Slabbed takes a look at the current impasse in the NFIP: A Guest post by Supsalemgr

Once again the politicians in Washington are oblivious to the needs of the citizens they are supposed to be representing. We hear about bipartisanship and this is a situation that is truly bipartisan. Both parties are playing pure politics with the failure to extend the NFIP. This may not seem like a big deal to many folks, but by not having access to Flood Insurance the impact is rippling throughout our economy. Lenders will not close on loans without Flood Insurance in flood prone areas, which means every coastal community.

Are there some legitimate arguments against the NFIP as it is currently structured? Absolutely, it is $19 billion in debt. This is due to the fact it is like most insurance pools and funds regulated by a governmental agency, federal or state. The rates have not been adequate as it is a “take all comers’ program. This should not be a surprise as it is a government program with all the built in deficiencies that come with that structure. In the scheme of things in Washington when does $19 billion matter to a politician inside the “Beltway”. That is not the reason. The reason is everyone wants to pass the extension of the NFIP and it is a good “hostage” to hold to try and garner votes for other issues. This is why the politicians won’t do what is right and just pass some stand alone legislation.

Some legislators will try to use the argument it is an inefficient program and needs reforms. No argument here, but first things first. Our economy is in bad shape and historically in order for the economy to improve the housing sector must improve. As long as the NFIP is not extended the housing market cannot recover. This is proof positive our representatives in Washington do not care about the citizens, but only about their power. I believe the NFIP will be extended in the near future. I would hope they would extend it for at least five years so we can have continuity of the program. Continue reading “Slabbed takes a look at the current impasse in the NFIP: A Guest post by Supsalemgr”

Blessed be the Slabbed. Let's revisit State Farm's departure from the NFIP from the perspecitve of agents that compete with State Farm.

Slabbed traces its roots to the broad topic of finance and economics and the smaller topic of insurance, especially how it doesn’t function well when large multi national companies with an anti trust exemption decide to put the ol’ boot to the throat of an area, in this case the Katrina impacted Gulf Coast. It has truly been a labor of love and I’m gratified that many folks within the industry have seen past the talking points promulgated by industry trade groups and taken time to truly understand how basic economic not only applies to insurance but also how anti-competitive practices actually hurt the industry as a whole. Unfortunately there are also those who judge a book by its cover and despite being honest themselves can’t help themselves trying to defend the indefensible taking on the sins of their competitors in the process.

Off blog I’ve had the pleasure of communicating with risk managers, agents, adjusters and the home office people with several major insurers who invariably find that we agree far more than we disagree despite the rhetoric. One thing I learned early on is that few within the industry have any sort of respect for the average state insurance commissioner. No one respects the proverbial waterboy in the business world and since it is the business world from where I hail, many people who have taken the time to contact us off blog have found that in many ways we’re one of the team, which is also what makes Slabbed so dangerous to insurers like State Farm.

So much has changed since we began Slabbed as the American public has now tangibly suffered the consequences of blind worship of the free market gods as our financial system was imploded by same, lead off the cliff by a global insurance company with an anti trust exemption in AIG. The price of regulatory capture, a topic I’ve written about more times than I can count is now on display across the Northern Gulf of Mexico in BP’s Oil spill disaster. Luminaries such as Alan Greenspan have seen their legacies literally go up in smoke while corrupt pols like Senator Chris Dodd leave DC with their tails between their legs. Economics, at least the theories to which I generally adhere, do not know political boundary.

I say all of this because to my knowledge we were the first blog to highlight Paige St John’s story for the Herald Tribune which announced that State Farm was leaving the NFIP WYO program. In the insurance world, when the nation’s largest P&C carrier pulls out of a gravy train federal program such is huge news. Or so I thought. Continue reading “Blessed be the Slabbed. Let's revisit State Farm's departure from the NFIP from the perspecitve of agents that compete with State Farm.”

State Farm announces it is leaving the National Flood Insurance Program. FEMA still asleep at the switch.

Now that State Farm’s fleecing of the NFIP has been laid bare for all to see predictably, like a spoiled brat, Ed Rust and his gang of thugs in Bloomington are picking up their toys and going home.  Paige St John at the Herald Tribune has the story: (h/t to a reader)

State Farm Mutual confirmed Thursday that it will stop administering federal flood insurance policies this fall, leaving government officials to find a new home for 800,000 customers nationwide who bought their coverage through the company.

State Farm does not insure property against floods or storm surge. But it is the nation’s largest administrator of such policies written by the National Flood Insurance Program.

In exchange for administrative fees and commissions, State Farm writes federal flood policies and handles claims, including sending adjusters to homes to assess damage.

Predictably FEMA had no clue what was happening in the program they are supposed to be overseeing: Continue reading “State Farm announces it is leaving the National Flood Insurance Program. FEMA still asleep at the switch.”

“It’s the same old song But with a different meaning” – electronically stored information: Branch qui tam

Nowadays, all roads seem to lead to Jefferson Parish.  Why I was surprised to find a road connecting Jefferson Parish to the Branch qui tam case is beyond me.  Mind you, it’s not a main road; but, before we can go there, a little background is in order and, for that, we make a u-turn and a quick stop at Shall we dance – the SLABBED post on Magistrate Shushan’s Order granting in part the Branch motion to file a second amended complaint.

Data extracted from 2006 Market Conduct Exam of Defendant Standard Fire calculated to show percentage claims and payments from Orleans and Jefferson Parish were of Total number and amount paid by the Company following Hurricanes Katrina and Rita.

In her Order, Magistrate Shushan declared, “The loss-shifting and inflated-revenue motives create two entirely different schemes”.  I contend otherwise…Not only is “inflated revenue” an essential element of loss-shifting, the Magistrate had no data to support her decision…

Back on the road but a detour ahead that takes us by the Louisiana Department of Insurance where we pick up the data-heavy Market Conduct Exam of Branch Defendant Standard Fire’s claims handling following Hurricanes Katrina and Rita and straight to Jefferson Parish.

Data are an essential element of the decision-making process; however, data derive meaning in the context of other data.  For example, if claims data from all insurers covering property in Jefferson Parish were analyzed in the context of other data, it could be possible to determine the extent of damage resulting from the disabled pumping system and, in turn, indicate the associated cost of contracts for the required repair and rebuilding and concomitant loss from corruption of the contracting process – The rising tide that’s sinking all ships

However, in this post, these data are an indicator of the critical need for a broad discovery process to informed decision-making about Continue reading ““It’s the same old song But with a different meaning” – electronically stored information: Branch qui tam”