NC Braces For A Visit From Earl

Complete Choice Insurance — Mon, 30 Aug 2010 13:10:12 +0000

While Hurricane Earl is expected to brush the North Carolina coast late on Thursday night, Tropical Storm Gaston has weakened into a depression but still is forecast to intensify into a Category 2 hurricane in the next five days. Although Earl has weakened, now packing 125 mph winds, it still is a dangerous Category 3 system. The storm is projected to slide just east of the Outer Banks but close enough that much of the region likely will experience hurricane conditions. Rough weather should start blanketing the coast of the Carolinas later on Thursday.

In addition to its ferocious winds, Earl threatens to produce up to 6 inches of rain and a storm surge of up to 5 feet above ground level along its path. At 2 p.m., Earl was 245 miles south of Cape Hatteras, N.C., and 720 miles southwest of Nantucket, Mass., moving north at 18 mph with sustained winds of 125 mph. Mandatory evacuation orders have been issued for most of the North Carolina coast. Several schools and government offices plan to close on Friday. According to the Charlotte News Observer, North Carolina Gov. Beverly Perdue urged residents along the coast to follow evacuation orders and assured that the state is ready for Earl’s worst.

The storm “isn’t something to mess around with,” Perdue said. “It’s a serious storm and we need to treat it as a serious storm.” President Barack Obama declared an emergency in North Carolina because of Earl’s approach. The declaration allows North Carolina to gain federal support for emergency protective measures such as the use of the National Guard, state Highway Patrol, state Department of Transportation, opening shelters and providing other resources as needed. Resources, including bottled water and meals-ready-to-eat, are being moved to distribution sites.

After departing North Carolina, Earl is forecast to parallel the U.S. coastline and steadily weaken. Just the same, Earl is projected to maintain hurricane status until it approaches either Maine or Nova Scotia, Canada. Because it juts out from the coastline, Cape Cod could suffer a direct hit. Hurricane watches warnings have been issued for much of the Northeast shoreline.

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One On One With Florida Insurance Commissioner Kevin McCarty

Complete Choice Insurance — Sun, 20 Jun 2010 16:54:06 +0000

What are some of the biggest problems in the state’s property insurance market and what can be done to solve them?

Insurance Commissioner Kevin McCarty fielded questions about that and other issues on Tuesday from the Sun Sentinel and readers.

Q: Why are rates increasing again?

A: McCarty said sinkhole claims are growing exponentially and all policyholders – including those in South Florida where sinkholes weren’t a big problem in the past – are paying for them. His office plans to issue a report on the problem in the next few months.

McCarty said claims cost for non-hurricane problems such as water and fire damage are also increasing, partly due to consumer-oriented policies passed in recent years and the growth of public adjusters, who represent policyholders in claims disputes with insurers. “I am as flummoxed as any consumer,” he said. “We can’t do anything about hurricanes but we can certainly do something about [other] claims that are out of control…in the same way we’ve done it with workers comp where we’ve seen a 64 percent decrease in rates.”

A 2003 workers compensation law that among other things, capped attorneys’ fees, is credited for leading to lower rates.

Q: What is the status of legislation expanding the federal government’s role in providing catastrophe backup coverage and loan guarantees for state catastrophe insurance funds? Proponents say the legislation could essentially solve Florida’s property insurance crisis.

A: The legislation, which cleared the House, is pretty much dead in the Senate. ”I’m afraid for this legislative period, we’re not going to see any national legislation,” McCarty said.

Q: Federal lawmakers passed some major, controversial legislation recently such as the health care bill and financial reform package. Why didn’t the national catastrophe fund legislation make it?

A: The legislation is being framed as a bailout, similar to the assistance some car companies and banks received from the federal government to stay afloat. “There is a strong alliance in Washington against what they’re calling another bailout and it’s easy to demonize these – what I think are good public policy initiatives by Congressman [Ron] Klein and others – as bailouts and say it’s because of Florida’s ‘inadequate rates,’” he said. Opponents “throw little buzzwords out there that have stock.”

Q: Why should states that are considered less risky subsidize hurricane-prone Florida?

A: McCarty said the legislation would create a plan for the federal government to back up loans and support states’ efforts to plan for catastrophes such as hurricanes, floods, earthquakes, mudslides and tornadoes – disasters that strike nearly all states, not just Florida. He said it’s more costly for the government to pay for relief efforts after a disaster strikes instead of planning for it beforehand.

But the attitude of many lawmakers is “when the house is burning, we’ll put it out,” he said. “It’s a future problem that may happen. They’ve got real problems that are happening” like the financial meltdown and uninsured Americans.

He noted that Florida pays 40 percent of the premiums for the National Flood Insurance Program but receives a fraction of the claims payouts. So lawmakers in some other states are OK with having Floridians essentially “subsidize” that program, he said.

Q: Why are so many homes in Florida still not fortified against hurricanes and what’s the status of efforts to encourage people to beef up their property?

A: “You have a culture of amnesia as you move further and further away from the storm, the less and less you…put your shutters up,” McCarty said. “And the pressure to build homes cheaply. That’s a real problem everywhere, not just Florida. They don’t want to build earthquake-resistant homes in California either…It costs three to five percent more to build them. It costs a whole lot more to replace them.”

He said Florida spent $250 million to provide free home inspections and matching grants for home upgrades. “We certainly have taken the biggest step in the history of the world in terms of providing money for that. That money ran out,” he said.

He said 60 percent of the homes in Florida were built before the new building codes and it would be too expensive to upgrade many of them; They will eventually just have to be rebuilt. But he said the only way to lower the huge, projected potential damage in Florida from major hurricanes is to make homes stronger.

“Florida is going to have to focus on those issues in order to ensure the economic viability of the state, not just the insurance viability,” he said.

Q: Do Floridians understand they’re on the hook to help pay for deficits in state insurance funds if they’re wiped out after a major hurricane?

A: Yes, McCarty said: “We’re a transparent state. We [list fees for each state program] on your deck sheet and you see it and people call when they see that number: ‘How come I’m paying this much money and I have a private sector policy?’”

Q: What are the next key insurance issues for Florida?

A: In addition to the sinkhole issue, McCarty said his office may hold a hearing on personal injury protection fraud. Insurance Consumer Advocate held a round table on the issue last week. Floridians are required to have at least $10,000 of PIP coverage, which pays for the driver’s medical expenses, a portion of lost wages and a death benefit after an auto accident.

Domestic insurers have pushed to have the state address the problem of staged accidents. Chief Financial Officer Alex Sink’s office has worked with local police and the crime bureau to arrest about 30 people this year for alleged involvement in staged accidents.

“PIP is certainly going to be an issue this year. There certainly is an increase we’re seeing in the cost of PIP claims,” McCarty said.

Q: Has feedback from Florida’s property insurance industry influenced your thinking? As the state’s top insurance regulator, you faced considerable criticism in recent years from industry representatives and some lawmakers for rejecting property insurance rate hikes in 2008, holding hearings to investigate insurers and opposing a bill to essentially deregulate rates. More recently, your office approved dozens of rate hikes and supported an insurer-backed bill.

A: “You make decisions and you’re going to be criticized. I think the important thing is to focus on the responsibilities and that is protecting consumers and ensuring solvency and I think the office has done a top job in doing those things,” he said.

Click Here For Full Story: http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2010/08/qa_florida_insurance_commissio_1.html