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.
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.
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.
The Florida Legislature adjourns this Friday, and the House and Senate continue to wrestle with the insurance bill. The Senate passed SB 408 on Tuesday only to have the House make major amendments to key provisions today. At the top of the list is, again, property insurers’ coverage of sinkholes.
We’ve been discussing job loss, or “unexpected unemployment,” insurance. The subject will come up during a home buyer’s negotiations with lenders or builders, and Florida borrowers should know that the insurance will likely be presented as coverage at no cost to the home buyer — “Why not? It’s free!” But it’s not really free — the premiums can be steep, even though the lender gets a wholesale rate from the insurance company, and are rolled into other costs or fees associated with the purchase. In addition, there are eligibility rules and caps on monthly benefits to consider.
In our last post, we were talking about the fate of Florida’s homeowners insurance report card. Mandated by a 2007 law, the report card was intended to be a tool for Florida homeowners to compare insurance companies using just a few key measures. After years in development, the first report card was completed in December.
As the Florida Legislature works on bills to change the insurance market in the state, a state-mandated homeowners insurance report card dies a quiet death. Lawmakers approved the report card in 2007 to give Florida homeowners a way to compare insurers as well as to move insurers to improve their customer service.
