Saturday, September 23, 2006

Long Island Homeowners and Flood Insurance Issues, Continued

It's been a few weeks since I had a chance to write a post. Mostly it's because we have been renovating my office. We have had two or three work crews at a time here daily. Now it's getting down to the trim and painting, so it's just a little slower. You can see pictures of how it's coming out at my other blog,

Anyway, my being busy has not stopped things from happening in the Long Island homeowners insurance and flood insurance market. Since I last wrote, several more companies, some of them fairly large players, have either announced that they will no longer be writing homeowners insurance either here on Long Island or, in some cases, in New York State.

Part of the problem is that here on Long Island is where the largest concentration of high valued homes exists. So many companies tried to write lots of business here to increase their cash flow, but are now in panic mode because after seeing what happened with hurricane Katrina, they now realize that they have a big exposure here that is not offset by customers in other areas that are not subject to 'coastal' issues.

For instance, it's not that people in upstate New York never have claims. And they DO have 'catastrophic' claims using the insurance meaning, which refers to something that affects a lot of people all at once, as opposed to a fire at someone's house, which might melt some siding on the house next to it, but generally does not affect a whole area.

In some upstate counties, for instance, they can have major ice storms that damage a lot of houses. But it's still not nearly the same as here on Long Island, because the houses tend to be much further apart (less concentrated) in most upstate areas, and the values are lower. As we all know, a house that sells for $450,000 here can still be had for $200,000 in most other parts of the country, maybe even less in some.

Interestingly, some of these areas that you would not expect have flood issues as well. Newsday a couple of weeks ago had an article about a number of people who live in Pennsylvania, along the Delaware river, just 'downstream' from the reservoir system that provides water to New York City. It seems that because of droughts that have occurred in the past few years, the water people now try to keep the reservoirs at 100% of capacity. But the flip side of that is when it rains a lot, BILLIONS of gallons of water overflow the reservoirs and have been creating flooding problems along the Delaware river!

There are a lot of post-Katrina changes coming to the Federal Flood Insurance program through FEMA, and some of them won't be pleasant for those living in primary and secondary flood hazard areas. More to follow on that, but in the meantime if you have questions, you can contact us through our web site at