I thought (stupidly I find out) that insurance companies had rainy-day funds for catastrophic losses. I applaud NY for taking the lead in getting this set up. There’s no reason to not have reserves and no reason to tax them when properly designated. Good stuff; hope it works.
Let me start of by saying I hate insurance companies but if NY wants to pass a law that requires them to hold a reserve account for unexpected losses, they should require ALL companies to create a reserve account for unexpected losses. Why should we stop with just insurance companies? Give me a break.
If the law passes and insurance companies are required to have a catastrophe reserve account, Dinallo says:
“Consumers will see where the money they pay for hurricane protection goes. They will see if it is not enough and there is a need for higher premiums. And they will see if the reserve is large and untouched and can then question the need for higher premiums.”
WWWWWWHHHHHHHAAAAAAATTTTTTTTT?????? Shouldn’t a company be allowed to charge what they want for their product? Isn’t that what this country was built on? If I start a company and I’m required to have a “catastrophe reserve account” for unexpected losses, I don’t think my customers should be able to tell me to lower my prices because my reserve account has too much money in it. If I charge too much for my product, go to my competitor. If you’re worried about my services or how I do business, go to my competitor.
The DOI in NY needs to let insurance companies do business and charge what they want, where they want, and keep their nose out of it. The marketplace can fix this on it’s own.
Dinallo said “he believes people are willing to pay a relatively small amount to ensure that whoever does have a catastrophe loss is protected”. Does whoever mean any resident of NY would be bailed out by the rainy day fund, whether they have paid insurance or not? What about flood, which is excluded on policies? Would the rainy day fund pay flood losses for those who don’t purchase flood insurance? It seems another attempt to make those with less exposure fund and bail out the high exposure of others. It hardly seems fair for a working class homeowner in western NY to have to subsidize the multi-million eastern properties, which is where the exposure lies.
I’m just wondering how well this has really been thought out.
DC, to all government personnel and those who worship the state as their one true god, your statement is the most disgusting obscenity they can imagine. Don’t you know (sarcasm ahead) that individuals know nothing about their own needs and desires and need the gun of government at their head to achieve true happiness? Only government employees know how to manage billions of daily individual transactions; the marketplace is made up of people (yuk!) who are most familiar with their immediate situation-how do you expect them to know what’s best for them?
I can’t help but notice that Superintendent Dinallo’s pandering to the media lately, ostensibly in an effort to help consumers, actually is detrimental to consumers.
Dinallo finds fault with insurers who, when deciding whose homeowner insurance policy to renew, base their selection in part on whether a customer has more than one policy with them.
Shouldn’t customers that have multiple policies with one company stand out from those that only have one? It makes perfect sense. Repeat customers or multi-faceted customers of any organization almost always receive preferential treatment over the first time or limited customer -and that is as it should be. If you look across our economy you find evidence of this in every aspect of our daily transactions.
Fox example:
1. If I purchase cable television from a given company I pay x price, however, if I also purchase internet and phone I get a better deal.
2. If I buy a season ticket package to a sports venue I get a better price and more amenities than the person who buys tickets to only one event per year.
3. I happen to fly with one airline frequently, as a result I board the aircraft before the folks who rarely fly and I am made aware of discounted routes and seats that a non-member may not be aware of.
4. I get discounts at the grocery store that I frequent with a plastic ring on my car keys.
Companies always treat customers differently, as they should, and as we the consumer expect. It’s called capitalism. When government tries to step in and tell companies how to treat their customers they almost always get it wrong.
By interfering in the insurance marketplace, I and other loyal consumers are being put at a disadvantage. I have all of my policies with one insurer and you bet I want preferential treatment!
I think the Superintendent missed the mark in his zeal for headlines and I wish more folks like me would speak up and stop it before someone else in government tries to deny me the benefits of capitalism.
You would think the Superintendent of Insurance would better understand how the industry works.The industry funded the 9/11 losses with no problem. the industry funded the hurricanes of ’04 and ’05 with no problem.
If he wants to see homeowners premiums come down, why not require homeowners in hurricane target areas to protect their homes against same? Even in Florida, a large number of homes and businesses do not even have shutters, the best protection of all.
Hurricane losses are caused by poorly constructed buildings built in areas where they shouldn’t be, and being poorly protected as well.
In ’05 Hurricane Wilma, crossed S. Florida with top wind speeds perhaps approaching 110 mph, caused $21,500,000,000 in damage.
Why? Lousy construction, and lack of hurricane protection.
A recent survey of inhabitants of hurricane prone areas showed 88% have taken no steps to protect their homes.
But they still want low premiums.
Florida has attempted to set up a hurricane catastrophe fund to provide cheap reinsurance to insurers. After ’04 and ’05 it had to borrow $13,500,000,000 to pay it’s claims, it’s paying that back over 10 years.
It currently has $2,000,000,000 in the bank, but it’s liabilities from it’s reinsurance contracts total $27,500,000,000.
The state forces insurers to buy it’s reinsurance, but companies are so wary of it’s ability to pay, that they then buy reinsurance against the fund not being able to pay it’s losses.
Our new governer, Charlie Crist doesn’t care if he bankrupts the state government as long as he can look as if he’s doing something to protect us from those evil insurance companies.
Sounds like a reasonable thing to do. However, I can tell that unless the rules guarding this money is strictly set up, the next administration will want to use it for their pet projects. Happens all the time.
Insurance companies already have massive rainy day funds. We call it reinsurance. Because of differential tax treatment and risk appetite primary insurers often prefer to pay for access to that capital through reinsurance premium rather than accumulate it themselves.
As written the regulations will make hurricane insurance more expensive and less available. The contributions to the funds require all cat-related premium net of taxes and reinsurance to be put into the fund for 20 years. From an insurance company perspective, why would they do this? They get to take all the risk and have to delay reward for 20 years. They can get better risk-adjusted returns elsewhere. On top of that, this cat reserve is subject to premium tax and annual income taxes for 20 years. It’s a no-brainer. Smart companies will pass on coastal exposure.
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I thought (stupidly I find out) that insurance companies had rainy-day funds for catastrophic losses. I applaud NY for taking the lead in getting this set up. There’s no reason to not have reserves and no reason to tax them when properly designated. Good stuff; hope it works.
Let me start of by saying I hate insurance companies but if NY wants to pass a law that requires them to hold a reserve account for unexpected losses, they should require ALL companies to create a reserve account for unexpected losses. Why should we stop with just insurance companies? Give me a break.
If the law passes and insurance companies are required to have a catastrophe reserve account, Dinallo says:
“Consumers will see where the money they pay for hurricane protection goes. They will see if it is not enough and there is a need for higher premiums. And they will see if the reserve is large and untouched and can then question the need for higher premiums.”
WWWWWWHHHHHHHAAAAAAATTTTTTTTT?????? Shouldn’t a company be allowed to charge what they want for their product? Isn’t that what this country was built on? If I start a company and I’m required to have a “catastrophe reserve account” for unexpected losses, I don’t think my customers should be able to tell me to lower my prices because my reserve account has too much money in it. If I charge too much for my product, go to my competitor. If you’re worried about my services or how I do business, go to my competitor.
The DOI in NY needs to let insurance companies do business and charge what they want, where they want, and keep their nose out of it. The marketplace can fix this on it’s own.
Dinallo said “he believes people are willing to pay a relatively small amount to ensure that whoever does have a catastrophe loss is protected”. Does whoever mean any resident of NY would be bailed out by the rainy day fund, whether they have paid insurance or not? What about flood, which is excluded on policies? Would the rainy day fund pay flood losses for those who don’t purchase flood insurance? It seems another attempt to make those with less exposure fund and bail out the high exposure of others. It hardly seems fair for a working class homeowner in western NY to have to subsidize the multi-million eastern properties, which is where the exposure lies.
I’m just wondering how well this has really been thought out.
“The marketplace can fix this on it’s own.”
DC, to all government personnel and those who worship the state as their one true god, your statement is the most disgusting obscenity they can imagine. Don’t you know (sarcasm ahead) that individuals know nothing about their own needs and desires and need the gun of government at their head to achieve true happiness? Only government employees know how to manage billions of daily individual transactions; the marketplace is made up of people (yuk!) who are most familiar with their immediate situation-how do you expect them to know what’s best for them?
P Funk, great reply. My ribs hurt! I couldn’t have said it better myself. Have a great wekeend!
I can’t help but notice that Superintendent Dinallo’s pandering to the media lately, ostensibly in an effort to help consumers, actually is detrimental to consumers.
Dinallo finds fault with insurers who, when deciding whose homeowner insurance policy to renew, base their selection in part on whether a customer has more than one policy with them.
Shouldn’t customers that have multiple policies with one company stand out from those that only have one? It makes perfect sense. Repeat customers or multi-faceted customers of any organization almost always receive preferential treatment over the first time or limited customer -and that is as it should be. If you look across our economy you find evidence of this in every aspect of our daily transactions.
Fox example:
1. If I purchase cable television from a given company I pay x price, however, if I also purchase internet and phone I get a better deal.
2. If I buy a season ticket package to a sports venue I get a better price and more amenities than the person who buys tickets to only one event per year.
3. I happen to fly with one airline frequently, as a result I board the aircraft before the folks who rarely fly and I am made aware of discounted routes and seats that a non-member may not be aware of.
4. I get discounts at the grocery store that I frequent with a plastic ring on my car keys.
Companies always treat customers differently, as they should, and as we the consumer expect. It’s called capitalism. When government tries to step in and tell companies how to treat their customers they almost always get it wrong.
By interfering in the insurance marketplace, I and other loyal consumers are being put at a disadvantage. I have all of my policies with one insurer and you bet I want preferential treatment!
I think the Superintendent missed the mark in his zeal for headlines and I wish more folks like me would speak up and stop it before someone else in government tries to deny me the benefits of capitalism.
You would think the Superintendent of Insurance would better understand how the industry works.The industry funded the 9/11 losses with no problem. the industry funded the hurricanes of ’04 and ’05 with no problem.
If he wants to see homeowners premiums come down, why not require homeowners in hurricane target areas to protect their homes against same? Even in Florida, a large number of homes and businesses do not even have shutters, the best protection of all.
Hurricane losses are caused by poorly constructed buildings built in areas where they shouldn’t be, and being poorly protected as well.
In ’05 Hurricane Wilma, crossed S. Florida with top wind speeds perhaps approaching 110 mph, caused $21,500,000,000 in damage.
Why? Lousy construction, and lack of hurricane protection.
A recent survey of inhabitants of hurricane prone areas showed 88% have taken no steps to protect their homes.
But they still want low premiums.
Florida has attempted to set up a hurricane catastrophe fund to provide cheap reinsurance to insurers. After ’04 and ’05 it had to borrow $13,500,000,000 to pay it’s claims, it’s paying that back over 10 years.
It currently has $2,000,000,000 in the bank, but it’s liabilities from it’s reinsurance contracts total $27,500,000,000.
The state forces insurers to buy it’s reinsurance, but companies are so wary of it’s ability to pay, that they then buy reinsurance against the fund not being able to pay it’s losses.
Our new governer, Charlie Crist doesn’t care if he bankrupts the state government as long as he can look as if he’s doing something to protect us from those evil insurance companies.
http://www.grandcanyonquotes.com
Sounds like a reasonable thing to do. However, I can tell that unless the rules guarding this money is strictly set up, the next administration will want to use it for their pet projects. Happens all the time.
The part I like is readjusting the tax structure to not penalize insurance companies for looking ahead. I can get behind something like that.
Insurance companies already have massive rainy day funds. We call it reinsurance. Because of differential tax treatment and risk appetite primary insurers often prefer to pay for access to that capital through reinsurance premium rather than accumulate it themselves.
As written the regulations will make hurricane insurance more expensive and less available. The contributions to the funds require all cat-related premium net of taxes and reinsurance to be put into the fund for 20 years. From an insurance company perspective, why would they do this? They get to take all the risk and have to delay reward for 20 years. They can get better risk-adjusted returns elsewhere. On top of that, this cat reserve is subject to premium tax and annual income taxes for 20 years. It’s a no-brainer. Smart companies will pass on coastal exposure.