Jackson Free Press

Today, Jim Hood sent out a statement asking the governor and insurance commissioner to follow Florida's lead and require State Farm and other insurance companies to continue writing policies in the state. In a response, the governor say no. Both statements are below verbatim. First, the AG's:

Jackson, MS--Attorney General Jim Hood this morning proposed legislation to require State Farm to continue writing new homeowners and commercial property policies in Mississippi. General Hood also requested that Governor Haley Barbour and Insurance Commissioner George
Dale issue emergency executive orders requiring insurance companies to continue writing homeowners and commercial property insurance policies until the Legislature has had time to address the proposed amendment.

Republican Florida Governor, and former Attorney General, Charlie Christ recently worked with Florida Commissioner of Insurance Regulation Kevin M. McCarty to use their executive emergency authority to temporarily prohibit the cancellation and non-renewal of homeowners and commercial policies, until the new Florida insurance statute went into effect. Hood provided Barbour and Dale with citations to Mississippi law granting them similar authority to that used in Florida.

The proposed legislation, which was modeled after Florida legislation passed last month by the Republican controlled Florida Legislature, would require that insurance companies selling automobile insurance in Mississippi to also sell homeowners and commercial property insurance statewide, if they sell these policies in any other state.

General Hood said, "I call on Governor Barbour and Commissioner Dale to use their emergency powers to temporarily prevent State Farm from hurting its own insurance agents and Mississippi consumers by requiring them to continue to sell new homeowners and commercial property policies until the legislature has had time to address the legislation I proposed. Republican Florida Governor Christ issued a similar temporary executive order until a similar Florida statute went into effect. Our proposed legislation is modeled after a wind-pool bill passed by the Republican controlled Florida Legislature last month."

Hood also stated, "One of the main reasons I settled our state court litigation against State Farm was to keep them writing homeowners policies in Mississippi, to stabilize our insurance markets, and to help our Coastal residents and business rebuild. Mississippi should notallow State Farm to breach its promise and continue to profit from others in our state."

And Barbour's response:

HAND DELIVERY
Attorney General Jim Hood
Post Office Box 220
Jackson, MS 39205

Dear Attorney General Hood:

Thank you for your letter and request for me to order State Farm and other insurers to sell homeowners and commercial property insurance in our state. Having considered my statutory and constitutional emergency powers including the statute you cited in your letter, I have no authority to force a private company to sell its products in the State of Mississippi.

Sincerely,

Haley Barbour

Previous Comments

ID

91336

Comment

Gosh, this is tricky. First, let's acknowledge the obvious: Barbour is beholden to the insurance companies, Hood doesn't want the political fallout from State Farm withdrawing from the state following his own lawsuit against the company. Hood, if he is compassionate (which he may be, but I don't like to assume this of politicians), may also be concerned about people who may lose coverage. Barbour, for his part, may for all I know be privy to plans from another insurer to snap up those State Farm contracts. But all that aside, I can't overcome the feeling that Barbour is technically on more solid legal ground here. I don't think he does have the authority to force a private company to sell its products in Mississippi, and I'm not sure the Florida situation sets a precedent that we would really want to see adopted in other industries. Cheers, TH

Author

Tom Head

Date

2007-02-17T04:35:37-06:00

ID

91337

Comment

At first glance it looks like two different things. The Florida action appears to just prevent insurance companies from cancelling existing policies - something SF is not doing except within one mile of the coastline. General Hood, if I read this correctly, is asking the state to force SF to continue to write new policies - not the same thing.

Author

Mr PR Professional

Date

2007-02-17T09:00:00-06:00

ID

91338

Comment

They could continue to write policies here, but at a huge premium, that very few could afford. There is no such thing as a bad risk, just a bad premium! And I second the Governor's "NO" to Hood. Good Lord. How can he think that he can force a company to "continue writing policies?" If I were a stockholder of StateFarm, and Hood forced them to write policies at a loss, I would be furious. lc

Author

LawClerk

Date

2007-02-17T09:59:21-06:00

ID

91339

Comment

Barbour's response is the correct one IMO. Barbour's alliegences are irrelevant; neither he nor Hood can force a private company to continue to do business in the state. Hood appears to be making a poor connection between the FL situation and our situation to justify his actions and save his political bacon. While I personally find SF's decision more than a little callous, they have a right as a private company to "boycott" and I can't see how legally Hood could force them to stay, especially if there are insurance companies remaining in the state who could step in to close the gap. Even if he could, as LawClerk points out SF would probably charge such high premiums for new policies that you'd have to make a 7 figure salary to really afford them!

Author

Jeff Lucas

Date

2007-02-17T11:18:39-06:00

ID

91340

Comment

You can't make a company do business in Mississippi and its not a precedent you want anyway. That is the kind of garbage they pull in Europe and the result is very stagnant economies in the countries that have those policies. Of course, I do kind of like them. It means we get more BMW and Mercedes plants here. But that does illustrate the point further. We are a small state with little market power on the national level. An insurance company will compare the profit v. the chance of paying for a hurricane (even if legit claims, that is still alot of money to pay), getting prosecuted, shaken down for 5 million dollars for the AG, and then it is told what kind of business it has to offer. That is a great environment for a company looking to do business in Mississippi. In other states like Florida and Louisiana, the state has prevented the insurance companies from cancelling policies prematurely. that is different in that that is involving already signed contracts, not telling a business what it has to sell. This is just rabble rousing from the grandstander.

Author

Kingfish

Date

2007-02-17T13:23:14-06:00

ID

91341

Comment

I know this is off the subject, but yesterday (around 6:30 a.m.) while watching CNN, I saw a story about the MS Gulf Coast. CNN pointed out that businesses and homeowners are really suffering, dying off, going "belly up". No rebuilding is underway on the coast---only the casinos are thriving. The saying, "Out of Sight, Out of Mind" is true. If we don't see it, read about it, or hear about it, we don't think about it or complain about it. Is this why there is no reporting (WLBT, WJTV, WAPT, Clarion Ledger, etc.) about the rebuilding process or lack thereof, on the gulf coast? Why is it that we have to depend on a national news organization, CNN, to tell us about what's going on in our very own state? Haley Barbour is also getting a free ride due to the lack of reporting on this matter. Many (because there is no reporting on it) think Barbour has revived the coast. That is so far from the truth. WHEN ARE WE GOING TO START HEARING ABOUT WHAT'S GOING ON ON THE MS GULF COAST??? Any thoughts on this?

Author

blu_n_a_redstate

Date

2007-02-17T19:03:59-06:00

ID

91342

Comment

This article is in today's Sun Herald: 461 DAYS AFTER THE STORM ... Where does Biloxi go from here? By Rick Matthews "So how is our bellwether city doing? How clear are its ambitions? And how well are its leaders performing in terms of achieving their goals?" "Some would suggest not well enough and certainly not fast enough." "Biloxi's challenges go far beyond reopening casinos and marketing condos...." Read more here: http://www.sunherald.com/mld/sunherald/16152712.htm

Author

blu_n_a_redstate

Date

2007-02-17T20:00:07-06:00

ID

91343

Comment

This is definitely a complex subject. You have to balance the legitimate desires of insurers, the insurer's obligation to social responsibility, urban planning, and social justice. But this is something The Coast (and our society in general MUST accomplish). *restrict more development to higher ground -- I give this one a BIG A+. No sense building on ground prone to storm surges. Furthermore, this space would be excellent for parks, recreation, and jogging trails - just to name three. *restrict residential and high-value permanent structures in low-lying and coastal areas -- this follows from above *stricter and more demanding building codes for business that HAVE to be near the water -- again, why rebuild if in 30 or 40 years another "big one" is going to put Biloxi were it was in 2005? Better yet, what is there to prevent use of a multi-story building's first floor? Let the bottome floor be "free space" that, when the next storm surge happens, water can go through without much damage to high valued items. *work with FEMA and Mississippi Emergency Management to arrange quick release or commanderment of public transporation to evacuate people to higher ground -- that'd both reduce traffic jams and speed evacuation during hurricane warnings. it'd also reduce air pollution and CO2 emmissions as well. **Any other ideas about accommodating private industry, social justice, and urban planning?

Author

Philip

Date

2007-02-18T08:00:52-06:00

ID

91344

Comment

One thing about people criticizing Barbour for focusing on Casinos. They ARE the largest employers on the coast and the people that work at them are the ones that really need the money. They can't get food, housing, or other basic necessities unless they have money or jobs. Having said that, the whole area was wiped out and its simply going to take time just to rebuild. The whole infrastructure was blasted out of existence. You can't just rebuild it in a year or two. Those casinos also mean alot to the state in terms of tax revenue and fund a lot of projects dear to the hearts of the posters on this board.

Author

Kingfish

Date

2007-02-18T10:17:56-06:00

ID

91345

Comment

Also, has anyone thought about underground powerlines? That would solve the problem of trees falling on power lines or powerpoles falling due to whatever. I know in some towns, they have all underground power lines, and it seems like a no-brainer to me in an area that is prone to high winds/tree damage. If Jackson had underground lines, I wouldn't have been without power the weeks after Katrina.

Author

LawClerk

Date

2007-02-19T15:30:25-06:00

ID

91346

Comment

A few points. First of all, the insurance industry is heavily regulated (not heavily enough, IMO, but that's a discussion for another time). The ordinary principle that the government cannot force a company to do business anywhere MAY not apply here. Second: At first glance it looks like two different things. The Florida action appears to just prevent insurance companies from cancelling existing policies - something SF is not doing except within one mile of the coastline. Mississippi could certainly prohibit State Farm from cancelling ANY policies in Mississippi. Even within one mile of the coastline. But (a Hood quotation from the article): One of the main reasons I settled our state court litigation against State Farm was to keep them writing homeowners policies in Mississippi, to stabilize our insurance markets, and to help our Coastal residents and business rebuild. Mississippi should notallow State Farm to breach its promise and continue to profit from others in our state. That's fine in principle, but if that was one of his objectives, why on earth isn't it part of the settlement? Which if it were, Hood wouldn't need Barbour's support for this -- he could simply go back to court for an injunction.

Author

Tim Kynerd

Date

2007-02-19T18:51:54-06:00

ID

91347

Comment

Jim Hood's grandstanding ways are going to haunt him at some point. He needs to be about this state's business, such as working on the Melton probation, instead of searching for populist headlines!

Author

fsy3

Date

2007-02-20T18:39:44-06:00

ID

91348

Comment

Well, I don't think this is about "grandstanding"—no more than Lott and Gene Taylor are doing about the insurance industry. We are in dire need of insurance reform—and antitrust regulation of these insurance giants that are, yes, raping our state. I'm glad to see Hood, Lott and Taylor have the courage to speak out against them. This isn't nearly as simplistic as Barbour, and many on this thread, have tried to make it. It's not as if State Farm can't argue that it's gotten its own share of favors from this state. This is refreshing from all of these men. We've had enough pandering to corporations that show up with their hands out every chance they get—even demanding and getting some very anti-capitalist tort reform from their puppet governor. It's time that the pendulum swing, and I applaud any and every politician with the balls to try to make that happen.

Author

DonnaLadd

Date

2007-02-20T20:03:14-06:00

ID

91349

Comment

First of all, why is Hood trying to get 5 million dollars for his office? that has nothing to do with the victims who have not been paid for their losses and I'm sure that could've helped quite a few families who were ruined by Katrina. Its also ridiculous for him to try to force a business to sell services or products in Mississippi. Second of all, I warned you months ago that it was a catch 22 and that State Farm would pull out. Surprise, they did. The threat of criminal prosecution was over the top. It was not criminal fraud. No business wants to worry about being prosecuted because it interpreted its contract one way, especially when there are strong legal grounds for doing so. Even law abiding businesses don't like to worry about an environment where an AG will shake them down for money and threaten to prosecute them. I also have a problem with AG's taking large contributions from trial lawyers and then rewarding them with nice lawsuits that pay them millions of dollars. If it was a state official taking it from a manufacturer or construction company and then awarding very lucrative contracts without bids to these contributors, you would be screaming bloody murder. Wait, some on this board did with Barbour already. However, if its an AG and his lawyer friends, that seems to pass muster for some reason. Now, if you want to debate the antitrust exemption for insurance, then that is a topic worthy of debate and discussion. One of my pet criticisms is from people in other parts of the state and country who gripe about their premiums rising and saying they shouldn't have to pay for people who choose to live on the coast. Naturally when a flood or tornado hits them, they expect to be helped and for their insurance rates not to skyrocket. I think the whole disaster exclusion and coverage needs to be reformed as you said.

Author

Kingfish

Date

2007-02-20T20:13:22-06:00

ID

91350

Comment

Second of all, I warned you months ago that it was a catch 22 and that State Farm would pull out. Surprise, they did. Doh, Kingfish. With due respect, of course they would. This was no surprise, and I'm sure the AG knew it was coming as well. It's part of the corporate muscle-flexing schtick—oh yeah, you won't let us deny payments we don't want to make? We'll pack up and leave. Take that. One of the biggest points here, though, is that if we don't stand up to unethical behavior by corporations, they will never change their ways. We're at a pivotal point, and anyone who doesn't think that Hood cares more about this state right now, based on his actions and words (even with imperfections) than Barbour does is a fool. Or, to rephrase, is acting a fool. ;-) Re the "AG and his lawyer friends" aside—which you need to go start a thread to discuss if you care to go further on it—be careful about falling into the partisan trap here. Make sure you have all the info and place it in context before you pass on empty N-JAM-esque pablum. One clue: If they say it regularly, there's more to it. Dig.

Author

DonnaLadd

Date

2007-02-20T20:26:23-06:00

ID

91351

Comment

I have been. However, I have a major problem with a criminal prosecution and demand for 5 million dollars for his office. That taints the nobility of his going after state farm and makes him look more like a grandstander to me. I've never been a fan of prosecuting companies for what are legitimate contract disputes and different interpretations. I know people that got screwed by insurance companies after Katrina. I disagree with alot of what they have done. But the demand for money and using the prosecutorial hammer is something I must oppose. I think the whole resolution is a matter for the civil court system and should be adjuticated in that venue. One thing about insurance companies. People say "oh, you made 20 million in profits this year". You are a business owner, You plan for the future. You set aside reserves when possible to cover losses. The insurance companies make profits but it is the profits that enable them to pay current and FUTURE claims. They did pay quite a bit in claims after katrina. They also need to be able to set aside profits for paying future claims as well for their will be years that will not always be profitable for them and too a large extent, they are the foundation for much of our economy.

Author

Kingfish

Date

2007-02-20T20:35:21-06:00

ID

91352

Comment

After Andrew, the insurance companies were allowed to set up a disaster pool to keep them solvent in the event of a disaster. I believe (but don't know for sure) that the funds in this pool are allowed to grow tax free- and the pool is now at $427 BILLION! They didn't even touch this after Katrina- what the hell are they waiting for?

Author

Rico

Date

2007-02-20T20:53:29-06:00

ID

91353

Comment

damn, you had to throw at me a research project. jerk.

Author

Kingfish

Date

2007-02-20T21:00:08-06:00

ID

91354

Comment

Rico, that figure is for the WHOLE industry and not in the pool you claimed. ;-) http://www.insurancejournal.com/magazines/west/2006/07/03/features/71253.htm?print=1

Author

Kingfish

Date

2007-02-20T21:07:04-06:00

ID

91355

Comment

Well, at any rate "The industry's aggregate policyholders' surplus for the U.S. property and casualty market is currently estimated at $427 billion, an ample amount to absorb a single natural catastrophe." That is the *surplus*...If Katrina wasn't a good enough disaster for them to at least dip into the surplus, what is it going to take? I think that they (the insurance companies) are just stalling for time until the Feds bail everyone out- and if that is the case, what is the point of even having insurance? Why bother having a policy that excludes any scenario that is likely to happen- such as a hurricane in a coastal area?

Author

Rico

Date

2007-02-20T21:26:53-06:00

ID

91356

Comment

That is for the whole industry. That is not a pool that a company can dip into. And he makes a point about absorbing a single catastrophe. They have to be able to absorb multiple catastrophes. What he said about a terrorist even occuring in NYC or SF was probably conservative when you really thinka bout it.

Author

Kingfish

Date

2007-02-20T21:31:21-06:00

ID

91357

Comment

The guy switches back and forth- a lot- between "economic losses" and "insured losses". Makes it pretty hard to come to any kind of conclusion. But he states that "The 2005 North American hurricane season resulted in more than $83 billion in losses..." I don't know if that is economic or insured, but the $427 billion in surplus would have covered it easily either way. I hate to ask you to do still more research, but just where is that $427 billion sitting right now- and do they pay taxes on the interest that it accrues?

Author

Rico

Date

2007-02-20T21:42:36-06:00

ID

91358

Comment

that is just for one event. What do you think happens when several events take place. You had Rita and Katrina in one year. Ivan two years before. Keep in mind that there will be a higher demand for insurance which will mean more exposure. They have to be able to cover multiple events and not just in one year either.

Author

Kingfish

Date

2007-02-21T00:05:00-06:00

ID

91359

Comment

that is just for one event. What do you think happens when several events take place. You had Rita and Katrina in one year. Ivan two years before. Well, that is kind of my point- Ivan, Katrina, and Rita within a few years of each other, and they still manage a surplus of $427 billion? What kind of cushion do they need before they are comfortable? And we still don't know exactly where that $427 billion is, nor if it happens to be growing tax-free, do we? I do realize that my views on all of this are pretty idealistic, and I'm sorry to have interrupted a thread where you guys were discussing things on a much higher level. But the whole State Farm thing has totally pissed me off- shouldn't this have been the one time in history where the CEO of a major insurance provider could have looked the stock holders in the eye and said "sorry, but you might not get a dividend this year..."?

Author

Rico

Date

2007-02-21T00:41:46-06:00

ID

91360

Comment

you seem to think State Farm can dip into some pool of 427 billion. Those are reserves for the whole industry. It doesn't say what State Farm's share of that is.

Author

Kingfish

Date

2007-02-21T00:50:31-06:00

ID

91361

Comment

I think that State Farm can dip into their proportionate share of a $427 billion pot, but haven't even needed to because their profits were still very high despite one of the most expensive insured losses of all time- is that wrong?

Author

Rico

Date

2007-02-21T01:22:04-06:00

ID

91362

Comment

Well, that is kind of my point- Ivan, Katrina, and Rita within a few years of each other, and they still manage a surplus of $427 billion? What kind of cushion do they need before they are comfortable? Plus: Making the insurance companies "comfortable" isn't what the surplus is for. The only way it makes any sense is if the insurance companies actually use it when it's needed. And if it was ever needed, it was needed after the 2005 hurricane season. This isn't only about State Farm; not everybody on the Coast had policies with State Farm. Did *any* of the insurance companies use money from this fund after Katrina? I think that State Farm can dip into their proportionate share of a $427 billion pot, but haven't even needed to because their profits were still very high despite one of the most expensive insured losses of all time- is that wrong? Sounds to me like you nailed it.

Author

Tim Kynerd

Date

2007-02-21T07:33:27-06:00

ID

91363

Comment

Tim, do you read? There is no disaster pool for companies to dip into. That 427 figure is the total amount of the whole industry. that means all insurance companies totaled together. There is no "pool". I haven't delved into the wind v. water dispute or what happens when just a slab is left and the insurance company says sorry, that was water. i seem to remember winds being strong enough to take off part of the roof of the superdome. imagine an ordinary home in 150 mph winds. I seem to remember from contract law ambiguities are construed against the drafter. My points on this thread have been that I do not think it is right that Hood tried to shake them down for five million dollars and threatened them with criminal prosecution. The equivelent would be suppose JFP had a contract with some advertisers. There is a dispute about the performance of the contract. JFP goes to its lawyers, who give it solid legal advice about what it should do under the law and JFP follows it. Then Melton intervenes and files charges against the JFP and its owners and also demands that they pay his office a certain amount of money. That would scare off businesses from operating in jackson when all the dispute is over is the terms of a contract, which happens every day in business. I am merely correcting Rico on the 427 billion dollar figure and pointing out it is no "pool" but an industry total.

Author

Kingfish

Date

2007-02-21T09:19:47-06:00

ID

91364

Comment

I'm still not positive that there isn't a "pool", but it doesn't really matter. State Farm probably has a sizable portion of $427 billion sitting somewhere collecting interest- and I would be willing to bet that the interest is tax free. This money was supposed to be used in the event of a disaster- I can't remember the name of the program, but I remember it being set up after Andrew. But instead of this being used as intended, it has become nothing but a tax shelter for the insurance industry. As to the other- remember those signs that you used to see everywhere that said "we reserve the right to refuse service to anyone"? Don't see 'em much anymore, because legally we have made it pretty uncomfortable for a business to discriminate based on religion, race, sex etc. This is a free country, and I suppose a business owner should be free to do business with whoever he/she chooses, but we saw where that got us. I can see a time where it becomes illegal for insurance companies to discriminate based on where somebody lives- the whole idea behind insurance is spreading the risk among many. I do agree about the AG's office wanting money- this is probably not the time to be doing a shake down- but at this point, I hope they get it.

Author

Rico

Date

2007-02-21T09:53:05-06:00

ID

91365

Comment

Tim, do you read? No, I just prefer to pull the comments out of my ass. What the hell kind of question is that? There is no disaster pool for companies to dip into. That 427 figure is the total amount of the whole industry. that means all insurance companies totaled together. There is no "pool". If there is no pool for the companies to dip into, then what on earth IS the purpose of the $427 billion?

Author

Tim Kynerd

Date

2007-02-21T19:07:29-06:00

ID

91366

Comment

are you able to comprehend the fact that that is the sum of all insurance companies? Maybe you don't have any business experience or expertise, but typically financial institutions that are competitors do not put all of their assets into one pool for each of them to use. The 427 billion is made up of assets that are owned seperately by each insurance company, not by all of them jointly. That means nationwide may have only 1 billion of that pool and state farm may have 300 billion dollars of it or vice versa. That doesn't meant Nationwide would have a 427 billion dollar pool to dip into when a disaster strikes.

Author

Kingfish

Date

2007-02-21T19:11:57-06:00

ID

91367

Comment

Rico, that was the basis for my initial response. It's not that I'm sympathetic to the insurance industry...just the opposite. I think SF's attitude is too typical of what I've personallyexperienced with insurance companies, and this move doesn't surprise me at all. I applauded Hood for at least challenging State Farm to quit playing games with the 'wind vs. water' argument as a way of avoiding large payouts. But I also can't see how the A.G. or the Gov can compel S.F. to write new policies, which makes it appear to me that the A.G. is grandstanding for the media. I think he knows he doesn't have a leg to stand on in this fight, but he has to appear to be willing to take the battle to the last man. And where is our *esteemed* Insurance Comissioner in all of this?

Author

Jeff Lucas

Date

2007-02-21T19:26:19-06:00

ID

91368

Comment

are you able to comprehend the fact that that is the sum of all insurance companies? Are you able to write clearly and concisely about anything? Maybe you don't have any business experience or expertise, No, I guess a major in accounting and years of working as a consultant don't count. but typically financial institutions that are competitors do not put all of their assets into one pool for each of them to use. The 427 billion is made up of assets that are owned seperately by each insurance company, not by all of them jointly. That means nationwide may have only 1 billion of that pool and state farm may have 300 billion dollars of it or vice versa. That doesn't meant Nationwide would have a 427 billion dollar pool to dip into when a disaster strikes. Then there's no real reason for us (or Insurance Journal) to speak of this as a single amount of money. It's not "an ample amount to absorb a single natural catastrophe," because it cannot be counted on to be available for any given natural catastrophe. The actual amount of money available will depend on the surpluses held by the companies that actually insured property in the affected area. Which isn't news. (And of course you'll be trying to pry those surpluses out of the insurance companies' cold dead fingers to pay the claims they owe their policyholders, but that's another story.) As for Rico's original post: After Andrew, the insurance companies were allowed to set up a disaster pool to keep them solvent in the event of a disaster. I believe (but don't know for sure) that the funds in this pool are allowed to grow tax free- and the pool is now at $427 BILLION! If Rico is right, then that pool isn't what Insurance Journal is referring to. The journal article is referring to the aggregate cumulative surpluses of premiums over claims. That isn't a "disaster pool" by any stretch of the imagination. My point isn't that I've finally gotten that it's not a pool (I understood that before), but that it needs to be determined whether Rico is right about there being a disaster pool.

Author

Tim Kynerd

Date

2007-02-21T19:53:00-06:00

ID

91369

Comment

Well, I have looked for information about a disaster pool, and have come up empty handed. Maybe I imagined it, or maybe I was confusing it with Florida's disaster re-insurance- who knows? But at any rate, I have very little sympathy for an industry that has a $427 billion dollar surplus (which we still don't know much about) whining about not making enough money. I did come across this: States like California and Maryland have banned insurers from using credit scores, ZIP codes and other factors in deciding whether to cover someone, arguing that they unfairly discriminate against the poor and minorities. So, maybe forcing the insurance companies to provide coverage in Mississippi could be done- all those stats that we have seen over the years that show MS to be the poorest state in the Union might finally come in handy- apparently it could be unlawful to discriminate against us poor folks!

Author

Rico

Date

2007-02-21T20:54:34-06:00

ID

91370

Comment

But at any rate, I have very little sympathy for an industry that has a $427 billion dollar surplus (which we still don't know much about) whining about not making enough money. That's the bottom line, right there. So, maybe forcing the insurance companies to provide coverage in Mississippi could be done- all those stats that we have seen over the years that show MS to be the poorest state in the Union might finally come in handy- apparently it could be unlawful to discriminate against us poor folks! I don't know about that. It's a lot easier to say, "If you want to operate in Mississippi, you can't discriminate between customers on these grounds" than it is to also say, "Oh, and by the way, you have to operate in Mississippi." As I said before, the insurance industry doesn't operate under the same rules as most industries -- mainly because they have that antitrust exemption -- but I'm saying that a state may or may not have any power to force an insurance company to operate within its borders.

Author

Tim Kynerd

Date

2007-02-21T21:16:04-06:00

ID

91371

Comment

I don't know about that. It's a lot easier to say, "If you want to operate in Mississippi, you can't discriminate between customers on these grounds" than it is to also say, "Oh, and by the way, you have to operate in Mississippi." As I said before, the insurance industry doesn't operate under the same rules as most industries -- mainly because they have that antitrust exemption -- but I'm saying that a state may or may not have any power to force an insurance company to operate within its borders. I was thinking more on a Federal level- if a state can force an insurance company to provide coverage to all zip codes within its borders or none at all, then couldn't the Feds force an insurance company to provide coverage for all of the states or none at all? Don't forget that we now have Trent "friend of the working man" Lott on our side, and he at least is trying to give the appearance that he is battling the insurance industry...

Author

Rico

Date

2007-02-21T21:41:41-06:00

ID

91372

Comment

Jindal goes after their antitrust exemption. makes some sense. If he wins governorship and does a good job, he might be a future star in the Republican Party. http://www.dailyworld.com/apps/pbcs.dll/article?AID=/20070222/NEWS01/702220304

Author

Kingfish

Date

2007-02-22T10:52:56-06:00

ID

91373

Comment

Rico, Insurance is generally a STATE responsibility, NOT a Federal one. In fact, the McCarran-Ferguson Act of 1945 exempts insurers from federal regulation to the extent that state governments do regulate the industry. This basically means that if the states don't regulate insurance effectively, THEN the Federal government can take over regulation. Having said that, the Federal government does have some options. Namely, they set up programs that supply capital to private insurers who otherwise cannot afford to cover certain distasters (flood, crop damage, coastal windstorm, etc.). Obviously the latter was relevant here. I haven't had time to look, it may be time to look at the federal beach and windstorm coverage plan. Having said that, as I said earlier, I'm all for placing restrictions on storm surge-prone coastal areas. For the lowest areas, the government should have outright bans on weakly-to-moderate-strength structures intended as a permanent fixture on the property and/or those permanently fixed structures in the lowest of those areas should be put under some damned strict building and design codes. That or else we should ante up gazillions of dollars to build a 50-ft high seawall along the coast.

Author

Philip

Date

2007-02-22T10:55:12-06:00

ID

91374

Comment

BTW, could the state legislature create, for insurance purposes, a special district comprising at least the three coastal couties - namely a high risk zone for wind and water damage? If that's the case, maybe there should be a gradiation of these zones. Say, Zone A is for the 3 coastal counties, Zone B for the next 3 counties inland, Zone C for the next one or two tiers of counties beyond that (Hattiesburg and Laurel would be in this particular zone). But, if this happens, we'd likely need similar legislatively-mandated insurance zones for areas at catastrophically high risk flood-prone areas too (The Delta immediately comes to mind). Furthermore, probably every other flood plain in the state that is downstream from a huge reservoir - dam failure risk you know. That'd probably put most of the city of Jackson subject to the 79 flood in this hypothetical special flood district too). Do you think it's worth it or would you rather have some other legislative mechanism in place (or even none at all)?

Author

Philip

Date

2007-02-22T11:13:09-06:00

ID

91375

Comment

I can see a time where it becomes illegal for insurance companies to discriminate based on where somebody lives- the whole idea behind insurance is spreading the risk among many. Because our state does regulate insurance -- including the rate that can be charged -- and because our insurance commissioners are elected, many companies are unable to get what they believe to be an "actuarially-sound" rate. In other words, they would write on the Coast if they could charge the rate their number crunchers have decided is necessary based on computers and storm modeling. The problem is that no insurance commissioner would approve such a likely exorboriant rate. For instance, Mississippi's windstorm pool asked for an "actuarially-sound" 400% rate increase for personal property and were given a 90% rate increase. Is the 90% a bitter pill for the insureds? It sure is. But it is also a bitter pill for any insurance company that thinks it needs 400% and only gets 90%. Newt

Author

Newt

Date

2007-02-22T12:33:11-06:00

ID

91376

Comment

could the state legislature create, for insurance purposes, a special district comprising at least the three coastal couties - namely a high risk zone for wind and water damage? The Mississippi Legislatute did after Camille when NO insurance companies were writing ANY kind of property insurance on the Coast. In the late 1980s, enough companies were writing property insurance on the Coast -- just not wind -- that the Legislature limited the group to only writing wind (and hail). Currently, both houses have passed their own versions of new legislation to change the "wind pool" to try and address both consumer and company concerns that arose after Katrina. Regarding water damage, as long as flood coverage is offered by the federal government, no private or state insurer will start offering it. Now, if the federal goverment would charge the National Flood Insurance Program to the National Natural Catastrophe Insurance Program and provide flood, windstorm, and earthquake coverage, then we would be able to share the risk with MANY so a single disaster (a Coastal hurricane) would have the backing of the insureds in California (earthquake), Oklahoma (tornado), and South Carolina (hurricane) so the risk would truly be spread among the many. Newt

Author

Newt

Date

2007-02-22T12:36:50-06:00

ID

91377

Comment

For all of the reasons people have argued above (and they are good arguments) I think it is becoming a consensus in D.C. that there will have to be a federal move soon regarding propoerty insurance. For one thing, many of the mortagages are backed by a semi-government agency and individual states cannot create a pool large enough on their own. Frankly, this is also going to be fed by the risk of terrorism and the fear agencies have of writing policies for commerical structures in large cities. I guess we shall see.

Author

Willezurmacht

Date

2007-02-22T12:40:06-06:00

ID

91378

Comment

Newt, agreed on the need to create a comprehensive Catastrophic Natural Disaster Insurance Program. Even here, we'd still have to deal with matters like *What level of damage (in the widespread sense) should constitutes 'catastrophic? More specifically, when the feds transfer funds to the private insurers to cover hurricane damage, should federal coverage only apply in Cat 3 and above? Or should it cover any storm with Trop Storm force winds (if so, this would include many Nor'easters)? *What disasters should be included (should we expand, contract, or keep as-is the types of disasters covered)? Furthermore, could this be funded by "catastrophe bonds" (such investments do exist)? What about access to foreign capital to fund those bonds? Would the East Asian countries allow us to buy their catastrophe bonds on equal terms as we would? (East Asia's natural hazzard portfolio combines the weather disasters expreienced on our East and Gulf Coast with the geological hazzards of our Western States. So if anything, East Asia is even an even bigger risk than North America).

Author

Philip

Date

2007-02-24T11:25:35-06:00