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Last Post 10/31/2006 1:29 PM by  dcmarlin
Democratic Caucus' Katrina Task Force Report
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10/26/2006 11:18 PM

    Listed below are some excerpts of insurance related suggestions or recommendation from the report. The Task Force Report was released 10/19/2006.

    • Investigate the Katrina claims practices of insurance companies that contract with the National Flood Insurance Program. The National Flood Insurance Program (NFIP) allows insurance companies to sell flood policies and adjust flood claims that are financially backed by federal taxpayer dollars.  Insurance company adjusters have an obvious conflict of interest when deciding whether claims should be billed to the federal flood insurance program or to the insurance companies that employ them, train them, and advise them on the interpretation of their policies.  

     

    • State Farm, Nationwide, Allstate, and other insurers paid hundreds of thousands of wind claims inland, where they could not possibly blame the storm surge, but denied wind claims near the coastline, where winds were stronger and water also was present. 

     

    • Cori and Kerri Rigsby, who adjusted claims under a contract with State Farm, have revealed that they were instructed to pay NFIP claims as quickly as possible, while refusing to acknowledge any evidence of wind damage.  The sisters also claim that State Farm and its contractors revised engineering reports and coerced engineering firms to assign all damages to flooding, despite hours of hurricane winds before the storm surge.

     

    • Repeal the federal antitrust exemption as it relates to price-fixing, bid-rigging, or market allocation in the market for property insurance.  The Katrina Task Force seeks to prohibit commercial insurers in the market for property insurance from any form of price-fixing, bid-rigging, or market allocation.  It seeks to prohibit insurers in the market for property insurance from engaging in concerted activity to deny compensation to policyholders through restrictive and unwarranted interpretations of policies.  It also seeks to prohibit concerted activity by insurers in the market for property insurance to limit the scope of policies and compensation.

     

    • Establish stronger federal oversight of property insurance practices.  Congress should establish federal authority to conduct oversight of property insurance practices.  When insurance companies stop issuing policies in New York because of claims in Mississippi and Louisiana, the industry cannot reasonably claim that property insurance is not interstate commerce.  The government has assumed responsibility for insuring risks that the insurance industry refuses to cover, such as flooding. The federal government also provides disaster assistance to offset the uncovered losses of individuals, businesses, and communities.  Since federal taxpayers are forced to fill the gaps left by property insurance, Congress and the federal government have an obligation to perform diligent oversight of the industry.

     

    • Establish all-perils disaster insurance coverage backed by the federal government.  The segmented insurance market leaves gaps in coverage that result in widespread uninsured losses from natural catastrophes, especially from flooding, earthquakes, and other perils commonly excluded by private property insurance.  Private insurers can shift responsibility for hurricane losses to property owners, NFIP, and relief programs by attributing damages to water rather than wind.  Any effort to provide a federal backstop for insurance losses should insist on elimination of the exclusions and gaps in coverage.  Rather than providing relief aid after the fact, the federal government should establish a reinsurance program that assesses the cost of catastrophic risks and collects premiums before such events occur.   The program would provide reinsurance to the all-perils insurance coverage and would be triggered by large-scale natural catastrophes."

    Click here to download the full report in pdf format>

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    sbeau4014
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    10/27/2006 10:00 AM
    They think there are problems in how things work now, is there any program that works right and efficient when the government runs and backs it?  A government run all risk insurance program would make todays problems with insurance seem minuscule.  Just ask the task force that looked into problems with the flood program from Hurricane Isabel. I would be all for such a program if I thought there was the slightest chance that politics and other problems related to government intervention could be kept out of it, but history tells me there is no chance of that.
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    Mr Rob
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    10/27/2006 11:52 AM
    I can't speak for MS, but I know that the major reason that New Orleans will never be the same is that a majority (70-80%?) of people that could have purchased Flood Insurance made a decision not to, and due to the huge numbers, now it's a political issue and there is talk of changing the program.. The program works fine, people simply have to buy a policy. If they don't, why should the Federal Govt get involved?? But who cares about common sense? politics will "fix" the problem with billions and billions of taxpayer money...
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    Tom Toll
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    10/30/2006 4:58 PM
    We have a broken government, so how can they fix anything when they cannot fix themselves. The insurance industry need to stay private and if problems arise, let the courts decide the answers. Just look at NFIP and all the red tape involved in working their losses and a policy that most policyholders do not understand. FEMA is a broken arm of the broken federal government. No one has been able to stop the billions of dollars of tax payer money that is absolutley wasted and New Orleans is a prime example of that.

    It seems that the only winners here are employees of the government, especially the congress. They vote themselves a raise anytime they want to, have  100%  free medical coverage, and don't have to worry about Social Security income, (they have their own fantastic retirment package). Now, how are they going to fix the insurance industry?
    Success is not final, failure is not fatal: it is the courage to continue that counts.
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    PORTASATGUY
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    10/31/2006 1:00 AM
    Hate to talk Politics, But the democrats seem to be the party that cares for America and shows it!
    R. Estes
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    Darryl
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    10/31/2006 8:47 AM
    I'm curious, as a born and bred New Orleanian I was wondering where the number 70%-80% of people that could have purchased flood insurance made a decision not to comes from.  I have never seen that in any of my reading on the topic. 
    Also, I personally know quite a few family and friends that lost everything in the hurricane including one relative that lost his life and most of them had flood insurance and those that didn't weren't in a flood prone area according to FEMA flood plane maps. 
    As for simply buying a policy, can we say that everyone in the country should buy a catastrophe policy so that when an unprecedented event happens they could be covered, if so then I'm for it.
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    Darryl
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    10/31/2006 8:50 AM
    And how would that be, by believing that the government is responsible for an individual from cradle to grave?  I believe that the individual is responsible for his life, good and bad.  I don't believe that we need the government to care for us in that fashion.  Give us a national defense and make sure we all have the right to determine our own destiny and leave us alone.
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    tonyd46
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    10/31/2006 9:23 AM
    Just my opinion but I can no longer afford to be a republican.
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    Tiger
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    10/31/2006 9:35 AM
    Posted By R Estes on 10/31/2006 1:00 AM
    Hate to talk Politics, But the democrats seem to be the party that cares for America and shows it!



    That's one way to say it. My way of saying it would be that the Democratic Party seems to be the party that believes that (big) government should play a larger role in the lives of Americans - and of course tax the hell out of them in order to play that role with FEMA being one of the prime examples of this philosophy. President Carter's 1979 executive order merged many of the separate disaster-related responsibilities into a new Federal Emergency Management Agency (FEMA). Among other agencies, FEMA absorbed: the Federal Insurance Administration, the National Fire Prevention and Control Administration, the National Weather Service Community Preparedness Program, the Federal Preparedness Agency of the General Services Administration and the Federal Disaster Assistance Administration activities from HUD. Civil defense responsibilities were also transferred to the new agency from the Defense Department's Defense Civil Preparedness Agency.

    Should the government care about it's citizens? Sure. But I don't think it's their responsbility to bail them out for their failure to protect themselves as individuals whether it be their failure to take advantage of a free public school education, their decision to exercise birth control methods or practice abstinence or their failure to purchase a flood policy. And I damn sure don't think it's my responsibility to fund it.

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    Darryl
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    10/31/2006 9:38 AM
    Wasn't pushing either party just a personal philosophy.  I don't care which party does it.  Just do the things government should do and stay out of the rest of my life.  I've voted both ways in the past but when it gets to national politics its always harder than local.  In national politics the party's beliefs often take precedent over the candidates and one man can't do much without the party backing, no matter which party.

    I guess the catch is what you believe the government is responsible for  and what we as individuals and as a society should be responsible for.  That's personal and you can't legislate that.

    Didn't want to be misunderstood.
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    Tom Toll
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    10/31/2006 10:17 AM
    Darryl, good post. I don't believe anyone misunderstood you. I was Republican for a number of years and was directly involved with Win Rockefeller when he was the first Republican in Arkansas history to win. I was one of his aides and his speech coach and traveled extensively with him. He was an outstanding man and did an excellent job as Governor for this state. His son, John Paul was going to run for Governor this year and would have been elected had he not died of cancer 6 months ago. It does not make any difference what party you belong to. There are good and bad in both parties. I now vote for whom I think will make a better politician and do more for the general population and not the big Corporations and the rich.

    I think the entire Senate, Representatives, and President needs to be cleared out and new blood added. We just continue to put those in power who have been around for years. I blame the population of the United States, as we have allowed our government to become a laughing stock to the world and the general public. I doubt that anything will ever change. Too many people want to be led by the nose, as if they don't have brains enough to come in out of the rain. We do not have many leaders any more.

    Everyone needs to read the Rise and Fall of the Roman Empire and if they do, they will realize what track we are on right now, that of failure. It is, however, never to late to make change, if we could just develop the capacity and common sense to do so. I, like you, Darryl, would prefer to regulate my own life and not have it legislated by the Feds.
    Success is not final, failure is not fatal: it is the courage to continue that counts.
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    dcmarlin
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    10/31/2006 1:29 PM
    Posted By Darryl Martin on 10/31/2006 8:47 AM
    I'm curious, as a born and bred New Orleanian I was wondering where the number 70%-80% of people that could have purchased flood insurance made a decision not to comes from. I have never seen that in any of my reading on the topic.

    Darryl,

    To the best of my knowledge, as long as the community (city, county, parrish) participates in the NFIP, then residents of that community have to opportunity to purchase flood insurance. If the community doesn't participate, then it is not available through NFIP.   I live in an area that I believe is in a 500 year flood plain and choose not to have flood insurance even though it is available to me.

    I do not know the percentage of the communities in Louisiana that participate in the program but, according to NFIP statistics, there was about 385,000 flood policies as of September 2005 with a population of about 4.5 million.

    Dave Marlin
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    Gimme a bottle of anything and a glazed donut ... to go! (DLR)
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