| "Prediction is very hard, especially when | | | | non-accessible. Thus, more scrutiny not less |
| it's about the future." Yogi BerraGiven the | | | | has been called for.But deregulation has also |
| focus on the recent one-year anniversary of | | | | brought about insurance products sold |
| Hurricane Katrina by the media and government | | | | worldwide as investments and annuities and |
| officials and its label as the most costly | | | | reinsurance companies which provide |
| catastrophic disaster in United States | | | | catastrophic coverage for domestic insurers |
| history, there has been little focus on the | | | | primarily are located overseas. Therefore, in |
| nationwide impact the property and casualty | | | | a global economy, federal oversight is far |
| insurance industry has started to impart on | | | | more necessary than in the past. Leaving |
| homeowners and businesses in a post-Katrina | | | | global oversight up to state regulators is |
| world.There has been serious discussion about | | | | arguably negligent given the ramifications of |
| reforming U.S. insurance laws in the U.S. | | | | lack of coverage during a catastrophe.The |
| Congress since 2004, before four hurricanes | | | | insurance industry itself has been |
| battered the Florida coast and well before | | | | campaigning for some type of legislative |
| the Katrina and Rita storms hit the Gulf | | | | reform to provide for a federal catastrophic |
| Coast in 2005. However, the insurance | | | | fund which would subsidize insurers in cases |
| industry since Katrina is now not only | | | | of terrorism and natural catastrophes. The |
| fighting hundreds of individual and class | | | | American taxpayer and consumer have gotten |
| action lawsuits in Mississippi and Louisiana | | | | their fill of that, however, where the |
| in the wind v. water debate, but also | | | | Federal Emergency Management Agency (FEMA) |
| advocating change in the event of future | | | | has been and continues to pay out damages to |
| catastrophic events.The McCarran-Ferguson | | | | the Gulf Coast states and primarily the City |
| Act, enacted in 1945, delegated sole | | | | of New Orleans for rebuilding costs, with |
| enforcement of insurance regulations to the | | | | FEMA's National Flood Insurance Program |
| states, where it was believed better | | | | (NFIP) to homeowners and businesses and for |
| oversight would take place rather than | | | | FEMA housing costs for the displaced.But an |
| federal government mechanisms. However, state | | | | unexpected phenomenon followed the 2005 |
| regulators are not law enforcement agencies | | | | hurricane season and is primarily fueling the |
| and do not have the benefit of the arm of the | | | | fires for insurance reform and that is the |
| federal government in cases which are beyond | | | | record high premium rate hikes on homeowners |
| their means. Now, many state insurance | | | | as well as commercial property policies. In |
| commissioners, members of the Congress as | | | | addition, hundreds of thousands of policies |
| well as consumer advocacy agencies believe | | | | are being dropped and non-renewed by the |
| that the whittling away of consumer | | | | country's two largest insurance companies, |
| protections over the years and recent | | | | namely State Farm Insurance Co. and Allstate |
| staggering premium hikes, with little public | | | | Insurance Co., from the Gulf Coast all the |
| disclosure, builds a case for federal | | | | way up to the tip of Maine.Even more |
| insurance legislation and industry | | | | unexpected, however, were renewal denials for |
| reforms.Since 1945 the insurance industry has | | | | inland properties for policyholders in the |
| enjoyed an antitrust exemption and the | | | | Northeast including New York City, where |
| viability of that rule has been seriously | | | | property owners have never even previously |
| discussed and revisited by the Congress. | | | | filed a claim for property damage. With |
| There have been state accusations of price | | | | premiums on the Gulf Coast having at least |
| fixing and price gouging along with collusion | | | | doubled since 2005, thousands of dollars have |
| in the industry leaving consumers with little | | | | been added to mortgage loans. In some cases, |
| information about their homeowners and | | | | many homeowners policies were not renewed at |
| business property policies, with only the | | | | all, preventing homeowners from obtaining |
| civil or criminal courts left for recourse. | | | | mortgages or rebuilding at all.With insurers' |
| It is argued that the antitrust exemption | | | | withdrawal from writing homeowners policies |
| only fuels such a scenario.The proposed | | | | throughout regions of the U.S. and gutting |
| National Insurance Act of 2006 (S.B. 5209) | | | | those with less and less coverage for those |
| introduced by the Senate Banking Committee on | | | | in place, the industry believes it will be |
| July 11, 2006, would allow insurers to be | | | | able to stay healthy. Astonishingly, in 2005 |
| licensed under a federal umbrella license, to | | | | it made a record profit of $45 billion |
| choose between federal or state regulation | | | | post-Katrina and after four storms in 2004 it |
| and to do business in any state without need | | | | realized a profit of $38 billion.The models |
| of state licenses. The U.S. Department of the | | | | associated with risk management amongst |
| Treasury would then have jurisdiction to | | | | insurers are also changing. The 100-year |
| regulate such national insurers. Arguments | | | | average of history for forecasting future |
| against such an arrangement cite more endless | | | | hurricanes, for example, is presently being |
| bureaucracy and red tape with fears that | | | | revised. And as those methods of calculations |
| individual states would not be equally | | | | become murkier, homeowners can hardly feel |
| treated.Alternatively, the State | | | | safe or comfortable when purchasing new |
| Modernization and Regulatory Transparency | | | | properties. There are also several states |
| (SMART) Act introduced in 2004 addresses | | | | which only allow for the issuance of property |
| market conduct, licensing and antifraud data | | | | insurance based solely upon a consumer's |
| exchanges but has failed numerous times to | | | | credit history and income which makes it far |
| move through the legislative process. It | | | | more difficult for the working class consumer |
| would leave regulation up to the states but | | | | to be able to purchase insurance.Over the |
| to comply with uniform standards without | | | | next year, 43% of the U.S. population which |
| federal oversight. The attempt to "modernize" | | | | covers 18 states can expect their policies to |
| the regulatory framework of the insurance | | | | either be dropped by their insurance carriers |
| industry has become synonymous with | | | | or have their premiums escalate between 20% |
| deregulation and appears that resistance on | | | | and 100%. And for that reason alone it might |
| both sides of the argument makes reform more | | | | be time to reel in an industry which not only |
| and more insurmountable along with immense | | | | is in business to make a profit, but also has |
| struggles to provide sufficient delivery of | | | | a moral obligation to help protect |
| adequate insurance for property owners.The | | | | communities nationwide and such becomes |
| repeal of the McCarran-Ferguson Act has also | | | | necessary in the face of absolute |
| caught the attention of the Senate Judiciary | | | | destruction.Copyright ©2006 Diane M. |
| Committee which held a hearing on the issue | | | | Grassi |
| on June 27, 2006 for the first time since | | | | |
| 1994, precipitated by numerous complaints of | | | | Contact: Diane M. Grassi is a freelance |
| less and less public disclosure of | | | | columnist, reporting and writing commentary |
| information and devices used for premium | | | | on current events of the day providing honest |
| calculations. Such has impeded consumers from | | | | and often politically incorrect assessments. |
| making a proper decision when purchasing | | | | From U.S. public policy to Major League |
| policies. Travis Plunkett of the Consumer | | | | Baseball, she is an eclectic thinker, and |
| Federation of America (CFA) testified that | | | | demanding of her readers to reflect on their |
| "Insurers want competition alone to determine | | | | own thinking patterns from an alternative |
| rates, they say. How about a repeal of the | | | | perspective. Whether you agree with her or |
| McCarran-Ferguson Act to test their desire to | | | | not, Diane M. Grassi will have you coming |
| compete under the same rules as normal | | | | back to note her opinions, and if at best she |
| American businesses?"The CFA has also called | | | | wakes you up, then her goal will have been |
| for regulation to ensure consumers have | | | | accomplished.Ms. Grassi is featured with the |
| availability of enough information in order | | | | online publications: New Media Journal.us; |
| to compare pricing of policies between | | | | American Chronicle; Mich News.com; Opinions |
| insurers in order to make informed decisions. | | | | Editorials; the Conservative Voice; Renew |
| Unlike the way most consumer service products | | | | America .us; Liberty Watch Magazine as well |
| are purchased, insurance costs are based upon | | | | as many others. She also writes regular |
| a non-finite uncertain condition to happen | | | | columns on Major League Baseball where she is |
| some time in the future. And consumers must | | | | a featured online columnist with The Diamond |
| rely solely upon the agent, especially when | | | | Angle Baseball Ezine and Sports-Central.org. |
| actuarial tables and insurance models are | | | | Ms. |