Information about a mult-state approach to solving coastal insurance crisis
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Hightower Supports Coastal Insurance Reform Legislation

Republican State Senator Bill Hightower has passed Senate Joint Resolution 22. SJR22 encourages Gulf Coast counties, the Alabama Department of Insurance and the Governor's Office to explore and consider the formation of an new concept Interstate Re-Insurance Coastal Band. The Coastal Band concept would involve a multi-state agreement, which lowers risk and reduces costs. Hightower is already in discussion with neighboring states regarding this potential solution. Governor Bentley will sign the resolution in the next few days.

Posted 4/10/2014


HHII has been holding a series of brainstorming & research sessions to develop Priniples & Objectives guiding the legislative creation of the Special Insurance District "Coastal Band" and its business model.

This is an ongoing collaborative effort on a working document and all interested parties are invited to attend.  Watch the column at right for the time and place of the next session.

Posted 1/28/2014; Link to document added 3/25/2014


Mississippi public meeting on Coadtal Band at Methodist Church Longbeach;Mississippi and Louisiana have held public meetings to generate interest in the Coastal Band insurance solution.

These states are also interested in persuing their own version of Alabama's Clarity Bill.

MS State Rep. DeLano has gotten the Clarity Law passed out of the House Insurance Committee and it now goes to the Senate.  You can read the bill here.

Updated 1/30/2014


HHII & GCECHIC thank the City of Fairhope for adopting a Resolution of Support of Exploration of the Interstate Re-insurance Coastal Band.  Read the full text . Baldwin County Commission passed a similar resolution in May, thanks to work by Bob James.

Posted 11/20/2013


The GCECHIC has been busy during the month of August with multistate conference calls and meetings with local groups and state movers and shakers.  Read a complete list of their activities here.

Posted 9/3/2013


The South Alabama Legislative Delegation, south Baldwin Cities, The Baldwin County Commission, many local business and the Homeowners Hurricane Insurance Initiative (HHII) are part of a growing coalition which will keep billions of insurance premium dollars in the US and cut wind premiums in half.

The coalition is building a public groundswell for a multi-state reinsurance band. “This is the thing that I feel best about in my whole political career,” Rep. Joe Faust said. “This is truly the community coming together to solve it's insurance crisis and it will actually cause the insurance industry to better fulfill its vocational calling in society – to help make communities whole after a catastrophe.”

Faust is referring to one of the two solution strategies the coalition and HHII have developed. It would:

 -- Be a band 70 miles inland from the beach, running from Maine to Mexico;

 --  Collect the hurricane premiums currently paid in the band;

 --  Pay for wind damages that resulted from named storms in the band;

 -- Be crafted by a Congressional Act or Interstate Compacts;

 --  Be governed as a non-profit, by consumers.

With wind premiums cut in HALF, this Coastal Reinsurance band

 -- Insures our homes at an affordable price;

 -- Requires NO tax money;

 -- Protects private insurance companies from catastrophic wind events;

 -- Brings these private companies back to the coast in droves to sell extended coverage

Very significantly – This Band has no affect on inland constituencies, thus removing obstacles raised by inland politicians.

Many people don't know that HHII and coastal legislators have been fighting for the families of Baldwin County and seeing many successes. Here is a list from last year -

-- The Clarity Law passed in May of 2012, thank you Sen. Trip Pittman and Rep. Joe Faust!

 -- The data from the Clarity Law will go on-line November of 2013. Do we really deserve premiums 300 – 600% higher than the rest of the state? You will be able to compare the claims data by zip code when the data goes on-line.

 -- HHII now has 15 grassroots organizations conferencing by phone twice a month in eight states – MA, NC, SC, NJ, LA, MS, AL, FL and a National Organization – United Policyholders.

 -- Legislators in four gulf states have networked to form the Coastal Legislative Caucus and agreed to explore a coastal band solution to the wind insurance crisis. Here in AL the lead legislators are Rep. Joe Faust (R) and Rep. Napoleon Bracey (D).

Faust said that for five years HHII has worked diligently for long with little on a winning solution for the coastal homeowners insurance problem. Their work now takes them to other states, and they can't do it without new funding.

"We are excited about the support of so many people - the South Alabama legislative delegation, the mayors of Baldwin County, Baldwin County Commission and key business leaders. We are going to a whole new level and we are grateful that the Lord has open these doors," said Earl Janseen, a volunteer leader that has been working with Homeowners Hurricane Insurance Initiative since Fall 2006. "We have come a long way, learned a lot and now we need everyone, everyone to do what they can to make this Coastal Band a reality."

Revised 6/13/2013


HHII now has 15 grassroots organizations conferencing by phone twice a month in eight states – MS, NC, SC, NJ, LA, MS, AL, FL and a Nat'l organization – United Policyholders.

Legislators in four gulf states have been networked and have agreed to explore a coastal band solution to the wind insurance crisis. Here in AL the lead legislators are Rep. Faust and Rep. Bracey.

Posted 5/1/2013

3/2013 Update on the The Gulf Coast / East Coast Homeowners' Hurricane Insurance Coalition - GCECHHIC

Activities in AL

1 Two AL House legislators agreed to lead the AL coastal caucus. This is the leadership of Rep. Joe Faust and we are delighted!! In partnership w. Rep. Faust we are reaching out to the Gulf States.

2 Representatives of GCECHHIC met with independent insurance agent Carl Schneider to hear about recent developments in the AL insurance sector.

 Activities in LA, from Tonia Pence's report, the newest addition of our team, after GCECHHIC visited w. Rep. Leopold and Plaquemine Parish's administrator on March 11 and 12th:

1 I spoke with Representative Leopold's assistant, Ray Ann, she is working to schedule time with the Louisiana Coastal Coalition and provide us with a list of members so we will know our audience. I will let you know as soon as I hear back from her. If I do not hear from her Monday, I will call again on Tuesday.

2 We have captured the attention of FEMA here in Louisiana. They are interested in the inter-state compact idea, as they have no idea how flood insurance will work as they continue to back out of the process. Plaquemine's FEMA VAL asked if we were interested in a conversation around the compact, and the new elevation mapping. I spoke with David on Thursday, and we will coordinate the meeting once FEMA confirms.

Activities in MS

1 A new person has been added to the Steps Coalition and has been assigned homeowners' insurance as her responsibility. We are excited about having the new energy of Toshja Brown.

2 We met with Councilman Bill Stallworth today in Biloxi and received good counsel on how we should focus on the upcoming challenges of expanding to multi-state activities. He spent almost two hours with us.

3 Please be in prayer for our 2 day workshop in Biloxi April 9 & 10. There will be representatives from FL, AL, MS and LA. If you are interested in attending, please call Michelle at 251-928-3430.

Activities in FL

1 We have a full day of appointments with two FL senators and one FL representative on March 21st. Please pray that we communicate effectively.

 The Gulf Coast / East Coast Homeowners' Hurricane Insurance Coalition continues to have very energetic and productive conference calls twice a month. This coalition has been participating in a survey that is collecting the stories of the consumers along the Gulf and Atlantic coasts.

Posted 3/21/2013


Posted 12/11/2012


Short explanation of the multi-state entity:

 A Coastal Reinsurance Entity would collect the hurricane premiums in a home-owners policy in the coastal band. It would pay for wind damages that resulted from named storms. It would be crafted by a Congressional Act or state compacts. Non-catastrophic homeowners insurance would remain with the private market.

Coastal Reinsurance Economics:

 Since 2006, an estimated $8-20 billion in home-owners hurricane insurance is collected in this band each year. The bulk of that goes to reinsurers out of the country.

An estimated average of $1 billion has been paid in hurricane claims a year since 2006.

Had the revenue stream been managed by a domestic Coastal Band Hurricane Reinsurance Entity, its fund would have $49-$133 billion in reserves.

Cutting Premiums in Half:

 Collecting premiums at half the current price, the coastal band would receive $4-10 billion a year and could repair the $2 billion damage done by a Cat-3 Hurricane two to five times a year, year after year.

If coastal home-owners premiums were half their present level, the fund would have $24-$66 billion in reserve since 2006.

Since 2006, the minimum amount that would have accumulated in the reserve -- $24 billion -- would be enough to pay for the damage done in the coastal band by another Katrina plus an Ivan and leave a few billion in the fund for another storm. The following year’s premiums could pay for another two to five Cat3 hurricanes. If the maximum estimated amount collected since 2006 is true, the fund would be able to pay for damages done by four Katrina’s in one year, and have enough left over for an average hurricane.

These numbers are subject to revision when Clarity Law data in all the states provides concrete information. A Clarity Law was passed this last legislative session in AL.

Principles for shaping a multi-state entity that would serve as insurance re-insurance for Catastrophe Wind for the Gulf Coast / East Coast

All for one and one for all.

Same product, same price.

Catastrophe wind only.

Private companies sell all else besides cat wind.

Monies accumulate.

Over X amount, monies are used for mitigation of homes and the restoration of coast environments that will lessen the wind effects of sever storms.

The board is made of educated consumers, non-profits, churches. The insurance industry and the legislators serve as advisors.

Serves the public/consumer first.

Logistical Questions

What is the structure of the entity? Quasi governmental, non-profit

How to manage the reserve and surplus?

Liquidity, growth and safety?

How to craft bill – US Congress, inter-state compact

Strategy to pass bill?

Posted 12/5/2012


There are 17 coastal states from Maine to Mexico and living in this coastal band, we estimate, is at least 25% of America's population. The possible power is a bipartisan voting block that could create a quasi-governmental entity for named storm catastrophes. Ideas about the structure of the entity range from quasi-governmental entity, or an inter-state compact, maybe something else entirely, that is for us to explore.

HHII believes that it is important to separate the financial challenges from the political challenges. We believe that the numbers work (see explanation below). We believe there is plenty of cat wind premium collected right now in a coastal band to more than cover the cat wind claims, cut premiums in half AND mitigate homes and the natural coastal environments. But let's do our research.

Posted 12/30/2012 (originated 11/21/2012)


Imagine a special coastal insurance band 50 miles inland from the beach, running from Texas to Maine. In the absence of Clarity Law data, we estimate insurance companies -- particularly reinsurance companies -- have collected between $56 to $100 billion since Hurricane Katrina in hurricane insurance premium alone. We estimate that they have paid out less than $10 billion in hurricane claims. This has occurred for various reasons. A special coastal-band re-insurance entity can capture that revenue stream and use it wisely.

Were such a multi-state entity created by Congress or multi-state compacts, and devoted to catastrophic, named storm damage, it would be able to (1) cut homeowners insurance premiums in this coastal band district in half; (2) stabilize premiums; (3) assist with mitigation; and (4) remove the fear insurance companies have of coastal homeowners because the companies would not have to deal with catastrophic losses. Number 4 would open the flood gates to private competition for the routine homeowners market in the Gulf and East Coasts of America again.

Posted 12/30/2012 (originated 11/21/2012)


This material was given to Gov. Bentley's policy representative during her vsit August 20, 2012.

Multi-state, Grassroots-led Initiative. Action can begin Immediately.

This is a mandatory step in order to prevent the Coastal Ghost Town Affect imagined in the HHII Worst-Case-Scenario Analysis. It is less urgent but helpful in the HHII Best-Case-Scenario Analysis.

Brief Explanation of the Multi-State Strategy: There are several multi-state strategies. One imagines a special catastrophic wind insurance district that is about 70 miles deep from the beaches and runs from the Mexican border to Maine.

Risk is spread appropriately throughout this premium-rich coastal band.

Companies collect about $10 billion a year in this band. *

Hurricane Ivan, a Category 3 storm, cost insurance companies about $1.5 billion in this coastal band.

The cost of Hurricane Katrina in the Coastal Band may have been as much as $10 billion.* If so, the Coastal Band could pay for one Hurricane Katrina every year. During the last six years from 2006 to 2011, the Coastal Band suffered only one direct hurricane hit, costing, perhaps, $ 4 billion.

During that same time, and at the current premium structure, the Coastal Band would have generated a hurricane-premium of about $60 billion. The excess is enough to pay for four or five additional Hurricane Katrinas; or begin to significantly reduce premiums and deductibles.

This and other characteristics of a multi-state, catastrophic Coastal Band strongly suggest the need for an informed, consumer-led, multi-state commission charged with furthering its progress.

(* Since states do not have a Clarity Law, the dollar figures are informed estimates.)

Immediate steps the governor can take:

1) Establish The Governors’ Gulf-Coast-East-Coast Leadership Commission (or some-such named group). Name Earl Janssen, Michelle Kurtz, A.C. Leggett, Colin Keleher, Dan Hanson, Johnny Chaney, Carol Peterson, Sarah Harris and two other HHII members to serve on it.

2) Charge it to develop a multi-state, grassroots network that will research and design a multi-state entities that fix the coastal insurance crisis.

3) Aggressively enlist the endorsement of this Commission by the governors of Mississippi and Louisiana. Ask them to appoint ten grassroots people from their state to it. Ask that the ten names from Mississippi be provided by Roberta Avilla of the Steps Coalition; and the ten names in Louisiana provided by David Gauthe of BISCO. (Both organizations are already working with HHII in a multi-state network devoted to this crisis.) Invite by letter the governors of all Gulf Coast and East Coast states to do the same, but without arm-twisting. For the initiative to succeed in the best way, all these coastal states should participate, but it might require considerable effort to bring all into the fold at once. Early progress made by three Gulf Coast states would attract their attention more easily later on.

4) Assist fund-raising for the initiative outside of state money. The governor personally and/or officially request private and foundation donations. Donations are needed for reasonable travel, and room-and-board for all appointed members; modest administrative costs (like mailings and social media).

5) Hold a joint press conference or author a joint press release with the Louisiana and Mississippi governors announcing the Commission.

 Posted 8/24/2012

Multi-State Wind Pool Reinsurance Presentation to ADOI

Michelle, since you mentioned that HHII’s coastal band concept was going to be one of the key agenda items for our upcoming Coastal Insurance Working Group, I wanted to share with you and others the presentation that AonBenfield made to the NAIC Southeast Zone Commissioners meeting back in 2010. This presentation only dealt with 5 state wind pools, but all the issues would be similar for your concept. Perhaps our Working Group should ask AonBenfield to come back and review this concept with us so that we understand all the issues that they’ve identified.


Charles M. Angell FCAS, MAAA
Deputy Commissioner & Casualty Actuary
Alabama Department of Insurance  

Posted 6/7/2015

HR 1101

The Homeowners and Taxpayers Protection Act of 2013 (HR 1101) requires the Secretary of the Treasury to implement a program that utilizes premiums from eligible state or multi-state plans to pre-fund future natural catastrophe recovery by making available for purchase, only by such plans, contracts for reinsurance coverage.

If passed, this Act could be an integral part of the Coastal Band Solution.  Protecting America requested Milliman, Inc. to analyze the economic impacts of this legislation, including a detailed analysis of impacts on homeowner insurance premiums.

Their final report contains much useful information to reinforce HHII's efforts to bring about equity and justice in coastal county insurance premiums.

Posted 12/26/2014

FIO Should Propose that Congress Work with Coastal States to help them join together to better manage the hurricane risk

The Consumer Federation of America has released their Study on Natural Catastrophes and Insurance by J. Robert Hunter, a brief portion of which is reproduced below

You can read the complete study here

It would be helpful for the coastal states to band together to regulate insurance and develop coastal mitigation/land use measures in the nation’s high-risk coastal areas. CFA believes that the hurricane-prone states from Maine to Texas should form an interstate compact or find another mechanism to work jointly to mitigate the costs associated with insuring hurricane risk in a way that protects their citizens exposed to hurricane risk. Together, the states could develop regulatory computer models to determine fair prices and keep rates at actuarially sound and below excessive levels. Together, states could jointly regulate insurance policy language issues like deductibles, claims practices, anti-concurrent-causation clauses and other recommendations discussed previously to protect homeowners and policyholders from abuse. Together, the states could effectively oppose abusive requests from insurers and reinsurers that often intimidate smaller states like Alabama and Mississippi into compliance.

An equally important reason for a coastal states joining together is that a coastal coalition would be in a much more powerful position to work with the federal government to move toward a more logical private/state/federal partnership on natural disasters. At that point, ideas like a true national all-risk homeowners’ insurance policy could be meaningfully discussed. The coastal states could construct a stand-by coastal reinsurance program at actuarial rates that could kick in if private reinsurers unfairly raised prices to multiples of the fair rate as they did in Florida after the 2004 storms. The federal government might consider providing ultra-high limit reinsurance to the states but only during the early years (to cover the timing risk of the introduction of such a program in case of an early hurricane that exceeds the pools capacity).

Posted 6/26/2013

Senate Democrats call on Gov. Scott
to push regional insurance compact

From Florida Current, by Gray Rohrer, 2/22/2013

Senate Democrats want Gov. Rick Scott to rally support in other states for a regional insurance compact that would spread risk among Gulf and Atlantic coast states.

“Florida cannot do this alone. This is a regional issue for our state,” said Senate Democratic Leader Chris Smith of Fort Lauderdale.

Smith and the four Democratic members of the Senate Banking and Insurance Committee -- Gwen Margolis of Miami, Jeff Clemens of Lake Worth, Bill Montford of Tallahassee and Jeremy Ring of Margate -- sent a letter to Scott on Thursday urging him to gather support for the idea among governors of coastal states.

The committee discussed a bill earlier Thursday that seeks to decrease the size of state-run Citizens Property Insurance Corp. and the potential for assessments on all policyholders if a catastrophic hurricane hits the state. Democrats on the panel fear the bill will accelerate the increase in property insurance rates, but Sen. David Simmons, R-Maitland, the committee chairman, thinks the increased private market competition the bill fosters will keep rates down.

Ring said a regional solution is needed because Florida’s risk from hurricanes is so great that domestic solutions will push rates exorbitantly high, and a federal wind risk pool akin to the National Flood Insurance Program is not politically feasible. He acknowledged, though, Florida would have to pay the most into the compact because it carries the most risk.

“You’re not going to get a one-to-one deal,” Ring said. “Florida would have to make the deal right for all the other states.”

But a regional compact with conservative Southern states sharing Florida’s insurance risk is not necessarily politically feasible either. Conservative members of Congress from the Midwest and even some from Florida, such as U.S. Rep. Ron DeSantis, voted against federal relief for Hurricane Sandy victims, and conservative governors and legislatures are unlikely to volunteer to take on Florida’s storm risk.

"Gov. Scott will look at any proposal to lower homeowner insurance rates for Florida families," Scott spokesman John Tupps wrote in an email.

Posted 5/1/2013


A Coastal Reinsurance Entity would collect the hurricane premiums in a home-owners policy in the coastal band. It would pay for wind damages that resulted from named storms. It would be crafted by a Congressional Act or state compacts. Non-catastrophic homeowners insurance would remain with the private market.

Read more here and here

Original Post 4/18/2013; link updated 9/15/2015


Click here to view

Posted 3/22/2013

After Sandy, create national catastrophe insurance fund

Coastal cities and towns from North Carolina to Connecticut felt Sandy’s power, and in the coming weeks and months residents in affected areas will likely face another impact of the storm: less availability of homeowners’ insurance and higher premiums. A national catastrophe fund could soften future blows by spreading risk across state lines and pooling capital, allowing for the “pre-funding” of all natural disasters in the United States.

Read complete Palm Beach Coast commentary here

Posted 11/16/2012


Insurance companies estimated that they would lose $63 billion dollars in US hurricane damages during the years from 2006 through 2010. They only lost $15 billion. That $15 billion was total wind losses wherever the actual hurricanes roamed inland and everywhere, not the losses in the coastal counties alone. The actual coastal losses are significantly less than $15 billion. Yet, the insurance companies -- allowed by departments of insurance all around -- dumped the entire burden of collecting premiums to cover, not $15 billion in actual total US losses, but $63 billion in projected, total US losses . . . dump the whole burden on the nation's coastal counties.

The cost of Hurricane Ivan -- the last hurricane to make a direct hit on Alabama -- is reported as $21 or $23 billion. It's a huge number, and leaves one feeling hopeless. How can Mobile and Baldwin counties ever hope to repay all that? But the Hurricane Ivan cost in Mobile and Baldwin counties is currently estimated as being only $750 million. (Without the Clarity Law data we can only use backdoor techniques to come up with estimates.) That's less than 4% of the total losses caused by that hurricane as it roamed around North Carolina, and Tennessee and Georgia and Florida and so on. Put in a single-state perspective, the total cost of Ivan throughout the state of Alabama is said by DOI to be around $2.1 billion. The $750 million coastal costs in Alabama appear to be about one-third of the total state losses.

Coastal counties of the Gulf and the Eastern Seaboard ponied-up $63 billion in hurricane premiums over a five-year period. Actual total US hurricane losses were only $15 billion. How much of that $15 billion was US total can be attributed to US coastal counties? Noticing the costs of Ivan, coastal costs seem to run somewhere between 4% to 35% of the total costs of hurricanes. If true, then the total coastal cost of hurricanes 2006-2010 was somewhere between $600 million and $5 billion. Yet, the coastal counties paid the whole inflated-gassed-up-price of $63 billion.

Here's the basic point. Cut the hurricane premiums charged Coastal America by two-thirds, collecting $21 billion instead of $63 billion. Then pay the $5 billion in actual coastal losses. That would leave $16 billion in reserve, a reserve that would continue to grow. A coastal multi-state reinsurance entity would be the mechanism able and necessary to do this. It would leave the regular property insurance world in the hands of private carriers, but take the hurricane premium (reduced by half, instead of two-thirds) and create a true insurance mechanism that handled catastrophic hurricane events.

This is what should have been done by the regulatory crowd charged with protecting the public the exact instant offshore reinsurance companies, and zaney statisticians started using Global Warming as justification for wiping out the savings of us little ole men who live 30 miles from the nearest coast. But they didn't, even though they all know these numbers. Departments of Insurance have vested interests in obfuscating the picture becaus they face major black eyes if this analysis turns out to be true. Look what they, the regulatory bodies -- have allowed to happen to millions of modest and low income widows and orphans. The insurance industry people are part of the cosmos that will lose $40 billion+ over 5 years, were this re-insurance mechanism created. Only the people who can gain from fixing the crisis -- ordinary citizens -- have the grass roots power to do so. If and when they succeed, millions of families in coastal America will suddenly have thousands of dollars a year in extra income. Their homes will be secure again. Watered by all this money that stays at home, the coastal economies will flower. Jobs will flourish.

Posted 10/13/2012

Beaufort County business leaders write Haley to try to lower home insurance rates

From June 7 article by Greg Martin in Island Packet

When Daryl Ferguson's suspicions about South Carolina's high insurance premiums were recently confirmed, the retired businessman didn't get angry. He got busy.

Next week, the Beaufort resident will meet with Gov. Nikki Haley's staff. He wants to address premiums paid by South Carolinians, which are higher than those charged to their coastal neighbors in Georgia and North Carolina. Palmetto State premiums are higher, he says, even though the state is at a relatively lower risk of hurricane damage.

Read complete article here .

Posted 8/11/2012

Coastal N.C. counties shine light on insurance rates

HHII has been in contact with Willo Kelly, mentioned in this article. A busy lady, but supportive of exploring a multi-state solution.

Posted 8/11/2012


Paula Aschettino, Chair/founder Citizens for Homeowners Insurance Reform, submitted the following.

Here is a 3 part series we wrote for the editorial page of our paper this week. Some of this is helpful to your citizens as well. Maybe your paper will write a piece. We also wrote a petition and had it on our website supporting our Bills and reform. In the first hour I had over 200 signed petitions.

UnFAIR plan: Why we need reform

Collusion, fraud and manipulation

How to fix what ails insurance

Posted 8/11/2012

Commissioners debate regional solution to
Gulf Coast insurance woes

A regional solution to the Gulf Coast's insurance woes is not as easy as it sounds, Louisiana Insurance Commissioner Jim Donelon and Mississippi Insurance Commissioner Mike Chaney told leaders gathered for a forum on America's energy coast Wednesday. Valsin Marmillion, managing director of the America's Wetland Foundation, the organizer of the two-day event at the Hyatt Regency New Orleans, called the high price of insurance "the biggest issue for the economy of the region," and asked the commissioners whether Gulf Coast states could band together create a larger territory so that companies could spread risk more easily.

Donelon said it's harder than it looks. The problem is that all three of the nation's riskiest places for hurricanes -- Texas, Florida and Louisiana -- are on the Gulf Coast, so there's not much to be gained by banding together.

Even if the regional pool is narrowed to smaller Louisiana, Mississippi and Alabama, it still doesn't work because there's much more coastal population, and therefore, property risk, in Louisiana than in the other states, and no politician would sign up its residents for higher rates.

"Alabama doesn't want to take Mississippi's exposure, and Mississippi doesn't want to take Louisiana's risk," Donelon said.

Another problem, Chaney said, is that different states have different regulations, and if a policy was sold in Mississippi and a claim was made in Alabama, which state's laws would govern in resolving a hurricane claim? Chaney added that he has tried to get companies to write similar policies in the different states, but they always back off from doing so. "It's a complicated issue," Chaney said.

 Read complete Times-Picayune article by Rebecca Mowbray

Yep, it was little ole HHII, your representatives at this conference, that triggered all these excuses as to why a multi-state could not work. But - HEY FOLKS, THIS IS AMERICA!! Those DOI commissioners were paddling as fast as they could because they knew that a multi-state answer would take away their power and control.  Every single one of their objections can be overcome!

Posted 8/2012

Yes, Of Course We Do Need a National Catastrophe Solution

View this article online:

The National Conference of Insurance Legislators has a tendency to be a very deliberative and, yes, dilatory, body. During the meeting of its Property and Casualty Insurance Committee last Friday in Burlington, Vermont this past week, every single piece of model legislation under consideration got put off until its next meeting. And this included a resolution from Rep. Greg Wren (R-AL) that I and others on the political Right were watching closely. The Wren resolution would have put NCOIL on record as opposing a national catastrophe fund, “backstop”, “catastrophe consortium” or anything like it.

A lot of the dispute amongst legislators centered around the way that NCOIL would talk about the federal government’s role in dealing with catastrophes. I’m probably, myself, on the extreme side of “no federal P&C insurance” in that, with the partial exception of terrorism–where it seems to me like a federal role really is inevitable–I’d like to see all federal P&C insurance phased out over time. I think the market can and should eventually handle all or almost all risk transfer involving flooding, crops, and nuclear power. I’d also like to see Congress enact more legislation similar to the Coastal Barrier Resources Act that would withdraw development subsidies from disaster-prone and/or environmentally sensitive areas. Mostly, yes, I do think that we could manage disasters better if the government just got out of the way and let the market do its thing.

But this doesn’t mean that a totally private sector solution to disaster response. No less a classical liberal Thomas Jefferson signed the first piece of disaster relief legislation, The Congressional Act of 1803. Although it’s on a lower plane than courts, national defense, and policing, disaster relief is a core function of government that could never be ceded altogether to the private sector. Many of the most important roles–immediate human services, police protection–are best provided locally. But there are still a few positive things the federal government could and should do to make it easier for states to recover from disasters. Here are four to start:

1) Allow executive branch agencies more flexibility in providing relief by administrative means: The current system for disaster relief puts rather low caps on most relief from the federal government. For example, if a state has more than $100 million in transportation infrastructure needs as a result of a disaster, it needs to go to Congress. This is bad fiscal policy since it opens up the appropriations process and usually ends with lots of federal dollars flowing in to the state that has been hit. But it’s also bad for the states because these federal dollars tend to be bound up with whatever rules Congress wants to put inand take awhile to get there. Giving executive branch agencies more flexibility would reserve appropriations for disasters on the scale of Hurricane Katrina and 9/11.

2) Expand the mandate of Joint Task Force: Civil Support: Right now, the rules for calling in the regular military to deal with a disaster tend are so restrictive that it basically never happens. The one standing unit devoted to domestic work, Joint Task Force: Civil Support, has a mandate limited to chemical, biological, radiological and nuclear incidents. While we shouldn’t call out the military at every turn, it does have some logistics capacities that nothing in the private sector matches. In some cases, the President should have the power to call out the military to deal with natural disasters.

3) Pool more risk through interstate compacts for disaster insurance: I’m more than a little bit skeptical that there are huge economies of scale or much monopsony power in having state markets of last resort pool together. But some states–New England and perhaps the mid-Atlantic stretch from Virginia to Georgia–might well realize some savings in a purely free market way by pooling their windpool/beach plan reinsurance purchases and maybe even just merging the windpools/beach plans altogether. Likewise, it’s possible that the California Earthquake Authority could expand its book of business, make money and diversify its risk a little by selling insurance in Nevada and perhaps the two other Pacific Coast states. The federal government would lose nothing if it allowed this to happen.

4) Onshore reserving (In Washington, D.C.): Allowing onshore tax-free reserving could modestly increase the amount of reinsurance capital available and thereby reduce insurance prices a bit around the country. It’s not a fix-all but it’s sure a decent idea.

Posted 5/6/2012

This page last updated 9/15/2015