were already active listings on the market.
  4. Bank gets first insurance bill Continue reading “Travelers to Sop. Ummm, You Forgot Something Bub.”

The Jacquith Move Part 2: Good Neighbor to Good Hands?

Anita Lee is reporting that Allstate and Nationwide have agreed to pick up the 900 or so homeowners policies State Farm is cancelling along the coast. Neither company has a good claims handling track record so my personal advice to these people is to do some homework on the internet and see an independent agent.

Insurance Commissioner Mike Chaney said Thursday that Allstate and Nationwide have agreed to pick up policyholders being dropped by State Farm. Allstate and Nationwide will offer those residents homeowner policies without wind coverage.

After Nov. 30, State Farm will cancel homeowner coverage that includes wind for about 890 policyholders within 1,000 feet of the Mississippi Sound and bays that spill into it. That number could go higher unless Chaney approves State Farm’s request for a minimum 5 percent hurricane deductible in the three Coast counties, coupled with 6 to 18 percent rate increases.