Thursday, January 6th, 2011
Baton Rouge, Louisiana
A HAPPY NEW YEAR FOR INSURANCE RATES ALONG THE GULF COAST? NOT REALLY!
So happy New Year! And by the way, get ready for higher property insurance rates along the Gulf Coast, particularly in Louisiana. One would think that if anything, homeowner’s rates would be going down. After all, there has been virtually no hurricane activity in the Gulf for the past four years. And with the national economic slump, home prices have dropped which should translate into lower insurance rates. Not so say the experts. Here are a few reasons why many states, particularly my home state of Louisiana, will see higher rates in the coming year.
Huge claims for the BP Gulf Oil spill will definitely boost insurance rates for the oil industry. No one at this stage can even guess what the final insurance costs will be from both the damage and years of ligation from the Gulf spill. Most of the larger oil companies are self insured, which means they will have to divert funds from operating costs into designated reserve funds. Independent companies, that produce both oil and gas, will see their insurance costs go up. Higher insurance costs mean cut backs, possible layoffs, and higher prices for both oil and gas. And those insurance companies that have taken a big hit over the Gulf spill will have no choice but to raise rates for all lines of insurance, including homeowners.
Citizens Property Insurance Company in Louisiana continues to run amok, and be a factor in higher insurance rates. Louisiana taxpayers are on the hook for well over a billion dollars because of the state created company’s mismanagement. The company is now bragging that it has reduced the number of policies it is selling. But this becomes a catch 22. As Citizens looses customers, the overall risk increases. A new study by the Insurance Information Institute pointed out the Louisiana state run plan still maintains a “precarious financial condition.” Simple translation — it’s broke, and will be for years. Last month the company asked the Louisiana Insurance Department for an increase that in some south Louisiana parishes will top 24%. Continue reading “Jim Brown”
A number of complaints have been filed with the Justice Department regarding what appears to be an effort to fix prices in the property insurance claims repair business. It involves a company called Xactware, which is a wholly-owned subsidiary of the Insurance Services Organization.
The writer, an independent business owner, was concerned because the practices in question impact my business, my employees and my family – raising the question: What practices?
As a practice, insurers, through their adjusting procedures, attempt to impose compliance with these “pricelists” by contractors as a broad group. Because of Xactimate’s position in the industry, at the very least I believe they should be enjoined from presenting their data as a “pricelist”.”
Again, a question is raised: What is Xactware’s data in Xactimate if it isn’t a “pricelist”?
They produce a pricing database, which they market as a “pricelist”, which is actually a database of information of previously submitted settlement numbers for typical processes heavily dependent on “feedback” from insurance companies and from captive contractors who have agreements with those insurers to use the database as a “pricelist”. This methodology results in a self-fulfilling prophecy as insurers and their contracted companies feed back information to establish a “pricelist”…
There is also no doubt that these so-called price lists can be manipulated BOTH downwards and upwards if the client requesting the “price” has a vested interest in doing so.
But, wait, “these client” are insurers – insurers that own a controlling interest in ISO and ISO owns Xactware. Continue reading “Behind door #1 – Xactware come on down!”
My thanks to Bryce and Mr CLS for bringing these two news stories to our attention. The first one is short, sweet and originates out of Nashville. It represents continued bad publicity for Adams and Reese:
Local law firms have been abuzz since Friday, we hear, over claims leveled at the home office of Adams & Reese down in the Big Easy. Only New Orleans could ladle up such a jambalaya of alleged corruption and skullduggery. No mention of the firm’s Nashville office, we ought to note.
The second story concerns the price fixing lawsuit brought by former Louisiana Attorney General Charles Foti while he was a short timer as AG. The implication of the report by Times Picayune writer Bill Barrow is that new Louisiana Attorney General Buddy Caldwell intends to pursue the price fixing case he inherited from Foti:
Attorney General James “Buddy” Caldwell, speaking Monday about his first four months in office, offered few details about his long-term strategy on hurricane-related cases filed by his predecessor. Continue reading “A Couple of Short Stories From our Louisiana Gumbo Pot”