This IJ article doesn’t say anthing about state windstorm associations. I’m a Texas agent and have numerous properties insured for windstorm through the Texas Windstorm Insurance Association/TWIA (created by the Texas Legislature as a last resort for wind coverage) and separate fire and flood policies. Most of the homes I insure thru the TWIA are elevated – first floors are about 14 or 15 feet above ground level. Having wind and flood coverages under one policy would alleviate problems that I have when a hurricane hits. That is, we have wind damage to the roof and siding but, erosion damage to the stilts which is covered by their flood policy. This would let the insured deal with one adjuster, have one deductible and there wouldn’t be an argument between carriers as they would be paying the losses regardless of whether it is wind or flood.
The sad reality is that the only way to keep premiums down may be to make building codes so strict that only wealthy people can afford homes close to the coast.
The TWIA is currently horribly underfunded so, the individual carriers are the ones really on hook for the losses which they fund by increasing premiums on their home policies regardless of where the insured lives. I can’t think of anything the federal government does well but, letting it administer both the wind and flood risk might be better than the current alternatives.
Well Stat guy I hope you also don’t live in Georgia, Alabama, Texas, California, Mississippi, North Carolina, South Carolina, Deleware, New York, Connecticut, Rhode Island, Pennsylvania, or in any other state in the US because those states may have hurricanes but what about all the tornadoes in other states, or flooding, or earthquakes? I guess everyone that lives in a state that has the potential for a catastrophic even should not have insurance. Maybe you should move to another country that does not have any risk!
Kathy, I live in Texas where we have both hurricanes and tornadoes. In fact, a tornado touched down about 60 miles south of my home last night and stayed on the ground in a northeast direction for over an hour – traveled about thirty miles. I don’t yet know what class F1-F5. I’m sure that everything in its path is badly damaged. However, the path of destruction was small when compared to a hurricane. We also know what areas a hurricane can hit and we don’t know about tornadoes so, an actuarial comparison doesn’t exist. In Texas, for tornados we use only historical loss data to work up rates for different areas of the state – no future forecasting models. With hurricane’s actuaries feel comfortable enough with future forecasting models to use them in rate equations.
The problems with funding windstorm insurance isn’t the issue here. The issue is ‘do we want the federal government or NFIP to insure BOTH wind and flood damage.’ I am uncomfortable with letting the federal government do anything as they never do a good job of it and the cost is always unacceptable. You may hate insurance companies but, they do a heck of a better job from a cost effectiveness than state or federal government programs. We should all agree that we don’t need more situations where there is an argument as to whether the damage is wind or flood – only the insured suffers. I would rather put this in the hands of the state governments – not the federal government. At this point, I am not going to even try to address how to fund the program. Let the TWIA windstorm adjuster access the flood damage portion, send the report to the NFIP and have them pay the insured for the flood portion of the damage. Of course, even that has its problems.
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YOU JUST DO NOT GET IT…..
This IJ article doesn’t say anthing about state windstorm associations. I’m a Texas agent and have numerous properties insured for windstorm through the Texas Windstorm Insurance Association/TWIA (created by the Texas Legislature as a last resort for wind coverage) and separate fire and flood policies. Most of the homes I insure thru the TWIA are elevated – first floors are about 14 or 15 feet above ground level. Having wind and flood coverages under one policy would alleviate problems that I have when a hurricane hits. That is, we have wind damage to the roof and siding but, erosion damage to the stilts which is covered by their flood policy. This would let the insured deal with one adjuster, have one deductible and there wouldn’t be an argument between carriers as they would be paying the losses regardless of whether it is wind or flood.
The sad reality is that the only way to keep premiums down may be to make building codes so strict that only wealthy people can afford homes close to the coast.
The TWIA is currently horribly underfunded so, the individual carriers are the ones really on hook for the losses which they fund by increasing premiums on their home policies regardless of where the insured lives. I can’t think of anything the federal government does well but, letting it administer both the wind and flood risk might be better than the current alternatives.
Well Stat guy I hope you also don’t live in Georgia, Alabama, Texas, California, Mississippi, North Carolina, South Carolina, Deleware, New York, Connecticut, Rhode Island, Pennsylvania, or in any other state in the US because those states may have hurricanes but what about all the tornadoes in other states, or flooding, or earthquakes? I guess everyone that lives in a state that has the potential for a catastrophic even should not have insurance. Maybe you should move to another country that does not have any risk!
Kathy, I live in Texas where we have both hurricanes and tornadoes. In fact, a tornado touched down about 60 miles south of my home last night and stayed on the ground in a northeast direction for over an hour – traveled about thirty miles. I don’t yet know what class F1-F5. I’m sure that everything in its path is badly damaged. However, the path of destruction was small when compared to a hurricane. We also know what areas a hurricane can hit and we don’t know about tornadoes so, an actuarial comparison doesn’t exist. In Texas, for tornados we use only historical loss data to work up rates for different areas of the state – no future forecasting models. With hurricane’s actuaries feel comfortable enough with future forecasting models to use them in rate equations.
The problems with funding windstorm insurance isn’t the issue here. The issue is ‘do we want the federal government or NFIP to insure BOTH wind and flood damage.’ I am uncomfortable with letting the federal government do anything as they never do a good job of it and the cost is always unacceptable. You may hate insurance companies but, they do a heck of a better job from a cost effectiveness than state or federal government programs. We should all agree that we don’t need more situations where there is an argument as to whether the damage is wind or flood – only the insured suffers. I would rather put this in the hands of the state governments – not the federal government. At this point, I am not going to even try to address how to fund the program. Let the TWIA windstorm adjuster access the flood damage portion, send the report to the NFIP and have them pay the insured for the flood portion of the damage. Of course, even that has its problems.