Consumer Groups Allege Insurance Wind Models More Politics Than Science

April 6, 2006

  • April 6, 2006 at 3:39 am
    Dan says:
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    These people are obviously commies. If they think the insurers are charging too much, and making killer profits, they should a) invest in insurance companies or b) start an insurance company. Same goes with oil companies. They are owned by shareholders. If you think they\’re making a ton, become a shareholder & quit whining.

  • April 7, 2006 at 4:52 am
    Tim says:
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    I’m not a particular fan of RMS, but the model proved spectacularly wrong last year. So what do they do – they revise it. No problem with that, they got it wrong they fix it.

    Models are tools used by insurers to help them predict their exposure to natural events. Based on those predictions insurers decide how much premium to charge – NOT the modellers. Look at the number of insurers who took a massive hit last year, if they want to continue providing insurance they need to recoup their losses â€â€Ŕ or risk going out of business. Basic economics â€â€Ŕ if not enough premium comes in, they cannot pay claims.

    Its pure headline grabbing by the consumer groups to blame the modellers. They are either galactically stupid or they don’t know squat about insurance. Maybe a better question would be to ask: what are the political aspirations of the leaders of these consumer groups?

  • April 6, 2006 at 6:06 am
    Joe says:
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    Perhaps these consumer groups with all their backing would be perfectly happy to provide quota share reinsurance at lower rates than the models indicate. All their excess profit could go into their coffers to provide more wise statements.

    The models, however must have had problems. Isn\’t the insurance industry at a net loss while using these models?

  • April 7, 2006 at 10:15 am
    ATS says:
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    Does no one else recognize the name Bob Hunter? I remember him from the late 1980s, when I was still working as an actuary.

    Of course it makes no difference if RMS is outside the scope of regulators. The profits of the companies that use RMS are inside that scope. But I confronted Hunter with such an obvious point before, and all he did was laugh. My associates at the time had similar experiences.

    He\’s quite willing to make as many problems as he can, as long as the insurance companies wind up taking the blame for the problems he largely created. He as much as said so at one CAGNY meeting (c. 1988?) I attended.

  • April 7, 2006 at 11:09 am
    Roger Poe says:
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    Even post modeling property damage facts can fool the premium paying public.

    4-7-2006

    A new twist to State Farm and Allstate\’s hurricane Rita damage UNDER-assessment schemes is to claim that wind debris damage to asphalt / fiberglass roofing system shingles, is not really damage they insure for.

    They now claim that when wind borne debris (sand, pebbles, vegetation, etc.) strips off the granular surface component, sometimes even down to the fiberglass matting, that that abrasive striping of the shingle…is not (wink-wink) reallllyy shingle damage.

    Another (untrue) claim they both are spreading, (Allstate through Pilot Claim Service adjusters), in and around the Beaumont Texas area, is that the tar sealant bond that keeps one shingle attached to the one below it, is also not (wink-wink) realllyy shingle damage.

    As wind loads break apart the (factory engineered and wind warrantied) tar sealant bond, and leaves behind debris under the shingles, the heat from the sun commonly causes the debris to become attached to the tar and commonly prohibits the shingles from (thermally) sealing back together…an obvious danger to the home / business structure, and the inhabitants of the structure…especially along the hurricane prone Gulf Coast.

    To help Allstate, Pilot Claim Service, and State Farm (permanently?) correct their shingle wind damage assessment errors, voluntarily reopen untold (thousands?) of claims incorrectly assessed, and to help the general public receive a reasonable shingle roofing system wind damage assessment review from insurance adjusters, the following fresh technical information, received from a credible and proven shingle manufacturer, is provided for the general public;

    TECHNICAL BULLETIN – HURRICANE EXPOSURE

    The process of detecting and evaluating damage from hurricane exposure is subjective at best, and often everyone involved may offer a different assessment.

    Damage can range from wind uplift, shingle loss, broken sealant bonds, granule loss, external sources, and may not be readily apparent. However, even small amounts of damage can harm the surfacing material, leading to deterioration of the shingles months or years later.

    GRANULE LOSS
    Regarding damage to the embedded granule surfacing in the asphalt top coating, hurricane wind exposure can result in varying degrees of granule loss. Hurricane wind exposure loosens the granules, potentially allowing the granules to separate from the coating layer and wash off the roof.

    Without the granule surfacing, the asphalt top coating is exposed to ultraviolet radiation from ordinary sunlight and will eventually deteriorate, exposing the fiberglass substrate and creating a leak potential. If a shingle indicates outward damage, the underlying components may be compromised and affected to some degree.

    The extent of granule loss resulting from hurricane exposure is influenced by, but not limited to, the following:

    1. Age of the product.
    2. Force and duration of winds and wind driven rain.
    3. Type and amount of wind driven debris.
    4. Orientation and slope of the deck in relation to winds.
    5. Amount of foot traffic.

    BROKEN SEALANT BONDS
    When sealant bonds are broken due to hurricane winds, it is possible, but not likely, for shingles to reseal. The subsequent strength of resealing, if any, would not be as strong as the initial thermal bond and would be contingent on, but not limited to, the following:

    1. Age of the product.
    2. Time of year and amount of exposure to ambient temperatures.
    3. Length of time before shingles are exposed to subsequent high wind events.
    4. Orientation and slope of deck.
    5. Stress and strain on the shingles due to exposure to sustained high winds and/or deck movement.
    6. Number, placement, type, and length of fasteners.
    7. Contamination to the sealant bonds by dirt, debris, or other foreign substance.
    8. Condition of the underlying deck or underlying shingles if a roof over.

    In accordance with the terms of the limited warranty, there is no coverage for damage caused by hurricanes. Shingles in hurricane areas will continue to carry the limited warranty for manufacturing defects and remaining limited wind warranty. Any damage relating to conditions caused by a hurricane, including granule loss, breach of the seals, nail tears and other structural damage, will not be covered by the limited warranty or limited wind warranty at any time.

    TB-420 2/24/06
    ELK P.O. Box 500 Ennis, TX. 75120
    Toll Free – 1-866-355-8324 http://www.elkcorp.com
    __________

    Large premiums + large deductibles + large depreciation factors + untrue and irresponsible and life endangering claim loss damage assessments = Minimal claim loss payouts, and Grrrreat!!! 2003, 2004, 2005 profits…

    Too bad for some insurers that a thing called \’Market Conduct Examinations\’, periodically performed by insurance regulatory market conduct examination professionals, and others, is not going to kind to them, or to their market investment support…

    Think about that the next time you see a ad from an insurer that wants you to trust them with your family\’s welfare, and your money.

    Make sure they do not (cleverly) steal either…

    rogerpoegc@yahoo.com

    P.S. Fair insurers, and adjusters, exist.

  • April 7, 2006 at 11:47 am
    FLActuary says:
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    Even though Florida has a commission that approves models, the Office of Insurance Regulation asks 52 questions model use in a filing. If you don\’t answer to their satisfaction (and no company has yet succeed) then you\’re disapproved.

    The OIR has spent a couple of million dollars creating their own model but won\’t allow the modeling commission to look at it.

    These are the last dying breaths of a regulatory system that will die when Federal Charters become a reality. Once the big companies decide they\’ve had enough, it\’s over for state regulation.

  • April 7, 2006 at 1:38 am
    Big Insurance says:
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    Hunter is a charlatan who makes a living bashing the insurance industry. He is a one-man show, just like Barry Lind of the so-called \”Americans United for the Separation of Church and State\” – it\’s just him making a lot of noise.

    You may also remember he was the elected insurance commissioner who single-handedly ruined the Texas worker\’s comp market; and he was oneof the proponents of the auto rate roll-back in CA in the early nineties.

  • April 7, 2006 at 1:47 am
    Old insurance guy says:
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    Bob isn\’t about finding answers. Bob is only about finding problems and identifying evil. Everywhere he looks, evil seems to be present. There is no good in anyone or anything related to the insurance industry.

    I saw Bob speak once at an auto insurance report conference. That was when he lost all credibility with me. He came with a list of problems a mile long but not a single answer or ideas that might result in an answer.

    One of the worst presenters I have ever seen in a professional forum.

  • April 7, 2006 at 2:59 am
    Tom says:
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    The astonishing thing is that the media keeps calling cranks like these for comments, or runs their releases. The Bob Hunters of the world don\’t provide a product, they don\’t support employees and their families, they don\’t contribute a single product or service to help the lives of anyone on the planet, and they also don\’t offer to demonstrate how they would do it better. Just like Harvey Rosenfield in California in the Prop. 103 days – start your own company, run it according to the principles you are preaching, and let\’s see what happens.

  • April 7, 2006 at 3:21 am
    Underwriter says:
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    Is that consumer groups like this do nothing for the customer. Ultimately, the result is increased regulation at the state level (I am thinking of MA, PA, MN, MI, NC, NY, NJ and a host of other overregulated states) where Insurers can\’t reasonably do business because of the arbitrary rules that are put into place to \”control\” insurance companies.

    The states where customers have the best insurance at the lowest rates are those states with an open regulatory environment. Simple competition is the best way to guarantee lower rates and better insurance coverage for the consumer.

    The other amazing thing is that the average consumer is completely fooled by Hunter\’s squawking. Of course, the average consumer also believes that anything seen on the news is the whole truth and nothing but the truth. Then again, most people know more about what\’s happening between Tom Cruise and Katie whats-her-name than they do about their own insurance contract.



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