A View From The Press Box

The article by Rebecca Mowbray was excellent and one of the few on this issue in the mainstream press. I first learned about the federal charter here.

From a consumer standpoint, as of this point in time I am still largely ambivalent as to whom the regulator may be. Federal or state officials each bring their own sets of strengths and weaknesses to the table.

That said, I am troubled by the lack of consumer protections in the federal proposal as cited by Robert Hunter and quoted by Ms Mowbray in her piece.

The article notes that "a powerful federal regulator would have real leverage to keep ROGUE companies in line."

Sure, and the Easter Bunny delivers colored eggs!

What is a ROGUE company? Does taking a strong position (a la State Farm and Allstate) make you a ROGUE?

As to the 'interesting issue' cited: "...as conspiracy theories have swirled since the storm that insurers colluded through their adjustment software to depress payout values for repairs," I am pretty certain that aspect has been investigated and disproven.

Mr. Baker gives an example where an insurer threatens to pull out of Louisiana, and the "Federal Regulator" threatens to prevent the company from writing in New York.

I find that deeply troubling as, I'm sure, the people in New York would. While I am not a lawyer, that statement smacks of illegality!

Here in New York, we have a pretty good Insurance Department that is on top of things. It is pretty proactive.

I do not see anything proactive coming from FEMA or the Veterans Adminisration. Why should we believe federal insurance regulators would respond any quicker or better than these other federal agencies?

I know that some will view this as heresy, but here goes.

First, I did read the entire article and I agree with the e-mail comment at the end of the article about taking my chances with the feds.

I am an agent from a small Southeastern state. I do not feel that our current office of insurance does an adequate job of consumer protection.

I will go with the Federal Office with some TEETH in their enforcement ability

The REAL issue is poor construction in areas prone to hurricane and flood damage. Building codes in South Florida up until 2002 had devolved to the point they were a joke.

My house, built in 1963, is a fortress, with only window protection needing to be added--which I did when I bought it in 1993. Compared with the construction of the Andrew houses, where roof deck plywood had 1 or 2 nails holding it down, joists were not tied to the walls, allowing the entire roof to sail off into the sunset.

The code was greatly improved in 2002 (except in the panhandle, where no changes were made, because the panhandle "never" gets hit--until, of course, it got hit.) My 1963 house exceeds even the 2002 code.

Yet millions of substandard residential and commercial structures remain that have no hope of surviving even a moderate hurricane without damage, and millions of owners STILL have done nothing to strengthen them; yet they still want windstorm rates to be as low as they were before '04 and '05.

There is no reason Hurricane Wilma, a relatively weak storm that did spark some tornado activity (I lost all my trees, AFTER the strongest part of the storm had passed, but suffered no damage to the house--it was easy to trace the path of the tornado through the neighborhood) should have caused billions and billions of dollars of damage in South Florida in '05, but it did because of all the substandard construction.

The ONLY way to reduce rates and damageability is through mitigation.

Even now, as the windstorm market in South Florida weakens, with rates dropping drastically, the next serious storm will remind insurers once again af all the substandard construction we have here and so many owner's continued reluctance to strengthen their buildings.

Complex topic, Sam. A good one again!

I agree with Bill. Zoning commission decisions are heavily slanted to favor the owner/builder (in the chase for the almighty profit dollars) to the detriment of the taxpayer, the insurance buyer, the insurers, and everyone else who has to pay, after the fact, when those zoning decisions pan out in insured and uninsured losses or damage to the environment. Politics can be ugly at the local, state or federal level.

As respects Katrina, there was no one professional disaster leader (or team of leaders) who had a real grasp on disaster management and who had the resources, contacts and authority to give direction to all of the factions that were running around the Gulf Coast before, during and after Katrina.

A federal solution would be indicated, but unfortunately federal appointments usually are political (not based on skill and experience). I have little faith that the feds can be effective in disaster management.

As to the insurance aftermath, a federal insurance commissioner could have mismanaged the adjusting and availability issues, too.

Installing a federal insurance regulator in addition to state DOI regulation is just another layer of bureacracy. Eliminating state regulation in favor of federal regulation removes the local control of insurance and distances the regulator from the insurance consumer.

The NAIC needs to help the agents/brokers to simplify licensing and streamline the filings and reporting process for insurers. That would go a long way to curing the ailments that have given rise to this federal movement.

Of course, some of those entrenched state regulators might have to worry about job security.

The insurance industry has evolved over the centuries. It functions pretty well over all. America would not have become the economic leader it has been without the insurance market we have.