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Old 03-24-2009, 07:05 PM
 
214 posts, read 736,968 times
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On Friday, March 20th Judge Pittman filed the Order granting the Motion to Stay the November 21, 2008 Decision implementing increases in surcharges and deductibles under the Beach/FAIR Plans. The is great news! Even though the Order only applies to the increases in deductibles and surcharges, I firmly believe the Judge will rule the same way on the December 18, 2008 Decision (to raise overall rates) when this Motion goes before him.

The Order has some very strong language that I believe will support legislation now pending before the General Assembly. The Judge states in his Order "(i)t does not appear from the available record that the Commissioner of Insurance acted according to law." The Judge continues "(i)t is, therefore, hereby ordered that the November 21 approvals by the Commissioner of Insurance of the rate increase requests of the North Carolina Insurance Underwriting Association and the North Carolina Joint Underwriting Association are hereby stayed and the Department of Insurance is hereby enjoined from enforcing said decisions." WOW!!

Click here to read a copy of the Order.

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Old 03-26-2009, 06:10 AM
LLN
 
Location: Upstairs closet
4,981 posts, read 8,753,876 times
Reputation: 6451
Not so sure if I would rejoice, yet.

If those increases do not go through, more and more companies may simply exit the market. I am not fan of rate increases, but I am a fan of insurance for my property.

The problem is the huge concentration of risk for some companies. "Risk" is getting to be a dirtier and dirtier word in the financial sector.

The core problem is that fundamentally the purpose of insurance is to protect against an unanticipated disaster, something that you could not have foreseen and taken steps to mitigate.

Insuring against hurricane damage, either wind or water, on the NC coast, hardly meets that fundamental definition, and therein lies the problem. It is lose - lose for all concerned.

lln
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Old 03-26-2009, 06:45 AM
 
22,769 posts, read 26,229,736 times
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Quote:
Originally Posted by LLN View Post
The core problem is that fundamentally the purpose of insurance is to protect against an unanticipated disaster, something that you could not have foreseen and taken steps to mitigate.

Insuring against hurricane damage, either wind or water, on the NC coast, hardly meets that fundamental definition, and therein lies the problem.
Good point, I had not thought of it this way.

I don't understand why there isn't an inter-state risk pool for Florida, TX, NC, SC, MS, LA, and other hurricane-prone states, for the most vulnerable areas.
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Old 03-26-2009, 02:27 PM
 
214 posts, read 736,968 times
Reputation: 128
Quote:
Originally Posted by LLN View Post
Not so sure if I would rejoice, yet.

If those increases do not go through, more and more companies may simply exit the market. I am not fan of rate increases, but I am a fan of insurance for my property.

The problem is the huge concentration of risk for some companies. "Risk" is getting to be a dirtier and dirtier word in the financial sector.

The core problem is that fundamentally the purpose of insurance is to protect against an unanticipated disaster, something that you could not have foreseen and taken steps to mitigate.

Insuring against hurricane damage, either wind or water, on the NC coast, hardly meets that fundamental definition, and therein lies the problem. It is lose - lose for all concerned.

lln
Not necessarily, if the costs are more evenly distributed across the state, and not polarized or politicized, then it will a much fairer situation. The whole Beach Plan and those that have formed it, have to be further scrutinized, in order to come up with a fairer share of what costs go to which counties. I have no fear what so ever that companies will pull out, that is a left over fear tactic from the "Bushed" administration. The only company that i am aware of that has pulled out is State Farm, and that is because they lost their shirts in Katrina, and in Florida. That is comparable to "let's pay the folks @ AIG bonuses who got that company into the mess it's in" or "if we don't pay them, we won't retain them'. Make sense to you? Not me.
The whole Beach Plan needs to be re-addressed, as well as those who are representing it, I am glad to see some form of transparency, and questioning. Heck I've seen worse storms in Charlotte and Raleigh than have taken place down here, and that has been well documented.
.
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Old 03-26-2009, 05:41 PM
LLN
 
Location: Upstairs closet
4,981 posts, read 8,753,876 times
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Quote:
Originally Posted by seashellbelle View Post
Not necessarily, if the costs are more evenly distributed across the state, and not polarized or politicized, then it will a much fairer situation.
Fair to whom? Someone in Hickory that is not at threat from a hurricane. You have got to be kidding. Folks that want to live near the coast (that includes me) need to accept the risk and the price of that risk. Good luck getting folks in Charlotte to pay more for their insurance so we do not have to pay what the risk managers say is our share.


Quote:
Originally Posted by seashellbelle View Post
That is comparable to "let's pay the folks @ AIG bonuses who got that company into the mess it's in" or "if we don't pay them, we won't retain them'. Make sense to you? Not me. .
You must not understand Fortune 100 companies.

AIG had and still has, many many divisions. What did them in was top corporate management failing to look closely enough at the division in London, UK that was involved with a derivative financial product known as credit default swaps. This product insured security buyers against mortagages going bad (i.e., an interruption to the mortgage payment stream). For years it was money for nothing since rates and payments were low and property kept going up up up. BILLIONS were made by this one division, alone, and top management was fat, dumb and happy counting the revenue coming in.

Meanwhile MANY other divisions of AIG worked as hey have for many years and made profits, though none as spectacular as the London branch. In insurance services and sales, bonuses are what keeps people going and what keeps people, and their block of business with the firm.

With the outcry over bonuses, many paid to people that earned them contractually and had nothing to do with either top management's negligence or the credit default fiasco, people that legally earned the bonus are now being thrown under the bus by mis-informed press, politicians, and un-informed citizens. I commend to you an op-ed piece in yesterday's NY Times, which is a letter of resignation of a AIG manager over being told to return the bonus that he earned. Maybe bonuses will make more sense to you then. The AIG situation is not as straightforward as the simple minded would like for us to believe.

Meanwhile, it ain't fair to make people less at risk for hurricanes pick up our tab. Period.

lln.
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Old 03-26-2009, 06:33 PM
LLN
 
Location: Upstairs closet
4,981 posts, read 8,753,876 times
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Quote:
Originally Posted by rubber_factory View Post
I don't understand why there isn't an inter-state risk pool for Florida, TX, NC, SC, MS, LA, and other hurricane-prone states, for the most vulnerable areas.
That is exactly what the national flood insurance program does. It just does not cover wind.

lln
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Old 03-26-2009, 08:21 PM
 
Location: Five Points
1,190 posts, read 3,644,396 times
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Our mountains produced millions and millions in claims from Hurricane related flooding and mudslides in recent years. Tornado damage is also commonplace and spread around the state. Raleigh and Charlotte and their surrounding areas have been the source of huge claims from Hurricane damage in the last 20 years. This needs to be looked at. LLN has a different opinion from most folks that I know that own coastal property.
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Old 03-27-2009, 07:06 AM
 
Location: Leland, NC
149 posts, read 517,506 times
Reputation: 124
[quote=LLN;8058249]Fair to whom? Someone in Hickory that is not at threat from a hurricane. You have got to be kidding. Folks that want to live near the coast (that includes me) need to accept the risk and the price of that risk. Good luck getting folks in Charlotte to pay more for their insurance so we do not have to pay what the risk managers say is our share.


I'm glad you have such faith in the risk managers. Maybe things work differently in NC than from my neck of the woods, but where bureaucrats get involved decisions are often made for financial gain or because they are too lazy to do a thorough investigation of the problem.
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Old 03-27-2009, 07:49 AM
 
22,769 posts, read 26,229,736 times
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Quote:
Originally Posted by steve_d_bear View Post
I'm glad you have such faith in the risk managers. Maybe things work differently in NC than from my neck of the woods, but where bureaucrats get involved decisions are often made for financial gain or because they are too lazy to do a thorough investigation of the problem.
Risk managers aren't supposed to be bureaucrats. They are supposed to work in the private sector. The private sector is supposed to set prices in the market, and firms compete against one another.

At least, this is what I believe. Other people believe that the government should set the prices, we should abandon the markets, and probably end up spreading the risk onto the taxpayer. It is only when you start over-regulating that you drive firms out of the state, and have to rely on the state to provide coverage.
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Old 03-27-2009, 08:06 AM
 
Location: Morehead City, NC
1,676 posts, read 5,358,872 times
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61% of wind and hail damage occurrs inland, not coastal! Click Here (http://www.hitchcockrealty.net/Wind.html - broken link)
And hurricanes don't affect the mountains? A couple of them sure did in 2004. Left us along the coast alone.
Anyone remember Hurricane Hugo in 1989? Charlotte got whacked.
Raleigh got whacked in 1996 with Hurricane Fran.
Most deaths associated with storm flooding does not occurr coastal-It's an inland phenom.
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