Monday, June 13, 2011

Problems with the National Flood Insurance Program

The National Flood Insurance Program, run by FEMA, comes up for renewal again in September. There have been several lapses in the program in the past few years because it gets used as a political football. Members of congress who are NOT in flood-prone states hold up their votes to force others to support their particular bills and projects. Congress is trying to start work early on the process, but there are several obstacles.

The biggest obstacle is that the whole FEMA Flood Insurance program, both here in New York and around the country, has been losing money for years, where it is supposed to be self-supporting. Naturally that means higher rates but that is not a very popular idea with members of congress.

Another area they have been looking at is whether catastrophic windstorm (hurricanes) should be added to the flood insurance program. Hurricanes are not so much of an issue in the Midwest where they are experiencing record flooding because of record snows this past winter. But here on Long Island and all along the east coast, hurricanes are a HUGE issue and something that needs to be addressed.

So some politicians want to add wind coverage to the flood insurance policy. But others are against it for several reasons. First, it is available in the private market and our system of government is based on private business wherever possible. But also, if they have been losing money on the flood insurance, chances are they would just lose even more money if you added windstorm coverage.

Today the GAO (General Accounting Office) issued a report that severely criticized the management of the National Flood Insurance Program, and says that if they don't make significant changes, they will never become profitable. So again, the fear is that if they were to add windstorm coverage, the program would lose even more money.

I just hope they figure it out quickly enough that the basic program is renewed in September.

Thursday, February 17, 2011

Recent Changes in New York Insurance

It's been a while but the insurance marketplace has been quiet. Still, there are a couple of new items to report.

Across New York state, a law was passed a while back making it illegal to be using anything other than a hands-free phone while driving. I don't know how it is in the rest of N.Y. but here on Long Island it seems that almost half of the drivers going by my office every day are on a hand-held phone. But now the law has been given more teeth. As of yesterday, a cel phone violation will now add two points to your NY driver's license and motor vehicle record. That means that if you get a couple of other tickets, a cel phone violation could be the difference that causes your license to be suspended (for accumulating more than 11 points in an 18 month period). Insurance companies will also be more likely to charge for cel phone violations now, although New York car insurance companies use a different point system.

Research has shown that driving while talking on a hand held phone gives you about the same chance of having an accident as driving while under the influence of alcohol. So this is a real issue. Of course, so are other distractions such as applying makeup, texting (possibly the worst) or reading the paper while drinking coffee. The bottom line is that when you get behind the wheel you are now in a potentially deadly weapon, and we all need to be more careful.

Meanwhile in the Long Island homeowners insurance market, if anything it has eased up a little, though the larger carriers continue to cancel and non-renew some homeowners policies, especially along the south shore in Suffolk County. But some new, smaller insurance carriers have come into the market, and competition has caused some pricing to drop. So if you had to buy expensive homeowners insurance because you were canceled or you bought your waterfront home in the past couple of years, you might want to contact your agent to see if he or she can shop around for you a little.