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Michael Losses & FEMA Boss Sets Off a Hurricane of His Own

Posted By Staff Reporter, Tuesday, October 23, 2018

 

The estimates are still coming in about the damages from Hurricane Michael and its assault on Florida and the rest of the East coast a couple of weeks ago. Dr. Robert Hartwig who teaches risk management at the University of South Carolina — and who used to head the Insurance Information Institute (I.I.I.) — said insurance losses will hit $11 billion.

“If there is a silver lining here, it’s the fact that where Michael came ashore and where it went inland, these areas are not particularly densely populated relative to most of the coast of Florida. If it had hit Miami or Tampa, we’d be talking something quite different here,” he said.

Another plus, Hartwig said insurance companies have $761 billion available to pay claims. “So, they entered the 2018 hurricane season with financial strength that was unparalleled in history,” he added.

AIR Worldwide says losses will be $6 billion at the low end and $10 billion at the top.

Much of the damage and losses — said Federal Emergency Management Agency (FEMA) Administrator Brock Long — could have been avoided. He said that as he lashed out angrily at the people of Florida.

Long said the people of Florida need to pay attention to evacuation warnings and those running the state need to be better prepared for disasters like Hurricane Michael. “It’s frustrating to us because we repeat this same cycle over and over again,” Long said. “If you want to live in these areas, you’ve got to do it in a more resilient fashion.”

He also railed against citizens in other vulnerable areas and noted they fail to pay attention to warnings just like those in Florida. Long also noted that a lot of people in this country fail to carry the proper insurance.

 

“Insurance is the first line of defense. We see far too often where people pay off their mortgage and then let their insurance lapse, and then their house burns down,” he said.

 

As for officials? Long didn’t spare them either. He suggests they don’t do enough to protect the citizens they’re elected to protect. “Until we get building codes passed at local and state levels that are meaningful, then we’re going to continue to see a lot of damage and destruction,” Long added.

He was also critical of his boss — President Trump — and Congress. Trump was jumped for revoking federal-level construction rules and Congress received a tongue-lashing for failure to overhaul a very out-of-date National Flood Insurance Program (NFIP).

He did — however — say Congress did a good thing by passing legislation that gives FEMA more dollars to help communities avoid disasters.

We’re just one part of the formula that’s needed in this whole community to stop this madness,” Long said. “You see this enough in your career, you get ticked off.”

Source link: Insurance Business America, Insurance Journal

Tags:  Hurricane Michael  hurricane season  Insurance content  insurance industry 

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A Gathering of Agents & Insurers — PIA Washington/Alaska’s Annual Conference

Posted By Administration, Tuesday, September 25, 2018

They came from all over for the annual PIA Washington/Alaska and Independent Insurance Agents and Brokers of Washington (IIABW) conference. Some were there the whole three days. Others popped in just for the massive trade show.

Then there was golf, a world-class poker tournament, bingo, camaraderie and fun. And all of it in one beautiful setting at Renton, Washington’s Hyatt Regency Lake Washington.

PIA Washington/Alaska had a changing of the guard. Association Chairwoman Kristie English of Lynnwood, Washington’s English Insurance Group finished her term and Heidi Duncan of Duncan & Associates Insurance Brokers in Olympia, Washington assumed the association’s reins.

In her farewell speech, Kristie English said the end of any term is a time of reflection. She said a lot was accomplished during her tenure but there is much room for improvement.

“Our industry is working hard to keep up with the changes in both technology, and how people view insurance and the process by which they purchase coverage for their families and businesses. What can we as an association do to improve, and stay relevant to these changes and the needs of our agents?” she asked.

Her answer was simple.

“While we may be serving the larger agencies well, I think we could do a lot more to help the smaller agencies grow and succeed. I see a lot of small, new and those that have been around a while, independent insurance agencies, who are looking for an association or group that can help them learn how to run their business successfully,” Kristie concluded.

She said the PIA Washington/Alaska needs to be that group.

In her inauguration speech, Heidi Duncan said the PIA needs to find ways to help Millennials find their way into the business. To do that we need to make this business more appealing and more fun.

“Many younger people view insurance as a stuffy industry full of accountant types whose total focus is profits. Most of you have been in this business while. I don’t know what you think but I think some of the most fun people on the planet are in this room.

The business of insurance is a blast,” she said.

That the industry is fun is one thing. That it is diverse and has all kinds of jobs for Millennials is quite another.

“One of my goals will be to find better ways to explain the diversity of jobs available in insurance. We need to be able to explain that there is a job for everyone and not for just a few.  And we need to start by letting Millennials and other young people looking at the industry that insurance isn’t JUST about sales. Most Millennials think it is. We need to show the diversity in jobs available in insurance stretching from — yes, sales — but also to accounting to graphics to website construction and management to social media to technology,” Heidi added.

She said Millennials want positive careers. Insurance — she added — is a business that makes society better.

PIA Washington/Alaska also awarded its annual agent of the year. The Agent of the Year Award is the PIA’s way of saying thank you and recognizing that special individual whose accomplishments exemplify the best qualities an independent insurance agent can possess: integrity, dedication and commitment to the members and goals of the PIA. As an organization, we offer no greater recognition than the PIA Agent of the Year.

Lynn Peretti of Hub Insurance in Renton, Washington is this year’s recipient.  

She — along with her husband Ray — has been a PIA pillar for decades. Ray was the association’s president in 1994 and the agent of the year in 1995. Later in his career, Ray was the President of PIA National. As a team they helped shape the PIA Washington/Alaska and make it the success it is today.

That shaping came via tireless work on boards and committees.

In giving out the award, Heidi Duncan said, “All of that experience made you stronger and wiser. Best of all, you have shared your experience with us. From the political side of those travels and your time in Washington D.C. and at PIA National’s headquarters in Alexandria, Virginia, to the insurance basics gleaned from meeting agents from all over the country and in the State of Washington, the knowledge gained and given has blessed us all. We are forever grateful for your teaching and your sharing, and your willingness to pass on what you know to others.”

The PIA Washington/Alaska also gives out an annual Company Person of the Year award. Each year PIA members benefit from the contributions of time, money and expertise that come from our insurance company partners.  In recognition of those contributions, the PIA honors one individual whose active involvement with PIA helps drive their company to support our efforts with our members.

This year’s recipient is Gabe Gonzalez of Safeco. The reason? Agents love Gabe and his co-workers love Gabe. He is one of those people you call when you have a marketing question. You’ll get your question answered and lots of great suggestions — maybe even more suggestions than you really need.

In her announcement of the award, Heidi Duncan said, “That’s because our award recipient is an information junkie and — unlike most of us — he actually enjoys research. Our research guru uses that information to develop strategies to help the marketing efforts of agents everywhere.”

He’s also quite innovative. “One innovation is an advanced marketing group of agents. He put them in a non-competitive environment and asked them to share successes and strategies to benefit all. These are people in competition with each other! He must have a magic touch because it works,” Heidi said.

Amy Hays of Duncan & Associates Insurance Brokers received the 2018 National Alliance Customer Service Representative of the year.

The annual golf tournament’s winners:

First place

David Babbitt

Frank Lukacs

Paul Zeni

Ed Bukovinsky

 

Second place

Craig Field

Andy Hansen

Greg Boyd

 

Third Place

Mike Arnold

Brad Hickman

Kirk Rieker

Tyler Stoddard

 

Women’s closest to the pin — Mary Lemon

Men’s closest to the pin — Stephen Kern

Women’s longest drive — Kristen Horlacher

Men’s longest drive — Paul Zeni

This yeaf’s agent prize went to Jill Heath

New this year was the agent app and prizes were given for those doing the most posting and sharing of phone photos on the app: 

First Gary Morgan

2nd Michael Roberts

3rd Jill Heath

The annual Texas Hold ‘Em tournament winners:

First: Yvonne Mattson & Toddi Oberg

2nd: Ryan Porter

3rd Ryan Bettinger

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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Flood — The Hurricane Spawned by Hurricane Florence

Posted By Administration, Tuesday, September 25, 2018

Hurricane Florence is going to be one of the costliest disasters in U.S. history. Moody’s Analytics has estimated the economic damage at $38 billion on the low end and $50 billion on the high side. If it hits $50 billion — which the hurricane’s damage easily could do — Florence will be the 7th largest storm we’ve experienced.

The Moody’s estimate includes property damage, vehicle losses and lost business output. The good news — if good news can be found in a disaster of this magnitude —  the last three hurricanes to land on U.S. soil were more expensive than Florence.

  Hurricane Harvey’s cost was $133.5 billion

  Hurricane Maria sits at $120 billion

  Hurricane Irma cost the industry $84.2 billion

The hurricane — as of Monday, September 24th when this is written — killed 41 people and drove thousands from their homes and into shelters. A lot of them are still sheltered and will be for the foreseeable future.

From an insurance perspective there is some good news. The losses to the insurance industry will be less than that of last year’s hurricanes. Adjusters have been in North Carolina, Virginia and the other states involved from the outset.

Insurance costs are still being estimated but most models have the losses at about $5 billion. That’s because Hurricane Florence was just a category 1 storm when it hit shore. Gary Marchitello of Willis Towers Watson said the winds were not as high as expected and wind — for insurers — is what drives losses.

“The well-capitalized global property/casualty insurance market will easily absorb losses in this new range, and barring successive storms this season, we would not expect any prolonged hardening of the market. However, we still expect to see some short-term disruption in the market,” he said.

The enormous flooding that followed is a different story. Those damages fall on the back of the National Flood Insurance Program (NFIP) and its administrator the Federal Emergency Management Agency (FEMA) and on people who didn’t have foresight enough to have flood insurance.

As of the end of July this year — says the Associated Press (AP) — there were 5.1 million participants in the federal flood insurance program. That’s up from 4.94 million in 2017. North Carolina has just 35% of its at-risk properties covered by flood insurance. That compares to 65% in South Carolina.

While the AP found there was a 3.5% gain in homeowners with flood insurance in North Carolina between this year and last, the number of homes covered is down 3% over the last five-years.

That leads to one of the biggest problems with the NFIP. It’s repeat flooding and rebuilding. Here’s an example. Since 1978 in Belhaven, North Carolina 120 homes — in a town of 1,600 — have been rebuilt.

The cost to the taxpayer via the NFIP? $13.4 million.

That’s a huge amount of money for very few homes says Rob Moore. He is the senior policy analyst of the National Resources Defense Council. His group wants this changed. “We spend all this money to rebuild these homes, and we spend very little money helping people get out of these homes — even when that’s what they want. Efforts to help move people move somewhere safer are seen as a last option, instead of a first option,” he said.

Moore noted the programs designed to give people offers to get them to move take too long to come to fruition. Thus people repair their homes and stay.

Here’s another statistic. North Carolina has 1,100 “severe” repetitive loss properties. They have cost the NFIP $163.9 million. His organization thinks it is time for a limit to the number of times a property can be made whole. Moore said the $163.9 million is 60% of the value of those homes and over 400 of them have received more in federal claims dollars than the home is worth.

R.J. Lehmann heads insurance for the R Street Institute. He said the severe repetitive losses Moore refers to add up to just 2% of all flood insurance policies but a third of all claims. The Congressional Budget Office (CBO) had a similar take on the issue. It said costs annually to administer the NFIP exceed premiums by a third.

The problem — Moore said — is the NFIP is designed that way.

In 2012 Congress passed major reforms to phase out those subsidies and that increased premiums to be more actuarially sound. Two years later — after a lot of complaints from homeowners and politicians — the changes were rolled back.

Another effort at reform was made last year in a bill in the House that sets a limit to the amount of money available for all flood claims on a home to three-times the value of the home. That bill didn’t make it very far in the Senate.

Moore said that’s just plain wrong. “People that live in this cycle of flooding and rebuilding may never even be offered assistance to move somewhere safer. If they have flood insurance, they’re always offered the option to rebuild in the same location,” he said.

By the way, if the flood costs of the National Flood Insurance Program and the Federal Emergency Management Agency aren’t enough, FEMA is under siege from critics saying it is not organized or its people well-trained enough to properly respond to crises.

Adding to that is FEMA’s head guy Brock Long is under attack for using FEMA vehicles for personal travel and for taking staff to his North Carolina home and putting them up in swank hotels.

Brock says he’s going to reimburse the government for that use.

Some in the Trump administration are pushing for his firing and rumors are circulating that exploration is in process to replace him.

Source links: The Wall Street Journal, Claims Journal, Carrier Management, Insurance Journal, Insurance Business America, The Hill

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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GEICO’s Much-Watched Bad Faith Case

Posted By Administration, Tuesday, September 25, 2018

 

 

The auto accident was over 12-years ago. James Harvey was found at fault in a crash that killed John Potts. Harvey had $100,000 in coverage. GEICO issued a check. Where the bad faith comes into play is in how the claims adjuster failed to answer questions from Potts’ estate as to the extent of Harvey’s assets and whether he was working at the time of the accident.

The Potts’ estate rejected the $100,000 settlement and filed a bad faith lawsuit. As a result, the estate was awarded $8.7 million.

That’s a far cry from $100,000 and asks the question of whether GEICO properly addressed the interests of its customer. Harvey said no the company did not and he filed a bad faith suit against GEICO and was awarded $9.2 million.

The result of Harvey’s suit was then overturned by the Fourth District Court of Appeals. Harvey appealed that appeal and the Florida Supreme Court — by a 4 to 3 vote — said Harvey’s suit is justified.

GEICO is at fault.

In the opinion, Justice Peggy Quince wrote, “An insured [the customer] pays its insurance premiums with the expectation that the insurer will ‘act in good faith in the investigation, handling, and settling of claims brought against the insured. In this case, a jury found that GEICO acted in bad faith by failing to settle the estate’s claim against Harvey. Substituting its own judgment for that of the jury, the Fourth District erroneously concluded that the evidence was insufficient to show that GEICO acted in bad faith and that, even if it did, GEICO’s actions did not cause the excess judgment against Harvey.”

Chief Justice Charles Canady agreed. He wrote, “Finding bad faith in the circumstances presented here works a vast and unwarranted expansion of liability for bad faith claims. In Florida law, mere negligence has now become bad faith. I strongly dissent from this unjustified change in the law.”

William Large is from Florida Justice Reform Institute (FJRI). It is a business-backed group that joined in the action. He said this is proof that the state’s bad faith laws need changing.

“Today’s decision by the Florida Supreme Court in Harvey v. GEICO once again confirms that the Legislature must set clear, objective standards in statute for avoiding bad faith while settling insurance claims,” he noted. “In this case, GEICO tendered its policy limits in nine days, and the Fourth District Court of Appeal concluded that GEICO had fulfilled every obligation it owed its insured. Yet, the Supreme Court still found room under precedent to allow a jury to turn a $100,000 insurance policy into an $8.47 million judgment.”

Source link: PropertyCasualty360.com

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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The National Alliance Names Hold CEO

Posted By Administration, Tuesday, September 25, 2018

William J. Hold — the son of founder and president William T. Hold — has been named the National Alliance for Insurance Education and Research’s chief executive officer. He will assume the day-to-day leadership of the organization and in two-years will assume the presidency.

Hold has been with the National Alliance since 2006 and has filled a number of positions including chief development officer. As chief development officer he led efforts to develop the Alliance’s University Associate Program for the CIC and Certified Risk Manager programs.

The younger Hold also took the lead on:

  Making the programs available digitally

  Making the James K. Ruble MEGA Seminars digital

  He assisted in developing new CIC courses

  He assisted in enhancing the Certified Insurance Service Representative (CISR) curricula

  He focused on corporate program growth and on the Advanced Continuing Education Series and online volume purchases

  He worked with carrier representatives and agency associates to create educational and training opportunities

In a statement, William T. Hold said, “The board members and I are confident that William will uphold The National Alliance’s legacy and history of continued success.”

Source link: Insurance Journal

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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A Growth Spurt — Surplus Lines

Posted By Administration, Tuesday, September 25, 2018

A.M. Best has a new report — which is insurance traditionally long titled — Surplus Lines Push Through Various Headwinds for Higher Growth. It finds the surplus lines market grew by 5.8% in direct written premiums in 2017.

Best said surplus lines — because of that — will remain financially sound going forward. Here’s more of what the report found:

  A 5.8% growth in direct written premiums

  $642.1 million in direct written premiums total

  The 5.8% compares to 2.8% in 2016 and 2.5% in 2015

Best said, “One key challenge that remains for surplus lines carriers is the ongoing creep into the segment by standard market companies. Until standard market companies meet their underwriting expectations in their core lines, they will maintain an interest in competing for some surplus lines business, to complement their other operations.”

Another aspect of the report said consolidation of surplus lines insurers in 2017 impacted competition and will continue to reshape the market. “Acquiring insurers continue to use M&A as part of their strategies to carve out a bigger piece on the market. On the wholesaler side, the larger wholesalers have been growing in scale and expanding their profiles by acquiring smaller intermediaries,” the report continued.

This has led to businesses doing business with fewer wholesalers and wholesalers are now doing business with fewer insurance companies.

Best doesn’t see this trend slowing down in the near term.

Source link: Business Insurance

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Data Security Legislation — PIA National Objects

Posted By Administration, Tuesday, September 25, 2018

The House Financial Services Committee has passed a bill onto the full House to force federal financial regulatory agencies to adopt a national standard for data security measures. The bill also says that financial institutions will now put notification system standards in place for a breach or unauthorized access.

PIA National objects to the Consumer Information Notification Requirement Act — H.R. 6743 — as does the National Association of Insurance Commissioners (NAIC). Jon Gentile — PIA National’s Vice President of Government Affairs — said the association has two concerns.

The first is it undermines the state-based regulation of insurance and will impact independent insurance agents. The second objection is how the bill requires insurance commissioners and insurance departments to write data protection rules designed for banks and that are drafted by the regulators of banks.

“Many states are already advancing legislation on this issue and should be allowed to do so without federal interference. It also makes the mistake of applying requirements designed for banks on independent insurance agencies, when banking and insurance are inherently and fundamentally dissimilar,” he said.

He also points to the Capital Standards Clarification Act (Public Law No: 113-279) passed by Congress in 2014. Gentile said it is meant to prevent imposition of bank-based requirements on insurance and recognizes the disparities between banks and other entities.

And then there’s the impact on the independent insurance agent. The requirements are onerous for many agencies that are basically small businesses.

“This issue is best addressed by state legislatures and state insurance commissioners State regulators will always have a more thorough understanding of local insurance issues than the federal government,” Gentile concluded.

The NAIC agrees. It sent a letter to the House stating, “While we appreciate the legislation’s goal of promoting effective cybersecurity risk management and data protection safeguards, we have serious concerns that the bill’s language would significantly limit state insurance regulators from protecting consumers in their states.”

Like the PIA, the NAIC worries about the intrusion on the business of regulating insurance. “H.R. 6743 disregards the existing state insurance regulatory framework and would inhibit ongoing efforts in the states to adopt data security laws and regulations in the best interest of insurance consumers,” the NAIC said.

Part of the problem with this bill is a lack of understanding of how insurance works.

“The bill assigns enforcement of its federal data security requirements to an insurer’s state of domicile, which may be far removed from the location of consumers who are harmed by a data breach. Under current laws and regulations, if policyholders from one state are affected by a breach at an insurer domiciled in another state, both insurance departments work with the company to ensure all policyholders are appropriately protected moving forward, regardless of where they are located. Under this bill, only one regulator would have authority to require mitigation for policyholders from a breached insurer. This could leave consumers less protected,” the NAIC concluded.

Source links: PIA National, Business Insurance

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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Cyber Attacks — A Federal Solution

Posted By Administration, Tuesday, September 25, 2018

The Trump administration is taking a novel new approach to combating cyber attacks. President Trump signed an order saying the U.S. is now going to go on the offense against foreign adversaries engaging in negative cyber activities. The move rescinds an Obama administration directive on how cyber defense can be carried out. It said several government agencies have to agree on the decision to attack.

Trump’s national security advisor John Bolton said the hope is to keep bad actors from attacking us in the first place. “We will respond offensively as well as defensively. It’s important for people to understand that we're not just on defense,” he said.

Bolton also said cyber attacks won’t necessarily mean a cyber response. Some say that means the door is open to military action if needed. And again Bolton pointed out that the U.S. is now “not just on defense, as we have been — primarily on defense — for a period of time.”

The former U.N. ambassador said the United States has been engaged in cyber war for a long time. He’s hoping the now serious idea that we will go on the offensive will deter future attacks.

Bolton outlined the strategy and said it consists of four parts:

  Protecting federal networks and critical infrastructure

  Preventing the theft of intellectual property

  Exposing and attributing cyber attacks

  Promoting responsible behavior among nation states

No one agency will be responsible and the new strategy will still involve a number of agencies in the decision making. However, the Department of Homeland Security will lead the agencies in this. Homeland Security Secretary Kirstjen Nielsen said she will be guided in a number of areas “including securing federal networks and information systems, managing risk to the nation’s critical infrastructure, and combating cyber crime.”

The goal — she added — is to raise our defense against threats to our security, prosperity and our way of life.

Also involved in this is the Department of Defense. It issued a statement that said, “We also work to ensure that there are consequences for disruptive cyber behavior that harms the United States and our partners, with recognition that all instruments of national and international policy are available to prevent, respond to, and deter malicious cyber activity against the United States.”

Trump has also put sanctions into place for those countries found to have interfered with U.S. elections.

Source link: The Hill

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California — Wildfire Bills & Mendocino Fire

Posted By Administration, Tuesday, September 25, 2018

 

 

California’s Legislature made some insurance and public utility changes that will have a big impact on the future of the state. Governor Jerry Brown said the Legislature didn’t go quite as far as he wanted. In the case of utilities it was to limit liability over wildfires caused by equipment failure.

It’s called inverse condemnation. That means whether a company follows the rules and makes sure their equipment is safe, if that equipment causes a fire, the utility is responsible. Brown and the utility companies don’t think that’s fair.

The Legislature disagrees.

That said, the governor still hasn’t said whether he’s going to sign the one they did pass to allow utilities to add the cost of wildfire damage to utility bills.

The push to end inverse condemnation was opposed by insurers who say they’d be on the hook for the losses if the utility isn’t. Brown said what the Legislature did gives a little something to everyone.

“The insurance companies and the trial lawyers are very powerful. This time they did better than the electric utilities. Better in the sense that they got what they wanted and the utilities got a lot of what they wanted but not everything,” Brown said.

PG&E is one of the utilities impacted. It could end up owing as much as $17.3 billion for fires that happened in the state in 2017 alone. One of those fires was in California’s wine country.

The governor signed five bills last week that will help wildfire victims. They are:

SB 894: It will help homeowners reduce the huge financial burden of being significantly underinsured and unable to afford to rebuild. Underinsurance is not only a financial blow to disaster survivors, it is economically devastating to communities because, as one of the most challenging obstacles to loss recovery, it delays claim settlements which delays rebuilding. Insurers have generally failed to address this significant issue through any efforts of their own. Some consumers have found themselves uninsured by hundreds and thousands of dollars.

The bill still provides survivors the option to move the amount of their additional structures (Coverage B) losses to their primary dwelling (Coverage A) within their homeowner policy to help offset some of the underinsured amount in their home, but only in a limited fashion after significant narrowing at the hands of much of the insurance industry. Consumers only qualify for this provision if they meet three tests: 1) It is following a declared disaster; 2) They suffer a total loss; 3) They are underinsured in their primary dwelling or Coverage A.

SB 894: It allows consumers facing a total loss to generally have three years to utilize their Additional Living Expenses (ALE) coverage, up from the current two. SB 894 also provides homeowners suffering a total loss from a fire two renewal offers, instead of the current one. This provision reflects the reality that it takes most survivors more time than currently permitted to rebuild or replace their property. This provision of the bill would have applied retroactively to July 1, 2017 to help 2017 fire survivors; however, many insurance companies insisted SB 894 not help 2017 or 2018 wildfire survivors and successfully pushed to remove the retroactivity from this bill at the Assembly Insurance Committee.

After losing a home or business in a fire resulting in a declared state of emergency, current law provides a policyholder at least two years to rebuild their property and receive the full replacement cost coverage they paid for. However, experience shows that two years is often insufficient time for families to rebuild the insured property.

AB 1772: This one extends the amount of time a home or business owner has to rebuild an insured property from two to three years after a declared wildfire emergency and receive the full replacement costs to which they are entitled. AB 1772 takes effect immediately.

The 2017 fires also revealed that some insurers were withholding the additional Extended Replacement Cost coverage purchased by policyholders unless the policyholder actually rebuilt on the same lot. This is against the law. In the event of a total loss, AB 1800 (Levine) would clarify the current law that an insurer must pay out the full extended replacement cost benefit covered under the provisions of a plan, regardless whether the policyholder chooses to rebuild at the same location, rebuild at a new location, or purchase an already built home. AB 1800 takes effect immediately.

AB 1875: It addresses confusion surrounding extended replacement cost coverage (ERC), which allows property owners to purchase limits above the estimated cost to replace the home. However, ERC limits can vary dramatically and many consumers are never provided these options by insurers nor are they told how the coverage options, would impact their premiums. AB 1875 would require an insurer who does not provide at least 50 percent ERC to help direct the consumer to an insurer that might. The bill also includes a provision creating a home insurance finder to help consumers locate possible residential property insurance options.

AB 2594: This bill extends a consumer's right to sue their insurer following a declared disaster from 12 months to 24 months, given that it now takes longer to rebuild after California's significant fires the past few years. After losing a home or business in a fire resulting in a declared state of emergency, current law provides a policyholder at least two years to rebuild their property and receive the full replacement cost coverage they paid for. However, experience shows that two years is often insufficient time for families to rebuild the insured property. Some insurers have refused consumer claims, citing the lack of a lawsuit within the 12-month timeframe. 

By the way, the Mendocino Complex fire — which was a pair of wildfires that flared up in Lake County in late July — is now 100% contained. It became the largest fire in California history.

While thousands were forced to flee, the two fires burned 459,123 acres and destroyed 280 structures including 157 homes. The fire killed one firefighter and seriously injured another four.

Source links: Insurance Business America, California Department of Insurance, Sacramento Bee

Tags:  Around the PIA Western Alliance States  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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Renters Underserved in Personal Lines

Posted By Staff Reporter, Tuesday, September 4, 2018


Those renting rather than buying has reached an all-time high in the U.S. The number of renter-occupied units — apartments, condos, houses, etc. — has hit 43 million. That figure comes from the U.S. Census Bureau.

The problem — says the Insurance Information Institute (I.I.I.) — is that just 41% of those renters have renters’ insurance. As contrast, the I.I.I. says 95% of homeowners carry a homeowners policy.

Nationwide Vice President of Personal Lines Mendi Riddle said, “Many renters underestimate both the value and affordability of renters’ insurance. Not only does renters’ insurance provide coverage for belongings inside the residence should those items be stolen, destroyed or damaged, but the coverage may also extend to personal items renters keep inside their vehicle. Additionally, renters’ insurance helps pay for covered damage or bodily injury to others caused by an accident that may occur at their residence.”

Riddle said a lot of people mistakenly think the landowner’s policies will cover them. That’s — as you know — a myth, and insurers and agents need to find more creative ways to reach renters.

Nationwide’s claims data said these were the top renters’ insurance claims from 2017:

  Theft (from dwelling or vehicle)

  Water damage (non-weather related)

  Fire and smoke damage

  Liability

  Wind related claims

Riddle added, “Having to replace possessions such as clothing, furniture and electronics can be very expensive should they be suddenly lost due to a fire or other tragic event. Renters’ insurance provides peace of mind allowing renters to keep their lives on track should a major setback occur.”

Source link: Insurance Business America

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