Insurance Claims And Issues

No One Has Applied ...

                               ... Because No-One Is Home.

     In an Associated Press report published online on November 30, 2007, it is dutifully reported with a sense of astonishment that people who own homes destroyed or damaged by the 2005 Hurricanes in Louisiana and particularly by Hurricane Katrina (1) have not rushed to sign up for hurricane assistance from the State and (2) that some 40% of the people who do sign up and make appointments, do not keep them,  by Melinda Deslatte, "Hurricane Homeowner Aid Deadline Nears" (Copyright Associated Press, published online by South Florida Sun-Sentinel.com, Friday, November 30, 2007).

     People are not signing up for the Louisiana program and, when they do sign up they do not keep appointments in Louisiana, because they are not there.

    Many are in California, Texas, Georgia, and Heaven Only Knows what other States outside of Louisiana.

    Many of those who signed up and are still in Louisiana are in trailer parks  -- at least, they were in trailer parks in Louisiana until today.  FEMA is closing trailer parks for people displaced by Hurricanes Katrina and Rita.  Some have no place else to go.  FEMA's reply is that its trailers were only temporarily loaned to these displaced persons, it is reported in another Associated Press report, this one by Becky Bohrer, "Katrina Victims to Start Losing Housing/The Trailer-Park Homes Were Only a Temporary Solution, FEMA Says" (Associated Press; published by the Orlando Sentinel, including online at orlandosentinel.com, Friday, Nov. 30, 2007).  Trailers are not temporary if people stay in them more than 2 years, I suppose, and FEMA is out to prove that those trailers are temporary, nothing but temporary.  The tough-minded federal officials responsible for this eviction can stand any amount of pain felt by the persons who are now displaced twice:  Once by Hurricanes, and now a second time by officials paid by the current federal government.

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Colorado State Predicts Hurricanes: "Well, Never Mind!"

     The people currently in charge have done it again.  They have found opportunities to be wrong and they have taken them.

     NOAA, the National Oceanic and Atmospheric Administration, and its poor relation, FEMA, contracted for Hurricane predictions using Federal Tax Dollars.  They paid the landlocked Colorado State University to forecast Hurricanes in the Atlantic Ocean and the Gulf of Mexico.  Who is going to get your Federal Tax Dollars before 2008 to predict Earthquakes, the University of South Carolina?  Clemson?

     Well, a Colorado State University spokesperson is unfazed.  They were right then, and they are right now, he says in essence.  See "National Briefing"/"South"/"Florida:  Another LIght Hurricane Season in U.S." (Associated Press Copyrighted story published in New York Times Nat'l Ed., p. A20, col. 5, Wed., Nov. 28, 2007) and this summary by Ken Kaye, "'We Were Blessed,' Official Says of 2007 Hurricane Season" (South Florida Sun-Sentinel.com, published online Wednesday, November 28, 2007).

     The actual results in this 2007 Hurricane Season that officially began on June 1, 2007 and officially ends on the day of this post:

     2 Major Hurricanes, Cat III or higher;

     5 (Sun-Sentinel report linked above) or 6 (Associated Press linked above) total Hurricanes; and

     14 named storms.

     The Colorado State predictions funded by the current federal government ('tis unknown how many named storms on the East Coast they predicted from the shadows of the Rocky Mountains):

     5 Major Hurricanes, Cat III or higher, and

     9 total Hurricanes.

     Close enough for government work, or perhaps, close enough for work paid for by your government with your money?

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Hurricane Deductible Actually Raises Profit, Potentially Affects Loss Investigation.

     Hurricane Deductibles are a fairly new Insurance policy provision.  They were apparently introduced in Florida, for example, following the 2004 Hurricanes including Charlie, Frances, Ivan and Jeanne.  They were standard issue in many Homeowner's and other Property Insurance Policies before Hurricane Wilma struck Southeast Florida in October, 2005.  That includes the Homeowner's Insurance Policy with Hurricane Deductible that was at issue in Fabricant_v. Kemper Independence Insurance Co. (S.D. Fla. Case No. 06.80527, Opinion Filed February 9, 2007).pdf.  This link is to the official online report of the Court.  This decision is also reported at 474 F. Supp. 2d 1328, 20 Fla. Law Weekly Fed. D731 (both subscription required).

     For two reasons, this new decision interpreting a new policy provision is important.  First, the Insurance Company issuing a Homeowner's Insurance Policy with a Hurricane Deductible earned additional profits of at least $1,725.45 in that one case.  The Policyholders claimed Coverage for a Condominium Association special assessment in the amount of $2,225.45 as the Policyholders' assessed share caused by damage to common areas during Hurricane Wilma.  The Policyholders paid the special assessment and claimed reimbursement under their Homeowner's Insurance Policy.  The Federal Court denied their Coverage claim, because of the Hurricane Deductible.

     The Homeowner's Policy at issue contains two Deductibles and in that regard, it is a typical Homeowner's Policy in present-day Florida.  One Deductible is what the Federal Judge called a "general deductible of $500".  See attached official Opinion at page 2; 474 F. Supp. 2d at 1330. The Federal Court also recognized that it was "a standard policy deductible of $500".  Id. at 6; 474 F. Supp. 2d at 1331-32.  If that standard general deductible applied in the Fabricants' case, they would have been reimbursed $1,725.45 under their Homeowner's Policy, in all likelihood.  That deductible did NOT apply, the Federal Judge ruled.

     Instead, the second Deductible in the Fabricants' Homeowner's Insurance Policy applied to the special assessment that resulted from Hurricane Wilma.  The second Deductible is a Hurricane Deductible for the amount of $2,800.00.  The Hurricane Deductible being larger than the special assessment, the Federal Court ruled that Mr. and Mrs. Fabricant did not meet their Hurricane Deductible for the special assessment in this case, and they recovered nothing under their Homeowner's Policy.  The Federal Judge dismissed their Coverage action and the case is closed.  Id. at 8-9; 474 F. Supp. 2d at 1332-33.

    

Homeowner's Insurance Quiz for Arizona, Colorado, Florida and Texas Homeowners

     Who in Heaven's Name are such Insurance Companies as American Integrity, American Strategic, Coral, Edison, HomeWise, and PURE Risk Management?  Answer:  These are some of the 'new' Insurance Companies coming to your area to offer Coverage in unseen terms for unknown prices!  They may or may not be rushing in where the likes of Allstate, Nationwide and State Farm may fear to tread:  Homeowner's and other Property Insurance Markets.    Whether they offer you a good choice in these Markets is up to you and your own due diligence, though.  Here is a brief newspaper report that summarizes each of these 'new' Insurance Companies.  Check these Companies out online or in person or ask around about them, and let me know what you find.

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More on Mississippi cleansing

     Building permit records in Biloxi, Mississippi since the 2005 Gulf Coast Hurricanes speak as though they had voices.  They tell that less than 10% of single-family homes have been permitted for rebuilding in the last 2 years.

     It is not that money to rebuild is not available.  It is.  There is $600,000,000.00 in Federal Tax Money available in housing aid.  Or, that is, there will be unless the Governor of Mississippi and his administration are successful in diverting it to other uses at this time.

     They have proposed that housing aid be diverted and spent instead to expand the Port of Gulfport, Mississippi.  This will not rebuild Mississippi homes destroyed in 2005.  Make no mistake. 

     The plan has the seeming virtue of consistency, however.  Before the Hurricanes of 2005, the main type of rental dwelling unit on the Gulf Coastline was in small rental complexes or houses.  Some 20,000 of these units were damaged or destroyed in the State of Mississippi by the Hurricanes of 2005.

 

More Than Postscripts Now: Subprime Collapse Falls on Insurers Too

     Allianz is the largest Insurance Company in Europe.  It has been hugely affected by the subprime collapse.  It is reported that its shares are trading at the lowest valuation since 2003, that its shares trade at a current price comparable to another Insurance Company rocked by subprime markdowns:  Swiss Reinsurance Co., and that its stock has fallen 22% in the last four months at a rate greater than the Bloomberg Europe 500 Insurance Index, in Oliver Suess, "Allianz Investors Find New Cause to Rue Dresdner Deal:  Subprime" (Bloomberg.com, Monday, November 26, 2007).  A reported culprit is Dresdner Bank, which Allianz purchased six years ago.  There are "suspicions" about the solvency of Dresdner Bank in 2007 because of subprime mortgages which may be held by the Bank.

     The emerging effects of the subprime collapse and markdowns of securities values were noted in posts here on 11.08.07 and 11.15.07, with Postscripts added on 11.16.07 and 11.19.07 too.  In the same posts, the downward effects on Swiss Reinsurance Co. were noted and the likely spread of subprime markdowns to the Insurance Industry was predicted.  It did not require much knowledge of finance to see that coming to the Insurance Industry.

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Flood Maps and Flood Plains: Sorry is not an Option.

     It is reported in an Associated Press copyrighted story that the Army Corps of Engineers has miscalculated the flood plain in maps it drew up showing the Corps' highly publicized improvements to the City of New Orleans' canal drainage systems.

     Instead of reducing flooding by 5 and a half feet in certain neighborhoods, it would reduce floods by 6 inches, all during a once-in-a-century storm.

     It was not the Army Corps of Engineers that publicized this "discrepancy," the A.P. reported.  This mistake was found by a TV station in New Orleans.

     The availability of flood insurance depends on the location of a home in relation to the flood plain, which is a fact included in the A.P. story.  The Corps' current mistake requires the flood plain shown on its maps to be redrawn.  In the meantime, people with expensive homes built on the faux flood plain, which is now not really the actual flood plain basis for flood insurance, may not have many options.  A link is not available to this A.P. story published online by the South Florida Sun-Sentinel, but should be searchable by interested readers.  In the meantime:  See Cain Burdeau, "Mistakes Made in New Orleans Flood Maps" (Associated Press; published by South Florida Sun-Sentinel.com, Saturday, November 17, 2007).

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Garbage In, Garbage Out in Florida: Baseless Computer Modeling ....

                                                Still Denies Rate Hikes.

     Many Homeowner's Insurance Companies and other Property Insurance Companies in Florida have asked for rate hikes based on 'alternative' computer models of Catastrophe Risk.  These models appeared for the first known time after the 2005 Hurricanes.  Insurance Companies across the country have relied on them in support of applications for increased premiums because of exposure to Hurricane and other Catastrophe Claims allegedly magnified beyond the comparatively benign results based on facts as in the standard, approved computer model.  These rate requests were not successful in 2006, certainly to the extent that any one of them relied on unsupported, 'alternative' computer models of high-risk-opinion data.   This background is discussed and analyzed in previous posts on this site, including these two posts at Christmastime, 2006:  "Primary and Excess Flood Insurance ... And CatClaim Computer Models" (December 24, 2006) and "Computer Models:  Facts In, Opinions Way Out" (December 23, 2006).

     In 2007, it is Allstate which has been denied increased premium requests based on unauthorized models.  To be sure, Allstate is not the only Insurance Company in Florida in 2007 requesting rate hikes.  However, Allstate's proposed rate hikes were rejected and one of the reasons continues to be reported use of unauthorized modeling to predict future Hurricane Catastrophe Claims.   The 'new modeling' if you will depends on opinion input, resulting as might be expected in predictions output of more and greater so-called Catastrophe Claims, which lead in turn to requests for rate increase output.  The unauthorized use of models to support unsuccessful applications for rate hikes in Florida is one of the "5 Big Stories:  The Week in Business" by Jeff Harrington (St. Petersburg Times Online at www.sptimes.com, Sunday, November 18, 2007).

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Catastrophe Claims: Rate Increases Denied, But Where's The Relief?

         Hurricane Wilma Claims 2 Years Later:  Where's the Relief?

    Hurricane Wilma damaged a lot of homes two years ago.  Wilma struck Fort Lauderdale and surrounding areas hard.  FEMA is apparently not an option for relief there.  A separate brainchild called the Federal Community Block Grant Disaster Recovery Initiative Program is distributing money to cities and counties in small and differing amounts without visible strings tied to Hurricane Wilma relief.  Some localities are sharing the available proceeds with residents, although there is not enough 'relief' to go around.  Other localities are instead buying generators and paying for construction on drainage systems.  Having already proven spectacularly that FEMA could be made not to work, the current federal government has redirected prayers and hopes to its Big Drip (BGDRIP) for some relief now in Fort Lauderdale, Florida, where for 2 years it appears there has been none at all.    See this article by Juan Ortega, "Victims, Cities at Odds Over $41 Million in Federal Wilma Relief" (South Florida Sun-Sentinel.com, Wednesday, November 21, 2007).

                    Catastrophe Insurance Rate Hikes Denied.

     Allstate Corporation is reportedly the third-largest Property Insurer in the State of Florida.   One of Allstate's subsidiaries in Florida, Allstate Floridian, is itself reported to be the fourth-largest Property Insurer in Florida.  Allstate Floridian and other

Insurance Expert Not Reimbursable in Sixth Circuit, Court Holds.

     In a post today on Insurance Claims Bad Faith, www.insuranceclaimsbadfaith.typepad.com, a recent Sixth Circuit decision is examined in which the Federal Court unambiguously held that a party to that Insurance Case could not be be reimbursed for the fees of its Expert Witness, i.e.,  "the hourly rate charged for the expert's time and services" under various Federal Rules and Statutes.  Careful attention should be paid by parties and practitioners to those Federal Rules and Statutes, and others.

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