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Oregon Mutual & Insuritas — Home & Auto Solutions

Posted By Staff writer, Tuesday, April 16, 2019

 

 

Oregon Mutual KKLUB PIA Western Alliance


PIA Western Alliance K-Klub member Oregon Mutual and Insuritas are partnering to integrate Oregon Mutual’s portfolio of property & casualty insurance products into Insuritas’ meta-agency platform.

 

The partnership between the oldest mutual insurance carrier on the West Coast, and one of the nation’s most established insurtech distribution platforms will connect them to over 3 million potential new members across Oregon, Washington, Idaho & California. The point is to further the commitment of both companies to empowering their customers to find the right coverage at the right price for all of their insurance needs.

 

Insuritas COO is Matt Chesky. “We are thrilled to partner with a team like Oregon Mutual’s that shares our passion for protecting and serving our policyholders,” he said. “Oregon Mutual has built a strong reputation for focusing on their roots and advocating for the best interests of their members and the communities they serve, while also embracing technology and thinking progressively about how they can enhance their member experience. We couldn’t ask for more in a partner.”

 

Oregon Mutual VP Sales and Marketing John Jolliff agrees. He said, “Positioning our product on the Insuritas meta-agency platform allows us to help customers buy our products through a highly personalized, digitally rich mechanism that pairs them with professional agents to aid in their purchasing decision. As a mutual company, our mission aligns strongly with that of Insuritas’ credit union partners, and we are proud that through Insuritas we will be able to partner with several of the leading credit unions in our markets.”

 

Tags:  Insurance content 2019  Insurance News  KKLUB  Oregon Mutual  PIA Western Alliance 

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Feedback — No to Oregon Governor’s SAIF Raid Plan

Posted By Staff writer, Tuesday, April 9, 2019

Rich Kingsley was PIA Oregon/Idaho’s president from 2004 to 2005. He was, and still is very savvy politically. He recently sent Portland, Oregon’s daily newspaper, The Oregonian, a letter to the editor.

 

His concern? Governor Kate Brown’s plan to raid the reserves of the State Accident Insurance Fund Corporation (SAIF) to pay for the shortfall in the state’s PERS fund. PERS — as we all know — is not properly funded and the state is desperate to find a way to give the money promised by PERS to retired public employees.

 

The governor — and her SAIF fund-grabbing supporters — say SAIF has $1.4 billion in surplus that can be used to shore up PERS. 

 

Here are parts of Rich Kingsley’s letter to the editor. He asks some great questions. Some of which we will answer after you read what he wrote.

 

I was an Independent Insurance Agent in the insurance business for 37 years, writing mostly commercial policies for clients. I not only feel frustration, but extreme anger with the Democrats who want to raid SAIF.

 

In the late 1980's the legislature did just this same stupid “Raid SAIF” stunt. I think it was in 1996 or 1997 that a lawsuit against the State for ‘robbing’ funds from SAIF was settled, and the State was found culpable for taking money from SAIF. The State had to refund money to SAIF AND refund money to commercial clients that had to pay higher work comp rates thru SAIF, due to the State's robbing of those funds in the 1980's. The State not only had to return the funds, but interest for all the years the lawsuit went on.

 

When the funds were sent to be repaid back to commercial clients who had paid higher premiums, SAIF sent the checks to the agents who had assigned our work comp clients to SAIF, and we hand delivered the checks to our clients, who knew that we and our agent association [PIA Oregon/Idaho] had been highly in favor of penalizing the State for their act of stupidity in 'robbing' SAIF. Those businesses that had bought their work comp directly from SAIF received their checks in the mail.

 

It was a stupid stunt then, and to think of doing it again is still stupid, and reckless.

 

He then praises the newspaper for bringing to light the problems with this blatant theft of money that belongs to the state’s employers.

 

Kingsley is correct that the dollars in the fund that aren’t used for claims belong to employers. Many governor and Legislatures in states around the country are looking at their own versions of SAIF and those surplus funds to balance budgets.

 

The PIA Western Alliance state of Montana is the other state in our association where the Legislature has made a grab. PIA Montana and other groups and employers in the state oppose the taking of those surplus funds and a lawsuit was filed.

 

It will be heard in the Montana Supreme Court later this year or early next. Experts in Montana law believe the taking of the money from the Montana State Fund will be found unconstitutional and it will have to be returned.

 

To answer Rich Kingsley’s question. In the early 1980s, the Oregon Legislature had a budget crisis. It grabbed $80 million of SAIF’s reserves. A lawsuit followed and the Oregon Supreme Court said the state acted illegally and ordered the money returned.

 

With interest, $225 million was returned to SAIF and its policyholders. The attorneys fees and the cost of the litigation totaled a staggering $20 million.

 

The group opposing the Oregon governor’s SAIF funds plan includes PIA Oregon/Idaho. In their response to Brown’s plan the group said, “Doing so is nothing more than a Ponzi scheme. They [the governor and the Legislature] are literally stealing from one pot to cover liabilities in another and hoping that you can pay it back before something bad happens. That’s a dangerous game.”

 

In its response document, the group pointed out that those reserve funds are good for Oregon’s employers and Oregon’s economy.

 

“The premiums paid by Oregon employers are some of the lowest in the nation thanks to SAIF. It’s one of Oregon’s few competitive advantages. SAIF’s board and leadership are 100% local,” the group wrote. “They don’t operate like big corporate insurers and that’s proven to be a good thing for Oregon workers and employers alike.”

 

In addition to PIA Oregon/Idaho, these are the groups opposing Governor Brown’s plan.

Professional Land Surveyors of Oregon

Oregon Columbia Chapter of the Associated General Contractors

Oregon Economic Development Association

National Federation of Independent Businesses

Oregon Business & Industry

Economic Development for Central Oregon

Oregon Farm Bureau

Plumbing-Heating-Cooling Contractors Association

Oregon School Boards Association

Oregon Trucking Association

Oregon Home Building Association

Oregon Vehicle Dealer Association

Northwest Grocery Association

Oregon Metals Industry Council

Oregon State Chamber of Commerce

Oregon Wheat Growers

Oregon Seed Council

Columbia Gorge Fruit Growers

Oregon Power Sports Association

Northwest Automotive Trades Association

Oregon Manufacturers and Commerce

Far West Agribusiness Association

Oregon Association of Nurseries

Oregon Concrete & Aggregate Producers Association

Associated Oregon Loggers

Tags:  insurance content  insurance industry  insurance news  PERS  Raid the reserves of SAIF  SAIF 

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A.M. Best — 2018 Insurer Performance ​

Posted By Staff writer, Tuesday, April 9, 2019

A.M. Best has published a report on the performance of insurers in 2018. It is titled, Hurricanes, Wildfires Weigh Down U.S. Property/Casualty Performance for Second-Straight Year, and concludes the insurer overall financial performance in 2018 fell by a slight margin.

 

Above-average catastrophe losses are the cause of the Best conclusion. The ratings service also says the losses countered the positives of the tax reforms passed in 2017.

 

Best said the catastrophes were of historic proportion and pointed to California’s devastating wildfires and a bunch of hurricanes that caused equally devastating losses. The report also says expenses outdistanced revenues. A 3.2% drop in net investment income topped the 3.1% increase in premium revenue.

 

Speaking of growth in premium revenue, A.M. Best’s report says insurers saw double-digit increases in other income but it was not enough to increase the total operating income. So overall there was a 6.7% decrease in operating income. It was mostly due to a downturn in the equity market toward the end of 2018.

 

Best’s report did have good things to say about the tax reforms. It said insurers were able to defer $17.8 billion in asset write-downs. Overall there was a 70% decline in overall income taxes. That turned into a more than double net income of $17.1 billion.

 

The negative is in 2019, those cuts will be passed down to shareholders via stock repurchases and dividends.

 

Pre-tax returns on equity — on average — fell for the fourth straight year to 7.0%. Increased competition has impacted premium growth. Then there’s higher claims costs on multiple lines of business.

 

Lastly, A.M. Best saysmergers and acquisitions played a role in the slight drop in 2018’s financial results. Due to large-scale acquisitions, stockholder equity fell 4%.

Source link: Insurance Journal

Tags:  A.M. Best — 2018 Insurer Performance  insurance content  insurance news 

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The Farm Bill — PIA National Opposes Cuts

Posted By Staff writer, Tuesday, April 9, 2019

Late in 2018, President Trump signed the current farm bill into law. PIA National supported the president’s decision to sign. It — says Jon Gentile, PIA National vice president of government relations — preserved provisions in the crop insurance program that PIA National says are vital. The bill also honored how important the independent insurance agent is to the crop insurance program.

 

We’re pleased that Congress was able to agree on a compromise Farm Bill that includes strong support for the federal crop insurance program,” Gentile said. “The overwhelming votes in favor of the bill in both the House and Senate and the president’s signing of it signal strong, bipartisan support for the key crop insurance provisions it includes.”

 

In his 2020 financial year budget President Trump has taken a different approach to the Federal Crop Insurance Program. The budget statement runs 150-pages and the pages relating to the program said it eliminates “subsidies to higher-income farmers and reducing overly generous crop insurance premium subsidies to farmers and payments made to private-sector insurance companies.”

 

PIA National opposes the changes to the crop insurance program in Trump’s budget. To begin with, Trump is proposing a 15% cut to the Department of Agriculture. In that decrease is deep cuts to crop insurance totaling $26 billion over the next decade.

 

According to the PIA National Advocacy Blog, the Trump cuts will have three impacts:

 

  It reduces the average premium discount for producers to 48% — it is currently at 62%

  The administration says that will save $22.1 billion over 10-years

  Next, it caps the rate of return at 12%

  This — says the Trump administration — saves $2.9 billion over a decade

  Lastly, crop insurance eligibility is limited to farms with an adjusted gross income of $500,000

  This will save $641 million over 10-years

 

PIA National says this is just not a good idea.

 

“Crop insurance is the cornerstone of the farm safety net. During a time of depressed prices in rural America, now is not the time to slash the federal crop insurance program, which so many farmers and ranchers rely on to stay afloat,” PIA National’s Advocacy Blog says. “This budget proposal would make crop insurance unaffordable and unavailable for many people. Furthermore, a 5-year Farm Bill with strong support for crop insurance was just signed into law in December.”

 

PIA National said it strongly opposes these — or any cuts — to the crop insurance program and will diligently work with members in the House and Senate to make sure the cuts do not make it through Congress. “We urge Congress to reject these cuts and to support a strong federal crop insurance program that recognizes the vital role that independent insurance agents play in the delivery of the program,” the Advocacy Blog stated.

 

Source links: Insurance Business America, PIA National

Tags:  Federal Crop Insurance  insurance content  insurance news  Jon Gentile  PIA National  President trump 

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​ObamaCare Update — The Newest Bandaid & A New Lawsuit

Posted By Staff writer, Tuesday, April 9, 2019

It’s called Medicare X. Democrats Sen. Michael Bennet of Colorado and former vice presidential nominee Tim Kaine of West Virginia authored the plan and if it passes anyone would be able to buy a Medicare plan for their health care needs.

 

Bennet said this is a more realistic idea than the single payer system, Medicare for All.

 

“I just think this is a much more practical way of trying to achieve the objective of universal coverage, and over time, a reduction in our expenditures on health care, then practically any other proposal that’s been made since the ACA was passed,” he said.

 

Kaine and Bennet’s plan leaves ObamaCare and the current private system intact and just allows people of any age to go the Medicare route if they want to go that way.

 

The plan also expands access to tax credits to help people buy ObamaCare coverage. Those credits can be used to purchase the Medicare plan or ObamaCare-based insurance. Kaine and Bennet also do not want anyone to have to pay more than 13% of their income toward insurance premiums.

 

A similar version was also introduced in the House where it stands a much better chance of being heard.

 

While ObamaCare isn’t likely to be repealed and replaced this year or next by Republicans like President Trump called for, but he’s still fighting in the courts to make changes to the law. One battle shaping up to wind up in the U.S. Supreme Court is the decision by Texas Judge Reed O’Connor that ObamaCare is unconstitutional. His reasoning is based in the tax reforms of 2017 making the individual mandate null and void.

 

Since it’s gone, O’Connor said the entire law is unconstitutional.

 

Two Republican attorneys general — Montana’s Tim Fox and Ohio’s Dale Yost — have filed suit to stop O’Connor’s ruling. They say he went too far and overstepped his authority.

 

"No sound application of neutral rules and precedents — whether based on the Constitution’s original public meaning or Supreme Court precedent — could lead a court to strike down an entire congressional act based on the unconstitutionality of a single, inoperative provision within it," the states wrote.

 

The two attorneys general say it’s clear to them that when the tax reform package repealed the individual mandate, Congress intended to leave the rest of the law intact and that O’Connor knows that. "Congress would have been crystal clear if it had wanted to do something as extreme as making the entire Act rise or fall with the constitutionality of a completely inoperative provision," the brief they filed said.

 

The real worry — of course — is the protection of pre-existing conditions.

 

“The court’s decision, if affirmed, will deprive millions of non-elderly Ohioans and Montanans of coverage for pre-existing conditions. It will also negatively affect countless others who organized their affairs in reliance on the Act’s many unrelated provisions,” Fox said.

 

Fox and Yost say — ironically — even opponents of ObamaCare want to protect pre-existing conditions. “It is understandable that some who dislike the Affordable Care Act would cheer the result below. But they should remember that what goes around comes around. If allowed to stand, the decision ... will be used to invalidate any number of federal and state laws," the brief said.

 

Source links: The Hill — link 1, link 2

Tags:  insurance content  insurance news  joey leffel  Medicare  Obama  pia western alliance  weekly industry news 

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Washington House & 9.9% Capital Gains Tax

Posted By Administration, Tuesday, March 26, 2019

Former PIA Washington Alaska President Dick Fournier.

Legislatures are always seeking ways to raise income to support state governments. Name the state and business is almost always a target. In this case the state is Washington and its governor, Jay Inslee — now a candidate for U.S. President — wants a 9% capital gains tax.

Inslee needs it to support his budget — a budget that includes $52.8 billion in state spending.

Democrats in the Washington Legislature are in agreement with most of the governor’s budget raising proposals including the capital gains tax. For weeks, that has been one of the centers of discussion as Democrats in the House and Senate worked on their own versions of a budget.

Earlier this week one was finally submitted in the Washington House. It calls for $1.4 billion in new revenue. Much of that money will come from 9.9% capital gains tax on the earnings from the sale of stocks, bonds and other assets.

House Democrats have added 0.9% to the governor’s request. The 9.9% comes into play for individuals with taxable incomes of $100,000 or more, and it sits at $200,000 for couples. Members of the House Finance Committee say the tax will only impact 14,000 households.

Among the 14,000 impacted are the independent insurance agents and agencies of PIA Washington/Alaska. The “other assets” part of the equation is the sale of their businesses.

Former PIA Washington/Alaska President Dick Fournier — the head of the Fournier Group — said the independent insurance agents of the PIA, “are among the hardest working people in the state. This is a top-heavy tax that is not fair and that will reduce the value of the business built by hard-working entrepreneurs.”

That comment came earlier this year when he testified at a Senate Ways and Means Committee hearing on a 9% capital gains tax. Fourier told the committee that hundreds of small businesses will be hurt if the capital gains tax passes.

“For many of us decades of work began small. We worked nights and on weekends, and sometimes seven days a week,” he told committee members. “Our client lists often came from a phone book and we reached them via telephone. As the business grew the plan was to eventually sell and use the profit of that sale for retirement.”

He said a 9% capital gains tax wasn’t factored into his business plan.

PIA Washington Lobbyist Mel Sorensen agrees the 9% tax is oppressive and said it will adversely affect PIA members, many of whom have spent their entire business careers building their business. He pointed out that this tax is “very, very unfair and — in a way — punitive. For many, they have spent their entire professional careers building their businesses. The value in their business is frequently what they plan to rely on for their retirements. It’s simply damaging to expose them to a new 9% capital gains tax.”

It is for those reasons — and others — that the PIA Washington/Alaska opposed the 9% proposal in the Senate and this proposal.

Our opposition faces stiff opposition. Rep. Gael Tarleton is a Democrat and chairs the House Finance Committee. She said the 9.9% capital gains tax is an attempt to bring “tax fairness” to Washington, one of the few states without a personal income tax.

“Wealth continues to concentrate in the hands of fewer and fewer individuals who pay less and less into critical public investments as a proportion of their accumulated wealth,” she said. “This wealth is not generating the revenue we need to serve the interests and needs of 7 1/2 million Washingtonians.”

In an interview earlier this year with Weekly Industry News, Sorensen noted the comments about tax fairness leads to another problem with a capital gains tax. It is based on an income tax system and Washington State’s constitution does not allow one.

“Federal law defines the measure of tax on NET capital gain income,” he said. “Although the Governor's capital gains tax plan may call it an ‘excise tax and ‘for the privilege of selling or exchanging long-term capital assets, or receiving Washington capital gains,’ the departments of revenue for every state with a capital gains tax classify it as an income tax.”

Experts say the tax — if passed and signed by the governor — will undoubtedly end up on court.

Republican Rep. Drew Stokesbary serves on the House Finance Committee. He opposes the idea and says even if the courts make it legal, passing this kind of tax is irresponsible. “If we have a recession coming up, it will be difficult to balance the budget if we're dependent on capital gains as part of state revenues,” he said. “The fact of the matter is we can fund all of our priorities without raising taxes.”

By the way, the House budget exempts retirement accounts, primary residencies and the sale of agricultural and timberlands, cattle, horses and other breeding stock.

The target date for passing the budget and sending it to the Senate is this Friday and if a Senate budget has not been submitted by the time you read this story, you can expect one very soon.

Source links: Weekly Industry News — link 1, link 2, The Tri-City Herald

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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Auto Crashes & Cellphones — Nevada’s Novel Notion

Posted By PIA Western Alliance, Tuesday, March 26, 2019

 

We all know that most states ban the use of handheld smartphones and texting while driving. The reason is because distracted driving is dangerous. Sometimes people die because of distracted driving.

However, as International Association of Chiefs of Police president and Buffalo Grove, Illinois chief Steven Casstevens says,“If you’re the at-fault driver and you cause the crash because you’re talking on your cellphone, you’re likely not to admit it.”

The Nevada Legislature wants to fix that. It is looking at passing a law that can allow police to use new technology to see if someone was using their phone when the crash occurred.

The device is called a textalyzer.

Police and other law enforcement officials say distracted driving is underreported and the punishment for drivers who text while driving is inconsistent and — often — not all that harsh. So drivers are not held accountable.

The advocate fighting to let police us the textalyzer is Ben Lieberman. His 19-year old son was killed in a crash by a driver who was texting. Lieberman is behind a failed push to enact a similar law in New York two-years ago.

As it stands now, no one is quite sure how the Nevada bill will turn out.

Lieberman says something needs to be done nationwide and that texting and driving needs to have a greater social stigma. “When I was growing up, drunk driving was a joke. Now it’s not a joke,” he told those in Nevada’s Legislature. “Device use is a joke. Make it so it’s not funny.”

The textalyzer was developed by the Israeli company Cellebrite. It has the ability to look for user activity like opening Facebook’s messenger, or the sending or reading of texts. What it cannot do — as opponents fear — is access or store personal content.

The device has not been texted in the field and has not been used by law enforcement. The Nevada bill — if passed into law — would be a much-needed field test.

The American Civil Liberties Union — and others — worry that such a law will violate the Fourth Amendment to the U.S. Constitution. It protects us from unreasonable search and seizure.

Lieberman says it does not violate anything. Other experts — he notes — say this law is minimally intrusive and does not violate the Fourth Amendment.

Nevada’s bill originally had a piece in it that said drivers refusing to have their phones checked would immediately receive a 90-day driver’s license suspension. That quickly led to an amendment by the Democrats doing away with the automatic suspension and forcing police to get a search warrant.

Next up was Democrat Assemblyman Ozzie Fumo wondering if the legislation is needed anyway. Police can already get a search warrant to check phone use if they suspect texting or smartphone use was involved in a crash. 

“Wouldn’t it be better just to give this technology to (the police) and so that they can utilize it after they get the warrant already?” he said. “Nothing in this bill is actually new, ’cause the law enforcement (agency) already has the techniques and tools that we’re providing.”

Casstevens disagrees. He said the practice of checking for distracted driving is hit and miss, and is not a uniform practice among law enforcement officials nationwide.

The bill’s sponsor is Assemblywoman Michelle Gorelow. She is a Democrat. Gorelow wants the police only to be able to see if — after a crash — someone has been using social media, texting, browsing the Internet or playing games.

“It’s like a Breathalyzer that only detects tequila,” Gorelow said. She does not want the technology to go much deeper than that.

The bill is being amended and so far these things have been taken off the table:

  Gone is the automatic suspension if a motorist refuses to turn over the phone

  Gone is the implied consent provision that makes it mandatory that drivers turn over their phones

  Added is the driver being able to refuse

  Added is if the driver refuses, the police must obtain a warrant

The bill also has been modified to say that the textalyzer can only be used in the event of a crash that kills someone or seriously injures them.

Weekly Industry News is curious about what you think of the bill.

  Should laws that require a cellphone check in the event of a crash be enacted?

  Would you like to see such a law in your state?

  Does it violate the intent of the Fourth Amendment to the U.S. Constitution?

  Other comments?

Send your comments to Weekly Industry News Editor Gary Wolcott at garywolcott@piawest.com.

Source links: Associated Press, KOLO TV

Tags:  Insurance Content  Insurance News  Weekly Industry News 

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Workplace Injuries — Assaults and Women

Posted By Administration, Tuesday, March 26, 2019

The National Safety Council regularly puts out information on workplace safety. As part of National Women’s History Month, the council put out information on women and safety in the workplace.

The information says women are the targets of 70% of all of the non-fatal workplace assaults. This conclusion comes from 2017 totals:

  12,820 assaults upon women

  That’s a 60% increase since 2011

  5,530 men were assaulted

Other work-related — and non-assault — injuries and illnesses also disproportionately impact women:

  59% are accidentally caused by another person

  57% are from falls

  61% are from ergonomic causes like repetitive motion

The National Safety Council’s statistics also say some sectors have disproportionate numbers as well:

  80% of non-fatal injuries to women happen in the healthcare sector

  61% come from education

  60% from management, business and financial companies

National Safety Council President and CEO Nick Smith said, “Our workplaces should be safe havens for everyone, and these data show us we can do more to protect women in the workplaces. As employers examine the biggest risks facing their workforce, we urge them to consider these trends and make sure safety is extending to all employees.”

Source link: Insurance Journal

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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Cyber Criminals Take an Easy Path — Small Business

Posted By PIA Western Alliance, Tuesday, March 26, 2019

Chubb just released a study that is setting off alarms in the small business community. Cyber criminals are increasingly switching targets. Where they used to focus on large corporations and government, they are now finding small business to be much more fertile territory.

Spokesman Patrick Thielen — the senior president of Chubb’s financial lines — said the report looks at the new types of ransomware that blocks businesses from accessing their own networks until a ransom is paid.

“Cyber criminals typically don’t target specific small businesses, but they increasingly use tools that target their vulnerabilities. Those vulnerabilities are at times technical, like unpatched software or poorly configured hardware,” he said. “But even more common are those vulnerabilities involving employees who may use weak or compromised passwords, or may inadvertently click something they shouldn’t have.”

These are the cyber claims reported to Chubb last year:

  21% of cyber incidents are phishing

  20% due to errors

  14% came from hacking

Chubb’s head of North American claims is Anthony Dolce. He agrees with Thielen and says businesses need to be aware. And more importantly — small business needs to take preventative steps.

“Cyber criminals know that SME leaders may mistakenly think that cybersecurity services are beyond their means, which makes SMEs more vulnerable to an attack,” he said. “However, we are living in an age where cyberattacks are constantly evolving and threatening businesses of all sizes, but especially small to mid-size businesses. Therefore, it remains critical for companies to understand this present age and develop strong risk-mitigation strategies to lessen the impact of cyber threats.”

Source link: Insurance Business America

Tags:  Cyber Security  Insurance Content  Insurance News  Weekly Industry News 

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The Trump Administration & Flood Reforms

Posted By Administration, Tuesday, March 26, 2019

People worried about global warming and the Trump administration have finally found some common ground. The administration wants an overhaul of the National Flood Insurance Program (NFIP) that forces communities in flood prone areas to do a better job of planning for extreme weather.

The changes are coming through the Federal Emergency Management Agency (FEMA). It is the NFIP’s administrator. Those changes will tie premiums to the actual risk instead of whether a home is inside or outside a 100-year flood plain.

The changes are set to go into effect in 2020.

Union of Concerned Scientist spokeswoman Shana Udverdy said, “This is badly needed” and added it is “a huge step in the right direction, so we can let communities, particularly those communities that have been repetitively flooded, know what their actual risk is.”

Not totally gung-ho, she also says the union worries about the issue of affordability. There is the worry that the push will increase homeowner  insurance rates. “How do we protect those people that are historically disadvantaged and low-income, and that are also on the front lines of flooding?” Udverdy asked.

FEMA’s deputy associate administrator for insurance and mitigation David Marstad calls its new plan Risk Rating 2.0. The concept comes from the flooding caused by hurricanes in 2017 and from a large flood in Baton Rouge, Louisiana in 2016. That flooding caused damage to homes that didn’t have flood insurance because the NFIP didn’t accurately measure risk.

So a new system of mapping, pricing and risk will be implemented. “The new rating plan will help customers better understand their risks,” Maurstad pointed out and added, “I believe that will actually increase the demand for our product.”

As you know, most people with flood insurance get that insurance from the NFIP. It has 5 million policyholders and 3.5 million of those are single-family dwellings. And in spite of the large increase of losses from flood on a national level, the NFIP says it is selling 10% fewer flood policies than it did in 2009.

Marurstad isn’t quite sure how the new system is going to impact rates. “We’re not going to design it to either increase or decrease revenue,” he said. “Our effort is to improve our product and price it more fairly.”

FEMA’s press secretary Elizabeth Litzow said whether rates go up or down isn’t the point. “Risk Rating 2.0 will be introducing new sources of flooding, such as intense rainfall, that have not been previously considered in the rating structure,” Litzow said. “While these new sources of flooding have a lesser impact on risk and rates than those already considered, their introduction could result in the increased premium levels.”

Risk Rating 2.0 will use private-sector data to calculate the real flood threat to individual homes. In a test done last October on two homes, FEMA found a home on the edge of a 100-year flood plain had a lower flood risk than one closer to the center.

The current system says both homes pay the same premium rate. Under Risk Rating 2.0, the home on the edge would see a 57% drop in its rate and the one closer to the center will have a rate that doubles.

No doubt the proposed changes will receive attacks from politicians. A few years ago when Congress raised premiums to look like actual risk, public and political opposition was instant. Two-years later the changes were rescinded.

Maurstad said the big difference now — and the real need for change — is flooding that has grown worse. “We’re seeing more intense events,” Maurstad said. “We’re going to have a program that’s going to be able to serve the nation better in the years to come.”

Source links: Carrier Management, Insurance Journal

Tags:  Flood  Insurance Content  Insurance News  Weekly Industry News 

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