Two weeks ago, Florida’s governor asked the board of Citizens Property Insurance Company to get its house in order. Concerned that the state’s insurer of last resort would not be able to meet the financial demands of a major storm, the governor chastised Citizens’ management team for allowing the company to become so large without safeguarding its financial stability.
We have been talking about business insurance. The passage of the Dodd-Frank Act in 2010 changed the landscape for businesses — especially financial services companies — by instituting a de facto incentive for whistleblowers. The heightened risk of an investigation, initiated by an internal complaint or a regulatory inquiry, should prompt business to review their insurance policies. The directors and officers coverage of the old days may not be enough.
We are continuing our discussion of the impact of the Dodd-Frank Act on business insurance. The law includes protections and incentives for whistleblowers that may very well result in internal and regulatory investigations. Even if there is no wrongdoing, the costs of these investigations will likely be steep. Companies, then, will want to review their insurance policies, particularly their directors and officers coverage.
In the wake of the financial meltdown, mortgage servicing companies and lenders, banks and brokerage houses, any business that had anything to do with the securitization debacle suddenly became the object of intense regulatory scrutiny. Every investigation poses a risk to the company and its directors and officers. Enron is just one example.
Florida’s Gov. Rick Scott has come close to issuing an ultimatum to the board of governors of Citizens Property Insurance Corp. The governor challenged the board on Tuesday to come up with ways the insurance company can better meet its obligations in the event of a big storm. Lawmakers around the state agree with Scott that Citizens would fail altogether if a hurricane or series of hurricanes were to hit.
In our last post, we were talking about the risks associated with Halloween. As wonderful as it is, Halloween can turn into a nightmare if a trick-or-treater slips and falls in a homeowner’s yard. It’s also a time of year that presents a host of opportunities for vandals and thieves. Property insurance policies may cover pranks and cranks, but there may be a few easy ways to avoid that injury or damage altogether.
It seems a shame, but Halloween is really pretty risky. In the “old days,” the primary concern was about tainted candy. Urban legends abound about the innocent 5-year-old trick-or-treater in a Miami suburb — right on the block where a friend of a friend lives — who bites into a rosy red apple, only to find a razor blade or surgical needle. You couldn’t swing a black cat without hitting some kind of terrifying tale of danger to life, limb and property.
In our last post, we were talking about the state’s Hurricane Catastrophe Fund. The fund was established to help Florida’s property insurance companies pay claims after a major storm. Recently, financial analysts determined that the fund, in its current state, would be unable to cover a big storm.
Miami remembers Hurricane Andrew. The 1992 storm devastated South Florida and swept away the reserves of insurance companies in the area. Florida lawmakers responded by establishing a hurricane fund that would help insurers pay homeowners’ property claims if a storm were to level part of the state.
The U.S. Department of Health and Human Services has been over the numbers time and again, but it just won’t work. Last week, HHS Secretary Kathleen Sebelius told Congress that the Community Living Assistance Services and Supports program can never be actuarially sound. The insurance program was to have been established under the Affordable Care Act.
