House panel votes to add wind coverage

by Sean Reilly
Mobile Press Register Washington Bureau
Original article published on July 27, 2007.

WASHINGTON -- The House Financial Services Committee agreed Thursday to add optional wind coverage to the National Flood Insurance Program, brushing aside objections that such a major step needed more study.

The bill by U.S. Rep. Maxine Waters, D-Calif., would also increase overall coverage limits, phase out subsidized flood insurance rates for businesses and vacation homes, and authorize spending up to $400 million annually for the next five years to pay for flood map updates.

The subsidized rates generally apply to structures built before the early 1970s. For vacation homes in that category, the bill would allow flood insurance administrators to raise rates by 25 percent annually until the full risk-based premium is reached. For subsidized business structures, rate increases of 20 percent annually would be permitted.

In voting 38-29 to send the bill to the full House, the committee broke largely along party lines, with Democrats solidly in support and most Republicans opposed. In arguing for the addition of wind coverage, Chairman Barney Frank, D-Mass., pointed to the wave of "wind" vs. "water" disputes that followed Hurricane Katrina in 2005.

For full discussion of the famed "wind vs water" argument, see Wind? Water? More Like a Bunch of Hot Air!


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Federal plan would cover windstorms

A House panel OK'd expanding an insurance program to cover wind damage -- which could bring comfort to Florida residents -- but the plan has Republican critics.
BY MARIA RECIO
mrecio@mcclatchydc.com
(Miami Herald version)
Original published on July 27, 2007.

WASHINGTON --A bill beginning to move through the U.S. House could dramatically change the way windstorm insurance is sold in Florida and other hurricane-prone coastal states.

The House Financial Services Committee voted 38-29 on Thursday to expand the national flood insurance program to cover wind damage. Other proposals floating around Washington would create national catastrophe funds to cover many perils, but this one is focused squarely on hurricane risk.

To be sure, the bill faces stiff opposition ahead -- particularly from Republicans. It could get a floor vote when the House returns from recess in September and, if it passes, would have to prevail in the Senate and get past the White House.
Committee member U.S. Rep. Ron Klein, D-Boca Raton, said he supports the legislation and thinks it would help ease the state's windstorm woes but would not completely solve the insurance crisis.

''This could provide some relief for some people, but I still think we need to take additional steps to reduce insurance costs,'' Klein said.

Read the Miami Herald article.

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RAND Report on Post Katrina Commercial Wind Insurance Developments

RAND REPORT: Commercial Wind Insurance in the Gulf States:
Developments Since Hurricane Katrina and Challenges Moving Forward

In the aftermath of Hurricanes Katrina, Rita, and Wilma, Congress has been considering whether and how to encourage the purchase of wind insurance. Today, RAND issued a new report looking at the availability and cost of commercial wind insurance following the 2005 hurricanes.

The new report, Commercial Wind Insurance in the Gulf States: Developments Since Hurricane Katrina and Challenges Moving Forward, finds that many businesses along the Gulf of Mexico coast have had a difficult time obtaining wind insurance and have ended up paying more than twice as much for the insurance as they did previously. Other findings include:
Gulf Coast businesses are paying higher deductibles while getting lower limits on policy coverage;

1. The use of state-run residual insurance markets has risen;
2. The potential for financial losses resulting from damage to property due to high winds has shifted in part from insurers to policyholders and taxpayers - including those not living in high-risk areas; and
3. The scarcity and high cost of wind insurance has delayed some business investments in the Gulf States region, although the economic impact on the overall region is hard to assess. Higher insurance premiums may have in part redirected economic activity to lower risk areas in the region.

The study also proposes three basic goals for a wind risk insurance system and examines some of the challenges faced by the private market and government programs in achieving these goals.

The study can be found at http://www.rand.org/pubs/occasional_papers/OP190/.


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Scruggs' Statement Responding to State Farm’s Latest Salvo

From the Scruggs Katrina Group's website.

State Farm, desperate to shake the dark cloud permanently affixed to their reputation has taken another pass at us. This time they’ve re-released a two-week-old statement penned by the Washington Legal Fund, in an attempt to undermine our efforts on behalf of the families of Mississippi.

While it is tempting to re-release our two-week-old announcement that we filed over 20 counts of RICO charges against State Farm and over 200 additional lawsuits against them on behalf of Mississippi families, brimming with evidence of how “the good neighbor” has systematically defrauded policy holders, we won’t.

Instead we will simply say, we welcome any investigation into the matter of Katrina-related insurance litigation. Bring it on. We know who is hiding the truth. We know who hopes to bury that truth in litigation. Every member of the Scruggs Katrina Group and our clients call on the courts and the US Department of Justice to fully investigate all charges related to insurance industry corruption post Katrina. Unlike State Farm we won’t be taking the Fifth.

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For more information on the Scruggs Katrina Group's RICO lawsuit, see State Farm, Partners, and RICO: What a Racket! Former Mississippi Attorney General explains well the RICO lawsuit that the Scruggs Katrina Group has filed against State Farm.

Watch the video: Hi-Res Lo-Res
Former Attorney General Mike Moore Explains the RICO Case on WLOX's This Week.

Court Documents: Shows vs. State Farm
Original Complaint (PDF) Exhibits (PDF)
Note: These are large files and may take over a minute to load.

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