We were talking about the story of the three little pigs and the big bad wolf the other day. Someone suggested it was really a metaphor for homeowners and hurricane insurance coverage in Florida. The pigs are the homeowners, and each used different building materials for their little houses. The wolf represents a category 5 hurricane that the pigs hope their homes will survive.
The hurricane season started June 1, and we were talking about the National Oceanic Atmospheric Administration (NOAA) outlook for 2011. The NOAA’s storm estimates are likely included in the data property insurance companies use in rate-setting – especially in states like Florida that are right smack in the middle of “hurricane alley.”
The Atlantic Hurricane Season officially kicked off at the beginning of this month. This is the time of year when the National Oceanic Atmospheric Administration (NOAA) publishes its predictions for named storms, hurricanes and major hurricanes. And this is the time of year when Florida’s property insurance companies focus on the NOAA’s big picture summary instead of the detailed report as they justify their requests for rate increases.
The Florida Commission on Hurricane Loss Projection Methodology has approved the RMS U.S. Model Version 11.0. Insurers in the state can now use the model as they calculate rates — and rate increases — for the coming year. This is the same insurance model we discussed last month, and this is the same insurance model that insurance companies have been circling with some apprehension since its national debut.
Florida has certainly seen its share of Unum lawsuits. The insurance company has a national, if not international, reputation for denying long-term disability claims to policyholders for no reason. Complaints specifically cite Unum for randomly denying claims in an effort to reduce the company’s exposure.
Now that the Florida Legislature has finished overhauling property and casualty insurance, Congress is stepping into the fray. According to the author, the proposed bill — or the proposed proposed bill, as it has yet to be introduced — would better define hurricane claims and the allocation of damage between wind and water.
A class action lawsuit was filed recently against an auto insurer, claiming the insurance company fraudulently denied military families benefits following car accidents. The complaint alleges the company violated insurance laws and regulations and charges the insurer with breach of contract and breach of faith. The plaintiffs are asking for punitive damages from the company.
The Florida Office of Insurance Regulation recently asked major life insurance companies to appear at a hearing regarding unpaid benefits. According to the OIR, life insurers have failed to pay at least $1 billion owed to beneficiaries, policyholders or state governments. Florida’s regulators, along with regulators from 15 other states, specifically want to know how insurers determine a policyholder has died.
This is the second and last post covering a recent interview with a catastrophe risk assessment expert. The interview was especially interesting in light of recent natural disasters and efforts by Florida lawmakers to protect insurance companies — at the expense of policyholders — from the risks these models have predicted.
As the South fights floods and tornadoes, Florida’s governor is deciding if he should sign an insurance bill that is heavily weighted for the industry and, according to critics, not so much for consumers. We’ve talked about the bill before, especially in light of the industry’s contention that reserves will be wiped out from hurricane claims after that overdue category 5 storm hits.
