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Wednesday, October 08, 2008 |
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|  | Federal Wind Insurance Last Post 31 May 2008 08:09 PM by Gale Hawkins. 20 Replies. | Sort: |
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Steve Beaumont
Founding Member
Member
Posts:320
 | | 18 Jul 2007 12:50 AM |
| I'm going to start this topic on a new development that has a potential to affect everyone on this forum who handles wind claims at all. There is a bill being considered in Washington DC to expand the flood insurance program to add in the peril of wind much like the flood program covers flood now. I'll follow-up to this note and add in a link that you can read about what is being proposed. I would guess that if it is passed, most tropical storm/hurricane exposure claims will be done through the government (FEMA/NFIP/NWIP?) and through the write your own carriers. You may even see the coverage for wind on standard insurance policies being a rare thing like flood is now. I can see having to be certified with the government to be able to handle wind claims. I think a lot of us know how things improve a great deal once the government steps in and starts running things. Some may remember how great it was to handle flood losses before the write your own program came about. | | | |
| Steve Beaumont
Founding Member
Member
Posts:320
| | 18 Jul 2007 01:00 AM |
| Here are the basics on the proposed federal wind insurance. When you go to the article, there are links inside the box that describe in detail how this should/could work. A couple carriers are already behind it, but there is a good lobby against it also in DC. If interested, this newspaper will probably carry the updates on this as it is sponsored by their hometown boy. http://www.sunherald.com/news/breaking_news/story/100059.html | | | |
| Steve Beaumont
Founding Member
Member
Posts:320
| | 18 Jul 2007 04:20 PM |
| The latest as reported in the National Underwriter:
White House Nixes Windstorm Cover For NFIP
BY ARTHUR D. POSTAL
NU Online News Service, July 17, 3:45 p.m. EDT
WASHINGTON —The Bush administration flatly opposes expanding the National Flood Insurance Program to include windstorm coverage, a Treasury official told a House subcommittee today, placing a major roadblock in the path of legislation to expand the program.
Assistant Secretary for Economic Policy Phillip Swagel said in testimony before the House Financial Services Subcommittee on Housing and Community Opportunity that “the administration opposes H.R. 920.”
The hearing was held to gain the views of congressmen, state insurance commissioners, industry groups and consumers concerning the Multiple Peril Insurance Act of 2007.
The bill was introduced earlier this year by Rep. Gene Taylor, D-Miss., a vocal critic of the insurance industry for its actions in the wake of the 2005 Hurricane season.
Those who find fault with the program have suggested that private insurers who administer the flood program for the government have frequently managed to attribute home damage to flooding rather than windstorm activity, which they insure for.
Treasury’s views were supported by Ted Majewski, senior vice president of Pennsylvania-based Harleysville Insurance Group, representing three major trade groups, but rejected by a representative of the National Association of Insurance Commissioners.
Kansas Insurance Commissioner Sandy Praeger, who is also president-elect of the NAIC, testified that private insurance appears to be paying less and less of the losses created by major storms.
At the same time, Robert P. Hartwig, president and chief economist for the Insurance Information Institute, offered similar arguments to those of the administration and the insurers.
But he also pointed out that H.R. 920 will not necessarily solve any of the problems facing the market today.
The take-up rate for flood coverage has historically been “woefully low” and is unlikely to rise as a result of the bill, he argued.
In his testimony, Mr. Swagel said that a federal insurance program for wind damage will displace the active private market and “could give rise to a large new burden on federal taxpayers.”
“The administration supports leaving wind coverage to the well-developed private market for such insurance and not creating a federal program for wind losses.”
In his testimony, Mr. Majewski told the panel that risk-based pricing would be swept away in the tide of inclusion in the NFIP.
He spoke for the majority of the industry, the American Insurance Association, the Property Casualty Insurers Association of America and National Association of Mutual Insurance Companies.
Mr. Majewski said policyholders most likely to purchase the expanded coverage would be those in the high-risk areas, which he said would create an “adverse selection” and limit the program’s ability to spread its wind risk.
He also pointed out that the NFIP is already facing considerable deficits as a result of the 2005 storm season, while the private market has paid out significantly more in claims.
Ms. Praeger contended, however, that there is a “growing discrepancy” between total losses and insured losses after a major catastrophe.
“This discrepancy is exacerbated by a lack of all-perils coverage,” she said. As an example, Ms. Praeger said that while the private market did indeed pay out $40 billion in the wake of Hurricane Katrina, “private insurance covered only one third of the total economic response, with taxpayers covering the remaining seventy percent.”
“Providing consumers with all-perils coverage would unify these disparate approaches under one policy, shifting the burden off the consumer,” she added.
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| Steve Ebner
Member
Posts:349
| | 18 Jul 2007 07:00 PM |
| This sounds like a federal formula for disaster, or perhaps a way to move a little closer to governmental usurping of the industry. Are we to be subjected to wind maps and and wind zones, like we are with floods. If not is it simply a straightforward matter of there is wind insurance or there isn't? Will there be a $250,000 limit of coverage for wind as well as flood? Those who do not live in coastal areas have a very different exposure to wind than those who do not. The exposure on the plains is also very different. And the exposure here in the mountains is probably minimal. Here we seldom experience a devastating wind event. We generally have a hit or miss type of wind event. A few houses are hit. An occasional tree limb is down. When we get a hurricane here, the wind has dissipated and we get the water and attendant flooding. Separate wind coverage is not really a federal issue. It is a very important issue for a portion of the country. Though windstorms can happen anytime and anywhere, it is unlikely that a repeat of the Syracuse Labor Day Windstorm of 1998, for instance, will happen again soon. Now I wonder if we should federalize the peril of ice and snow, because it can be very devastating here in the northeast. Wait, wait, I know. Let's federalize the peril of hail because it keeps hitting Texas, Colorado, Wyoming, and Minnesota year after year. Hey, how about this...we could federalize earthquakes because they are a significant threat to the west coast. Or how about federal mine subsidence insurance added to the flood policy. Our houses here in the anthracite region always have the potential to fall into the ground because of the seven layers of coal mines under the house. Then we could add theft and vandalism to the flood policy because many live in very urban or very rural areas that are particularly prone to these perils. How about federal pollutant cleanup insurance for risks that are specific to the older industrialized cities and areas with oil refineries and chemical plants. Why stop there? There is significant exposure from fire to those who live in the west. The lack of rainfall in certain parts of the country can lead to a devastating fire event at any time. Why not just make it simple? We can create a federal multi-peril, or perhaps all risks policy, create a cabinet position for the new secretary of insurance, create a bureaucracy to run it, and eliminate the entire private insurance industry. Maybe that is too drastic. We can leave the perils of lightning, falling objects, aircraft, and vehicle collision for the private insurer's market. And to whom do we complain when we disagree with the settlement or believe we have been treated unfairly -- the same agency that approved the settlement in the first place? Believe me, I understand that the cost of wind (and hail?) insurance is prohibitive in certain areas of the country. I get that. I understand that the effects of a hurricane can be devastating. I get that too. I worked Pass Christian, Gulfport, Bay St. Louis, and D'Iberville, and stayed when almost everyone had gone on to other places. But why is a federal wind program the answer to this? (And don't even get me started on the inherent inequities of people who build on the beach, restricting public access and views of the water, and then expect the same public that is not allowed on their private beach to pay for the devastation to their property!) | | Steve Ebner
"With great power comes great responsibility." (Stanley Lieber, Amazing Fantasy # 15 August 1962) | |
| Steve Beaumont
Founding Member
Member
Posts:320
| | 18 Jul 2007 07:20 PM |
| | "But why is a federal wind program the answer to this?" For one reason, Mr Gene Taylor, the good congressman from MS, didn't get paid for his wind damages when his house was washed away during Katrina (until he sued SF that is), and we all know that the costs of insurance and availability of it has been a real problem for MS since the storm. What better way to make the people who vote for you happy then to have the federal government and the policyholders around the rest of the country subsidize them living in an area that is highly prone to a wind event. The NFIP has never been solvent to my knowledge nor has it had it's rates been actuarily sound. if they do this right (ie the people living on the coast paying high premiums based on the risk of loss, and people living in the mountains paying minimum amounts for the same reasons), then I don't think people would have many problems with it, but I would wager the cost difference between the two wouldn't be that great. I for one don't want to subsidize the lifestyle of those living on the coast. | | | |
| Ray Smith
Member
Posts:42
| | 18 Jul 2007 09:22 PM |
| | Mr. Ebner where can I purchase a Federal no storm/ no work policy for when there are no events for Cat Adjusters? | | | |
| Steve Ebner
Member
Posts:349
| | 18 Jul 2007 10:17 PM |
| Ray,
If I knew, I'd be in the line right behind you. I've heard it's right beside the line for manual typewriter repair people and down the hall from the Sony Betamax Owners Anonymous meeting. | | Steve Ebner
"With great power comes great responsibility." (Stanley Lieber, Amazing Fantasy # 15 August 1962) | |
| Ray Hall
Advanced Member
Posts:852
| | 18 Jul 2007 10:27 PM |
| If the Fed. wants to govern why do they allow million dollar secondary residence,s to built within 200 feet of a body of salt water ? Well thats not fair, that a local problem. If the builders and banks had to take the risk without the good old NFIP, taking the first 250K to 500K layer for flood how many would be built ? Let private insurance write the "all perils" coverage for about 6 to 8 % per year. | | | |
| Steve Zibilich
Member
Posts:46
| | 19 Jul 2007 01:49 PM |
| I wish to take the "#3" ticket in that line for the out-of-work Cat adjuster when there are no wind storms. Mickey D's is still hiring...
BUT SERIOUSLY, if you like the way the Federal Government handles your tax dollars, road projects, military conflicts, domestic and foriegn affairs, you'll LOVE the way they handle a program like this one. If the FEDS initiate and run a wind/hail/flood program, the VAST MAJORITY of folks who are adjusting right now would not be 'eligible' for the positions, due to racial and gender quotas. Heck, if the Feds start running this program (like they do FLOOD), the 25-50 Year Old White Male might be the ONLY person in the country who is fixing those Manual Typewriters & Edsels while watching the Sony BetaMax movies, eating traditional stove-popped Jiffy-Pop and churning their own butter.
Sorry to sound the alarm, but if something like this goes through, we may all become Whopper-Floppers at the local burger joint. AND, the level of customer service to those "insured" would drop drastically.
steveZ | | | |
| Steve Beaumont
Founding Member
Member
Posts:320
| | R .D. Hood
Founding Member
Member
Posts:215
| | 27 Jul 2007 06:24 PM |
| Here is the link to the National Underwriters Take If this passes, woe to this business as the Feds will now be in the Insurance Business. | | | "Anyone who has never made a mistake has never tried anything new... Albert Einstein" | |
| Steve Beaumont
Founding Member
Member
Posts:320
| | R .D. Hood
Founding Member
Member
Posts:215
| | 28 Jul 2007 02:47 AM |
| Insurers Balk as House Panel Votes to Add Wind Coverage to Flood ProgramJuly 27, 2007 Private insurance companies are balking at a decision by a key House panel to expand the federal flood insurance program to include wind coverage. The House Financial Services Committee voted yesterday to add wind coverage to the National Flood Insurance Program (NFIP). "We continue to believe that adding wind coverage to the NFIP is not the right solution," commented American Insurance Association (AIA) President Marc Racicot. AIA commissioned a study by Towers Perrin showing that adding wind could taxpayers as much as $100 billion to $200 billion if the federal government began displacing the private market by providing wind coverage. At recent hearing, AIA was joined by other insurer groups in opposing the expansion. They included the Property Casualty Insurers of America and the Reinsurance Association of America. PCI told lawmakers that, while the inclusion of wind coverage within the federal program is well-intentioned, it may produce unintended negative consequences for millions of American insurance consumers. "Including wind coverage within the NFIP will create artificial subsidies, thereby essentially raising rates for consumers in inland parts of the country who are not subject to the same kind of wind-damage risks faced by policyholders on the coasts," said Ben McKay, PCI's senior vice president, federal government affairs. "It is hard to believe that Congress wants to give more responsibility to a failed government program. I wouldn't invest in a company that had inadequate cash flow and $17.5 billion of debt." According to PCI, the combination of homeowners' insurance coverage, state wind pools and flood coverage available through the NFIP already provide consumers protection from wind and water damage. Moreover, the current system provides consumers the opportunity to purchase coverage at a price that reflects the risk based on the location of the property and the likelihood of a loss. "State residual market mechanisms provide wind coverage where there is no market, and private insurers provide wind coverage where there is a market," McKay said. "The Taylor bill simply creates a federal government fund that will compete with existing state funds and potentially with the private sector." Franklin W. Nutter, president of the Reinsurance Association of America (RAA), also argued that the expansion provision was unnecessary because private sector insurers, reinsurers, capital market participants, and residual market programs already provide wind coverage. In a letter sent to Chairman Barney Frank, D-Mass., and Ranking Member Spencer Bachus, R-Ala., of the House Financial Services Committee, Nutter said that it "fundamentally alters who bears the risk of loss from wind. Instead of spreading this risk throughout the private worldwide insurance marketplace, this legislation puts the entire burden of deficits on the U.S. taxpayer. This fundamental shift is not needed. There is adequate wind capacity being provided by direct insurers and/or state residual markets, and there is a very robust global private reinsurance market for wind to help insurers manage their risk of loss." Insurers had hoped lawmakers would have instead pursued a proposed six-month study by the Government Accountability Office, which they said would have provided an analysis of adding wind coverage to the NFIP and provided a better understanding of the real cost of adding wind coverage. The measure approved by the House Financial Services Committee is H.R. 3121, the "Flood Insurance Reform and Modernization Act of 2007," which also includes other reforms to the NFIP that insurers support. Find this article at: | | | "Anyone who has never made a mistake has never tried anything new... Albert Einstein" | |
| R .D. Hood
Founding Member
Member
Posts:215
| | 28 Jul 2007 02:50 AM |
| "The House Financial Services Committee voted 38-29 to approve legislation yesterday that would expand the National Flood Insurance Program to offer wind damage coverage. This fall, the legislation, HR 3121, will move to the House floor for action. It combines previously introduced flood reforms designed to increase the number of consumers in the program and reduce subsidies for some properties with a bill to add the wind coverage option. The measure requiring windstorm insurance to be provided by the flood program was introduced earlier this year by Rep. Gene Taylor, D-Miss. In voting yesterday, committee members split largely along party lines. Republican opposition to the bill mainly concerned inclusion of the wind coverage provision, which they argued would increase taxpayer liability for a program already deeply in debt. Democrats countered by noting a provision in the bill requiring premiums for wind coverage to be actuarially sound. “The answer to ‘how much is the bill going to cost?’ is ‘nothing,’” said Rep. Barney Frank, D-Mass., the chairman of the committee. Republicans responded that it is unlikely the actuarial soundness called for will survive political pressure to lower premiums. “We all know our constituents will be calling us from day one begging for lower rates and higher coverage,” said Rep. Tom Feeny, R-Fla. Later in the hearing, Rep. Feeny said the committee would be “usurping” the private market if the wind coverage provision were passed, and pointed to the experience of the Florida market since the state established its own Joint Underwriting Authority as insurer of last resort. That entity, now known as Citizens Property Insurance Corp., is currently the largest insurer for wind coverage in the state, he said. Inevitably, Rep. Feeny argued, the question of offering lower rates arises, and “no legislator in his right mind would vote against subsidizing,” he said. “It’s happened in Florida, and we’re going to do it again if we adopt this bill.” Rep. Frank, however, said that opponents would not have to look far to see a difference in this particular legislation. “I would give one piece of evidence that Congress can say ‘no,’” he said, “and that’s the rest of this bill.” Other provisions in the bill would require the Federal Emergency Management Agency to revise the nation’s flood maps by 2010 and phase out subsidies for structures built before the NFIP was established that are not primary residences. Insurance groups voiced opposition to the wind coverage provision, echoing many of the same concerns voiced by members of the panel. “Adding wind coverage to the National Flood Insurance Program would create artificial subsidies, which would essentially raise rates for consumers in noncoastal areas…” said Cliston Brown, federal affairs director for the Property and Casualty Insurers Association of America (PCI). Mr. Brown noted that “the NFIP is already $17.5 billion in debt, so adding further exposure to the program is not a good idea. Furthermore, state residual market mechanisms provide wind coverage where there is no market, and private insurers provide wind coverage where there is a market.” American Insurance Association President Marc Racicot said of the passage by the committee that “we continue to believe this is not the right solution,” noting a Towers-Perrin study commissioned by the group that the impact on taxpayers could be as high as $200 billion. That study, according to Rep. Taylor, is based on false assumptions. Mr. Racicot said AIA had hoped the committee would have chosen to pursue a proposed six-month study by the Government Accountability Office, “which would have provided in-depth analysis of adding wind coverage to the NFIP and provided a better understanding of the real cost of adding wind coverage.” Rep. Frank said during the markup that the bill will not go to the House floor before lawmakers leave for their August recess, and may not be acted on until October." BY MATT BRADY
NU Online News Service, July 27, 9:03 a.m. EDT
The above is from this article >>>> | | | "Anyone who has never made a mistake has never tried anything new... Albert Einstein" | |
| R .D. Hood
Founding Member
Member
Posts:215
| | 28 Jul 2007 02:52 AM |
| Steve et al: Have copied and pasted the info which was on the link. You do have to subscribe to get the daily information. Im on so many subscriptions i could make a house payment, LOL | | | "Anyone who has never made a mistake has never tried anything new... Albert Einstein" | |
| Roy Cupps
CatAdjuster.org
Member
Posts:338
| | 13 Sep 2007 03:48 PM |
| "Republican nominee for Mississippi insurance commissioner, Sen. Mike Chaney, R-Vicksburg, formally endorsed U.S. Rep. Gene Taylor's, R-Miss., Multiple Peril Insurance Act (H.R.920). The MPIA would allow property owners to purchase wind and flood coverage in a single policy. read more of the insurancejournal.com article >> http://www.insurancejournal.com/news/southeast/2007/09/13/83437.htm There has not been any action on this bill since February 2007 and the last report I saw indicated that the bill was dead in the water. | | | Adjuster Directory | The Licensing Page | The Cane Page | |
| Tom Toll
Life Member
Advanced Member
Posts:983
| | 13 Sep 2007 04:46 PM |
| Lets hope the bill stay dead in the water. Can you imagine the paperwork that would be required for both flood and wind claims. I get nauseaous just thinking about it. | | | Success is not final, failure is not fatal: it is the courage to continue that counts. | |
| Steve Beaumont
Founding Member
Member
Posts:320
| | 17 Oct 2007 08:39 PM |
| Here is the latest in the Insurance Journal on the senate version of the bill:
National News
Senate Flood Insurance Bill Keeps Current Limits, Omits Wind Coverage
October 17, 2007
Send Feedback E-mail this Article Print this Article Article Reprints
The U.S. Senate Banking Committee has approved legislation to reform the National Flood Insurance Program. The Flood Insurance Reform and Modernization Act of 2007 will now move to the floor of the full Senate.
The U.S. House of Representatives passed a similar measure last month, but while both the House and Senate versions reauthorize the NFIP through 2013, the Senate version veers from the House bill by not increasing maximum coverage limits and leaving out optional coverages, including business interruption coverage and additional living expenses.
The Senate version also differs from the House bill in that it does not include optional federal wind coverage, something insurers have said would result in a dramatic expansion of the NFIP – with the potential for huge deficits – and a fundamental realignment of both the NFIP and the private wind insurance market.
The Senate bill won praise from insurers, while agents expressed disappointment that it lacks the increased limits and the business interruption and living expense upgrades.
"AIA is pleased that the Senate Banking Committee approved legislation that will put the NFIP on a firm financial footing and will not include federal wind coverage as part of the NFIP reforms voted on today," said American Insurance Association President Marc Racicot. "We have steadfastly opposed the inclusion of windstorm coverage in the House version of this legislation and will continue to oppose adding wind as the House and Senate deliberate on this legislation."
Adding windstorm coverage would also encourage building in hurricane-prone regions, putting more people and property in the path of devastating storms, Racicot said.
"This is a very good bill," said Ben McKay, Property Casualty Insurers Association of America's senior vice president, federal government relations. "PCI has always supported reforming the flood program so that it can be solvent for the foreseeable future and helpful to consumers in need, but the addition of wind coverage would be extremely costly and potentially very damaging to the NFIP and its policyholders.
"We fully support the proposal to move forward with needed reforms without including needless additional exposure to a program that is already overburdened in the wake of Hurricanes Katrina and Rita."
The Independent Insurance Agents & Brokers of America (The Big "I") expressed concern over the missing upgrades.
"Both an increase in the maximum coverage limits and an inclusion of optional coverages would better allow both individuals and commercial businesses to insure against the damages that massive flooding can cause. We hope that the Senate will consider including these provisions as the legislation moves forward," said John Prible, Big "I" assistant vice president for federal government affairs.
The House Bill would increase coverage limits from $250,000 (structure) and $100,000 (contents) to $335,000 (structure) and $135,000 (contents) for any single-family dwelling and from $500,000 to $670,000 for structures and related contents of a nonresidential property.
The House version would also provide optional coverage for additional living expenses following a flood loss when the residence is unfit to live in, basement improvements, business interruption for commercial property, and full replacement cost of the contents of properties. New benefits would be made available only at time of renewal or issuance of a new contract, and only at actuarial rates, according to the bill summary.
Agents have not supported the addition of windstorm coverage.
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| Larry Hardin
Member
Posts:391
| | 30 Oct 2007 02:27 AM |
| Agents have not supported the addition of windstorm coverage.
This is really a recomendation FOR the coverage.
Think about it. Not that I support this but it seems that whatever the agents are FOR, do not necessarily help the insureds. | | | Larry D Hardin | |
| Steve Beaumont
Founding Member
Member
Posts:320
| | 08 May 2008 03:16 PM |
| This was shot down last year, but the politicians from the gulf coast states keep trying to push it through. There has been a revival of their efforts in the last month or so, and looks like it was resoundingly shot down again. Hopefully these folks will let it die this time and concentrate their efforts on getting matters taken care of at home properly vs trying to make the rest of the country subsidize their mixed up courts/intrepretation of the coverages. Here is the article I read this morning: Senate rejects adding wind to flood insurance program Posted by SEAN REILLY May 08, 2008 6:46 AMWASHINGTON Despite pleas from some Gulf Coast lawmakers Wednesday, the U.S. Senate swamped an attempt to add optional windstorm coverage to the federally backed National Flood Insurance Program. The amendment's sponsor, U.S. Sen. Roger Wicker, R-Miss., had touted it as a financially responsible way of dealing with the "wind versus water" insurance disputes that spawned numerous lawsuits after Hurricane Katrina. But the 74-19 turndown came one day after a congressional watchdog agency cautioned that a combined wind and flood insurance program could shift a considerable amount of risk from insurance companies and state insurance pools to the federal government. Wednesday's Senate vote came in the course of a debate over a broader overhaul of the flood insurance program. The House overwhelmingly approved optional wind coverage in its own flood insurance bill passed in the fall. The proposal's fate will hinge on how strongly House members continue to push it when they huddle with senators to hammer out differences between the two bills, said David Conrad, a flood insurance expert with the National Wildlife Federation, a Virginia-based environmental organization that believes optional wind coverage would encourage risky development. Unlike their counterparts in Florida, Louisiana, Mississippi and Georgia, U.S. Sens. Jeff Sessions, R-Mobile, and Richard Shelby, R-Tuscaloosa, both voted against Wicker's amendment. Shelby, the top Republican on the Senate banking committee, has objected that it could mean added costs for a program already staggering under some $17 billion in debt related to claims from Katrina and other 2005 storms. Sessions' office did not respond Wednesday to a request for comment on the reason for his vote. Created in 1968 because of private insurers' reluctance to cover water damage, the federal flood program now has more than 5.5 million policies in effect nationwide. Some 55,000 of those policies cover homes and businesses in Alabama, the bulk of them in Mobile and Baldwin counties. Among other provisions, the Senate bill would write off the flood program's mammoth debt to the federal treasury. It would also seek to shore up the program's finances by phasing out subsidies to businesses and second homes, raising the maximum allowable annual premium rate increase for unsubsidized properties from 10 percent to 15 percent; and requiring more at-risk homeowners to buy flood policies. But the amendment for optional wind coverage would have been much more far-reaching. The idea originated in the hybrid nature of the flood insurance program. Although the program is nominally run by the Federal Emergency Management Agency, most of the policies are written by private insurance companies that also offer wind coverage and adjust claims. By putting both wind and flood coverage under a federal umbrella, supporters say, those companies would have no incentive to attribute storm damage to flooding when the source is uncertain. "A conflict of interest exists" under the current system, U.S. Sen. Mary Landrieu, D-La., said Wednesday. Insurance industry trade groups deny any tilt in adjusting claims. In a review last year, the congressional watchdog agency known as the Government Accountability Office concluded that FEMA needs more authority to scrutinize claims where both wind and water are possible factors. In the separate report released Tuesday, the accountability office found that FEMA would have to complete "certain challenging steps" to make a combined wind and water insurance program work. Because premiums would be tied to the level of risk, for example, the agency would have to figure out how much to charge and still be able to cover catastrophic losses without resorting to the federal treasury. While the GAO reviewers agreed that a combined program could help resolve claims more quickly and ensure continued coverage, they also warned that it could lead the federal government and possibly taxpayers to pick up more of the insurance risk now borne by private companies and state wind pools such as the Alabama Insurance Underwriting Association, commonly known as the "beach pool." Despite the requirement that premiums be tied to risk levels, they wrote, "the potential exists for losses to greatly exceed expectations." | | | |
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