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State Farm will increase insurance rates 10 to 12 percent in coastal counties
Published: Friday, October 01, 2010, 8:00 AM Updated: Friday, October 01, 2010, 10:22 AM
Jeff Amy, Press-Register Jeff Amy, Press-Register
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State Farm Fire and Casualty Co. said Thursday that it would increase rates by an average of 10 percent to 12 percent for most Mobile and Baldwin policyholders.
Statewide, including the two coastal counties, customers will pay an average of 8.4 percent more.
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The Alfa Mutual Insurance group, the state’s second-largest property insurer, raised rates statewide by an average of 18 percent on Sept. 1. Allstate Indemnity Co., the largest branch of the state’s No. 3 homeowners insurer, raised rates by a statewide average of 9.9 percent on Sept. 13.
The rate changes continue a trend that has seen prices for most Alabama homeowners insurance far outpacing the rate of inflation.
The increases were reviewed by both in-house and contract actuaries and “found to be necessary,” said Ragan Ingram, chief of staff for Alabama Insurance Commissioner Jim Ridling. The Insurance Department must approve such changes in advance.
Effective Nov. 1, State Farm will impose an average increase of 9.9 percent in areas south of Interstate 10 in Mobile County and in areas generally west and south of U.S. 98 in Baldwin County, the company said. For most of the rest of the two counties, the increase will be 11.9 percent.
State Farm has more than 40,000 property policies in the coastal counties, although that includes renters, condominium and other types of policies.
Spokesman David Majors said the rate increases cover projected costs, based on past trends.
“Our overall claims in Alabama have increased,” he said, both in number and in average cost.
Coastal insurance rate increases
State Farm rate history:
* 2008: 12 percent to 18 percent increase in Mobile and Baldwin counties; 0.9 percent decrease statewide.
* 2009: No change in Mobile and Baldwin, 19.1 percent increase statewide.
* 2010: 10 to 12 percent increase in Mobile and Baldwin, 8.4 percent increase statewide.
Alfa rate history:
* 2008: No change.
* 2009: 6.5 percent to 16.6 percent in Mobile and Baldwin, 5.8 percent to 6.5 percent statewide.
* 2010: 18 percent statewide.
Allstate Indemnity rate history:
* 2008: 9.9 percent statewide.
* 2009: No change.
* 2010: 9.9 percent statewide.
Sources: Press-Register files, Alabama Department of Insurance
Spokesman Jeff Helms said Montgomery-based Alfa has suffered more losses from inland tornadoes and windstorms, prompting its rate change.
“We have seen an increased pattern of very severe spring storms,” Helms said.
Statewide, homeowners insurance has been expensive, compared to national averages. The typical Alabama policyholder paid $904 for one year’s coverage in 2007, the most recent data available. That was 12th highest among states. Nationwide, the average house cost $822 to insure.
There’s no data available for how much insurance costs along the Alabama coast, but premiums are known to be higher.
Rate increases had paused in 2007 after steep increases following Hurricane Ivan in 2004 and Katrina in 2005.
A few State Farm policyholders may get breaks. The company said that it would increase its discount for combining auto and homeowners policies from 20 percent to 25 percent.
Policyholders who can’t or don’t buy wind and hail coverage from State Farm will also get breaks. Non-wind homeowners policyholders north of Interstate 10 in Mobile County or generally north and east of U.S. 98 in Baldwin County would only pay 31 percent of the face value of a homeowners policy, down from 40 percent. Renters and condo unit owners also would get bigger breaks.
“I don’t know why State Farm is doing this,” said Earl Janssen of Foley. Janssen, a State Farm policyholder, is a member of the Homeowners’ Hurricane Insurance Initiative, a group that lobbies for lower insurance rates.
Janssen said that he pays $3,300 a year right now to cover his 2,000-square-foot house. Janssen carries a $5,000 deductible for all other risks than wind, meaning he would recover nothing from a small theft loss, for example. On the hurricane part of the policy, he has a 2 percent deductible.
“We’ve had no damage or hurricanes in the last few years here,” Janssen said. “Their profits have gone up.”
State Farm, based in Bloomington, Ill., posted a $777 million profit in 2009, compared to a $542 million loss in 2008.
Majors said that State Farm has found that the number of claims and the cost of settling each claim both go up during recessions, saying that’s one factor that may have contributed to the increase.
“The homeowners line of business has been a challenging line of business for the insurance industry as a whole in terms of profitability,” said Alfa’s Helms.
Friday, October 8, 2010
Friday, July 2, 2010
Premiums for new High Risk Health Pool...
Here.
President Barack Obama's new health coverage for uninsured people with health problems won't be cheap -- monthly premiums as high as $900, administration officials said.
Prices will vary by state and type of coverage from a low of $140 a month to as much as $900, said Richard Popper, deputy director of a new insurance office at the federal Health and Human Services department. Officials provided details of the plan, which starts enrolling people Thursday.
The price range is so wide because premiums will be keyed to standard individual health insurance rates in each state, which can differ dramatically because of medical costs and the scope of coverage. Independent experts estimate premiums will average around $400 to $600 a month. Younger people will pay less.
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"There are going to be meaningful premiums that are going to be required to stay in this plan ... in the hundreds of dollars,'' said Popper, with the Office of Consumer Information and Insurance Oversight.
Despite the cost, consumer advocates are urging uninsured people with health problems to sign up soon, because they cannot be turned away for medical reasons. Family members may be able to help with premiums.
The Pre-Existing Condition Insurance Plan will start taking applications Thursday in many states, the rest by the end of the month. Coverage will be available as early as August 1.
Consumers can go to a new government website, HealthCare.gov, to find out about the program and other coverage options in their state. Twenty-nine states and Washington, D.C., will administer their own plans. The federal government will run the program in the remaining 21 states.
The new plan is a stopgap for vulnerable people locked out of the private insurance market because of medical problems. It's intended to remain available until 2014, when core health care overhaul provisions take effect. At that time, insurers will be barred from turning away people in poor health, low- and middle-income households will get subsidized coverage, and most Americans will for the first time be required to carry health insurance.
To qualify for the pre-existing condition plan, people must be uninsured for at least six months and have been turned down for coverage by a private insurer because of a medical problem. U.S. citizens and legal residents are eligible.
The biggest question hanging over the program is whether the $5 billion allocated will be enough.
Millions of people meet the basic qualifications for coverage, and technical experts who advise Congress and the administration have warned the funds could be exhausted as early as the end of 2011.
HHS officials sidestepped questions about what would happen if the money runs out. One option is for the government to limit enrollment.
Popper estimated about 200,000 people would be enrolled in the program at any one time, but other HHS experts estimated that 375,000 would sign up this year, and the Congressional Budget Office says the total could reach 700,000 in 2013.
President Barack Obama's new health coverage for uninsured people with health problems won't be cheap -- monthly premiums as high as $900, administration officials said.
Prices will vary by state and type of coverage from a low of $140 a month to as much as $900, said Richard Popper, deputy director of a new insurance office at the federal Health and Human Services department. Officials provided details of the plan, which starts enrolling people Thursday.
The price range is so wide because premiums will be keyed to standard individual health insurance rates in each state, which can differ dramatically because of medical costs and the scope of coverage. Independent experts estimate premiums will average around $400 to $600 a month. Younger people will pay less.
Advertisement
The Ultimate How to Insurance Guide for Agents, Brokers, Underwriters and Adjusters
"There are going to be meaningful premiums that are going to be required to stay in this plan ... in the hundreds of dollars,'' said Popper, with the Office of Consumer Information and Insurance Oversight.
Despite the cost, consumer advocates are urging uninsured people with health problems to sign up soon, because they cannot be turned away for medical reasons. Family members may be able to help with premiums.
The Pre-Existing Condition Insurance Plan will start taking applications Thursday in many states, the rest by the end of the month. Coverage will be available as early as August 1.
Consumers can go to a new government website, HealthCare.gov, to find out about the program and other coverage options in their state. Twenty-nine states and Washington, D.C., will administer their own plans. The federal government will run the program in the remaining 21 states.
The new plan is a stopgap for vulnerable people locked out of the private insurance market because of medical problems. It's intended to remain available until 2014, when core health care overhaul provisions take effect. At that time, insurers will be barred from turning away people in poor health, low- and middle-income households will get subsidized coverage, and most Americans will for the first time be required to carry health insurance.
To qualify for the pre-existing condition plan, people must be uninsured for at least six months and have been turned down for coverage by a private insurer because of a medical problem. U.S. citizens and legal residents are eligible.
The biggest question hanging over the program is whether the $5 billion allocated will be enough.
Millions of people meet the basic qualifications for coverage, and technical experts who advise Congress and the administration have warned the funds could be exhausted as early as the end of 2011.
HHS officials sidestepped questions about what would happen if the money runs out. One option is for the government to limit enrollment.
Popper estimated about 200,000 people would be enrolled in the program at any one time, but other HHS experts estimated that 375,000 would sign up this year, and the Congressional Budget Office says the total could reach 700,000 in 2013.
Monday, May 24, 2010
Small businesses to lose Zurich insurance policies as part of Farmers cutback
Small businesses to lose Zurich insurance policies as part of Farmers cutback
By Jeff Amy
May 19, 2010, 7:01AM
BUSINESS icon
MOBILE, Ala. -- Zurich Financial Services will drop 554 small business property policies in Mobile and Baldwin counties beginning Oct. 1, citing risks from hurricane exposure. The move comes after Farmers Insurance Group, a Zurich unit that mainly covers homeowners, announced a larger cutback in February.
"This is an effort to manage our overall business volume and our coastal catastrophe exposure," said spokesman Mark Toohey.
He said the 554 policies represent a little more than half of the number of Zurich small business policies in Mobile and Baldwin counties, and about 10 percent of such policies statewide.
Company officials said they were not dropping all commercial wind coverage in Mobile and Baldwin counties. Independent agents who sell the policies, though, said they believe the insurer is exiting the market entirely.
"Zurich is pulling out," said Jay Ison, a partner in the Thames Batré Mattei Beville & Ison agency in Mobile.
The Swiss insurance titan took control of Farmers in 1998. In 2008, it combined its pre-existing small business line with Farmers, creating one of the five largest insurers for small business, with $2.3 billion in nationwide revenue.
Farmers said in February that it was dropping wind coverage on 10,000 residential policies in Mobile and Baldwin counties. It also dropped 400 small business policies sold by Farmers-brand agents. Toohey said those 400 policies represent just more than 30 percent of Farmers-brand small business policies in Mobile and Baldwin counties. Farmers agents can continue selling business coverage that excludes wind.
Zurich had largely stopped writing new business along the Alabama coast after 2004's Hurricane Ivan and 2005's Hurricane Katrina, agents said.
Gaylord Lyon, president of Mobile's Lyon Fry Cadden Insurance Agency, said about 40 of his customers have policies with Zurich right now. He said it would be hard to find equal coverage at the same price.
In the overall market, prices and availability are not as good as they were before Ivan. But things have improved, said Andrew Davis, a vice president with International Assurance Inc., a Mobile agency.
"Right after Ivan, if property was involved, your were going to pay through the nose," he said.
Ragan Ingram, chief of staff for Insurance Commissioner Jim Ridling, noted the decline in policies carried by the Alabama Insurance Underwriting Association, an insurer of last resort. "The department believes that commercial insurance is readily available in the Mobile and Baldwin marketplace," Ingram wrote in an e-mail.
He wrote that regulators know of no other carriers that are leaving.
By contrast, the states four largest homeowners carriers have announced that they are dropping wind coverage or all coverage on more than 50,000 homeowners policies since Ivan.
By Jeff Amy
May 19, 2010, 7:01AM
BUSINESS icon
MOBILE, Ala. -- Zurich Financial Services will drop 554 small business property policies in Mobile and Baldwin counties beginning Oct. 1, citing risks from hurricane exposure. The move comes after Farmers Insurance Group, a Zurich unit that mainly covers homeowners, announced a larger cutback in February.
"This is an effort to manage our overall business volume and our coastal catastrophe exposure," said spokesman Mark Toohey.
He said the 554 policies represent a little more than half of the number of Zurich small business policies in Mobile and Baldwin counties, and about 10 percent of such policies statewide.
Company officials said they were not dropping all commercial wind coverage in Mobile and Baldwin counties. Independent agents who sell the policies, though, said they believe the insurer is exiting the market entirely.
"Zurich is pulling out," said Jay Ison, a partner in the Thames Batré Mattei Beville & Ison agency in Mobile.
The Swiss insurance titan took control of Farmers in 1998. In 2008, it combined its pre-existing small business line with Farmers, creating one of the five largest insurers for small business, with $2.3 billion in nationwide revenue.
Farmers said in February that it was dropping wind coverage on 10,000 residential policies in Mobile and Baldwin counties. It also dropped 400 small business policies sold by Farmers-brand agents. Toohey said those 400 policies represent just more than 30 percent of Farmers-brand small business policies in Mobile and Baldwin counties. Farmers agents can continue selling business coverage that excludes wind.
Zurich had largely stopped writing new business along the Alabama coast after 2004's Hurricane Ivan and 2005's Hurricane Katrina, agents said.
Gaylord Lyon, president of Mobile's Lyon Fry Cadden Insurance Agency, said about 40 of his customers have policies with Zurich right now. He said it would be hard to find equal coverage at the same price.
In the overall market, prices and availability are not as good as they were before Ivan. But things have improved, said Andrew Davis, a vice president with International Assurance Inc., a Mobile agency.
"Right after Ivan, if property was involved, your were going to pay through the nose," he said.
Ragan Ingram, chief of staff for Insurance Commissioner Jim Ridling, noted the decline in policies carried by the Alabama Insurance Underwriting Association, an insurer of last resort. "The department believes that commercial insurance is readily available in the Mobile and Baldwin marketplace," Ingram wrote in an e-mail.
He wrote that regulators know of no other carriers that are leaving.
By contrast, the states four largest homeowners carriers have announced that they are dropping wind coverage or all coverage on more than 50,000 homeowners policies since Ivan.
Monday, May 10, 2010
Editorial: Legislators need educating on coastal insurance
insurance
By Press-Register Editorial Board
May 10, 2010, 5:11AM
THIS YEAR’S session of the Legislature confirmed what property owners in southwest Alabama already knew: Key legislators have little or no understanding of what the crisis in the region’s homeowners’ insurance market means for the state as a whole.
While major insurers continued their retreat from the coast, dropping thousands of wind policies in Mobile and Baldwin counties, the Legislature failed to act on more than a half-dozen solid proposals for stabilizing the coastal insurance market.
Six insurance bills, including a seemingly noncontroversial requirement for the state’s insurer of last resort to refer to itself as the "wind pool" instead of using the misleading moniker "beach pool," went down in one Senate committee meeting. Sen. Lowell Barron, D-Fyffe, who once based his opposition to insurance reform on the distance from Fyffe to the Alabama coast, couldn’t get past a personality conflict with Sen. Ben Brooks, the Mobile Republican who sponsored several insurance bills. Sen. Barron said his colleague was "abrasive" and wanted others to "help him solve his problems."
Apparently Sen. Barron missed the point that the insurance bills were intended to help solve problems affecting thousands of property owners, the state’s revenue system and a huge chunk of Alabama’s $9 billion tourism industry.
Mobile and Baldwin counties generate $1.8 billion in state revenue. Another bad hurricane season — with the accompanying hit on coastal insurance — would wipe out tens of millions in tax revenue that Sen. Barron and his colleagues in north Alabama need to provide services for their own constitutuents.
The Legislature did approve one insurance bill this year: Sen. Trip Pittman’s measure to make it easier for "surplus lines carriers" — insurers whose rates aren’t regulated by the state — to enter the coastal market.
Any insurance legislation that promotes competition in the coastal counties helps, but most surplus lines companies have relatively high rates, and their policyholders are vulnerable if the companies go bankrupt.
In 2009, the Legislature passed a bill sponsored by Sen. Brooks that allows homeowners to reduce their premiums if they make their houses more hurricane-resistant. This measure, and Sen. Pittman’s surplus lines bill, do represent progress on the coastal insurance front, but the Legislature must do more than inch forward on an issue of major significance for the state’s economy.
Before the Legislature convenes next year, advocates of insurance reform need to launch an all-out campaign to educate senators and House members from north Alabama on the crisis in the coastal insurance market and its ramifications for their constituents. The Press-Register editorial board believes that if Sen. Barron and his allies truly realized what’s at stake in the debate, they would put aside regional and personal differences and get behind a plan to protect the economy of southwest Alabama.
By Press-Register Editorial Board
May 10, 2010, 5:11AM
THIS YEAR’S session of the Legislature confirmed what property owners in southwest Alabama already knew: Key legislators have little or no understanding of what the crisis in the region’s homeowners’ insurance market means for the state as a whole.
While major insurers continued their retreat from the coast, dropping thousands of wind policies in Mobile and Baldwin counties, the Legislature failed to act on more than a half-dozen solid proposals for stabilizing the coastal insurance market.
Six insurance bills, including a seemingly noncontroversial requirement for the state’s insurer of last resort to refer to itself as the "wind pool" instead of using the misleading moniker "beach pool," went down in one Senate committee meeting. Sen. Lowell Barron, D-Fyffe, who once based his opposition to insurance reform on the distance from Fyffe to the Alabama coast, couldn’t get past a personality conflict with Sen. Ben Brooks, the Mobile Republican who sponsored several insurance bills. Sen. Barron said his colleague was "abrasive" and wanted others to "help him solve his problems."
Apparently Sen. Barron missed the point that the insurance bills were intended to help solve problems affecting thousands of property owners, the state’s revenue system and a huge chunk of Alabama’s $9 billion tourism industry.
Mobile and Baldwin counties generate $1.8 billion in state revenue. Another bad hurricane season — with the accompanying hit on coastal insurance — would wipe out tens of millions in tax revenue that Sen. Barron and his colleagues in north Alabama need to provide services for their own constitutuents.
The Legislature did approve one insurance bill this year: Sen. Trip Pittman’s measure to make it easier for "surplus lines carriers" — insurers whose rates aren’t regulated by the state — to enter the coastal market.
Any insurance legislation that promotes competition in the coastal counties helps, but most surplus lines companies have relatively high rates, and their policyholders are vulnerable if the companies go bankrupt.
In 2009, the Legislature passed a bill sponsored by Sen. Brooks that allows homeowners to reduce their premiums if they make their houses more hurricane-resistant. This measure, and Sen. Pittman’s surplus lines bill, do represent progress on the coastal insurance front, but the Legislature must do more than inch forward on an issue of major significance for the state’s economy.
Before the Legislature convenes next year, advocates of insurance reform need to launch an all-out campaign to educate senators and House members from north Alabama on the crisis in the coastal insurance market and its ramifications for their constituents. The Press-Register editorial board believes that if Sen. Barron and his allies truly realized what’s at stake in the debate, they would put aside regional and personal differences and get behind a plan to protect the economy of southwest Alabama.
Sunday, May 9, 2010
Saturday, May 8, 2010
As Tennessee Copes With Flooding Disaster, FEMA Faces Own Financial Crisis
With a flooded Tennessee becoming the latest disaster to strike the United States, the Federal Emergency Management Agency is confronting its own emergency as its relief funds run perilously low.
Last month, FEMA Director W. Craig Fugate wrote a letter to Congress warning that its relief fund had fallen to $693 million as of April 7 but the agency owed $645 million to 47 states for past disasters. That doesn't include the $1.7 billion settlement the agency owes to the Gulf Coast state and city governments for Hurricane Katrina.
Now FEMA is handing out money to the residents of Tennessee after deadly floods ravaged the region last weekend.
FEMA has already approved $4.1 million in individual assistance and more than 16,200 Tennesseans had registered with FEMA for disaster assistance by Saturday morning with 650 inspections complete.
White House spokesman Robert Gibbs said Friday that FEMA will probably need a shot of supplemental funding. The administration is seeking $5.1 billion in emergency funding from Congress.
Homeland Security Secretary Janet Napolitano toured the area Saturday and found residents already repairing their homes and business owners pushing to re-open.
"DHS and the entire federal government will do everything possible to support the people of Tennessee and across the Southeast in getting back on their feet quickly -- coordinated every step of the way with our state and local partners," Napolitano said.
The outlook for the devastated areas of Tennessee, Mississippi and Kentucky remained grim Saturday as the death toll climbed to 31 with the discovery of a missing kayaker's body in Kentucky. Twenty died in Tennessee alone.
Nashville Mayor Karl Dean raised the damage estimate for his city to $1.5 billion Friday, with 17 percent of Davidson County still to be checked. Already officials know 9,300 properties have been damaged and almost 2,000 of those are residences. Dean said the damage total will go up because it doesn't include damage to roads, bridges or the contents of the buildings.
"While the numbers seem daunting, and they truly are large, Nashville is in the process of recovering," Dean said.
But some analysts believe FEMA was never meant to be -- and shouldn't be -- the disaster response agency for the nation.
"From an operational standpoint, disaster response should be driven by state and local governments, as they are the owners of most of the response resources and they are the first on the scene when disaster strikes," Jena Baker McNeill and Matt Mayer of the Heritage Foundation said in a report published last month. "Supplanting this funding encourages state and local governments to not be prepared, knowing that the federal government will bail them out."
The report found that the yearly average of FEMA declarations has tripled from 43 under the first President Bush to 89 under President Clinton to 130 under the second President Bush.
President Obama issued 108 declarations in his first year in office – the 12th highest in FEMA history – without the occurrence of one hurricane or other major disaster, the report said. In the first three months of 2010, Obama has issued 32 declarations, putting him on pace for 128 declarations for the year – the sixth most in FEMA history, according to the report.
The report says the reason behind the increase is governors, as their state budgets decline, are more likely to seek emergency declarations from FEMA that requires the federal government pay up to 100 percent of the disaster response bill.
"Truly catastrophic disasters that overwhelm state and local governments are a welcome forum for FEMA intervention; that is, after all, the very purpose of FEMA declarations," the report reads. "However, all too often disaster politics, rather than effective policy, drive decisions on disaster response. Washington policymakers simply do not know how to say 'no' to spending more on disasters. Consequently, FEMA can no longer meet its financial commitments."
The Associated Press contributed to this report.
Last month, FEMA Director W. Craig Fugate wrote a letter to Congress warning that its relief fund had fallen to $693 million as of April 7 but the agency owed $645 million to 47 states for past disasters. That doesn't include the $1.7 billion settlement the agency owes to the Gulf Coast state and city governments for Hurricane Katrina.
Now FEMA is handing out money to the residents of Tennessee after deadly floods ravaged the region last weekend.
FEMA has already approved $4.1 million in individual assistance and more than 16,200 Tennesseans had registered with FEMA for disaster assistance by Saturday morning with 650 inspections complete.
White House spokesman Robert Gibbs said Friday that FEMA will probably need a shot of supplemental funding. The administration is seeking $5.1 billion in emergency funding from Congress.
Homeland Security Secretary Janet Napolitano toured the area Saturday and found residents already repairing their homes and business owners pushing to re-open.
"DHS and the entire federal government will do everything possible to support the people of Tennessee and across the Southeast in getting back on their feet quickly -- coordinated every step of the way with our state and local partners," Napolitano said.
The outlook for the devastated areas of Tennessee, Mississippi and Kentucky remained grim Saturday as the death toll climbed to 31 with the discovery of a missing kayaker's body in Kentucky. Twenty died in Tennessee alone.
Nashville Mayor Karl Dean raised the damage estimate for his city to $1.5 billion Friday, with 17 percent of Davidson County still to be checked. Already officials know 9,300 properties have been damaged and almost 2,000 of those are residences. Dean said the damage total will go up because it doesn't include damage to roads, bridges or the contents of the buildings.
"While the numbers seem daunting, and they truly are large, Nashville is in the process of recovering," Dean said.
But some analysts believe FEMA was never meant to be -- and shouldn't be -- the disaster response agency for the nation.
"From an operational standpoint, disaster response should be driven by state and local governments, as they are the owners of most of the response resources and they are the first on the scene when disaster strikes," Jena Baker McNeill and Matt Mayer of the Heritage Foundation said in a report published last month. "Supplanting this funding encourages state and local governments to not be prepared, knowing that the federal government will bail them out."
The report found that the yearly average of FEMA declarations has tripled from 43 under the first President Bush to 89 under President Clinton to 130 under the second President Bush.
President Obama issued 108 declarations in his first year in office – the 12th highest in FEMA history – without the occurrence of one hurricane or other major disaster, the report said. In the first three months of 2010, Obama has issued 32 declarations, putting him on pace for 128 declarations for the year – the sixth most in FEMA history, according to the report.
The report says the reason behind the increase is governors, as their state budgets decline, are more likely to seek emergency declarations from FEMA that requires the federal government pay up to 100 percent of the disaster response bill.
"Truly catastrophic disasters that overwhelm state and local governments are a welcome forum for FEMA intervention; that is, after all, the very purpose of FEMA declarations," the report reads. "However, all too often disaster politics, rather than effective policy, drive decisions on disaster response. Washington policymakers simply do not know how to say 'no' to spending more on disasters. Consequently, FEMA can no longer meet its financial commitments."
The Associated Press contributed to this report.
Wednesday, May 5, 2010
Update from Congressman Gene Taylor
Dear Friends,
The oil spill out in the Gulf is a big deal to all of us. It's deadly serious. Like you, I very much want to see the oil leak capped as quickly as possible. In fact, I wrote Secretary of Defense Robert Gates on Friday urging him to make available all of the resources of the U.S. military to help in the effort to stop the spill and mitigate its effects, and I spoke personally with Admiral Gary Roughead, Chief of Naval Operations for the Navy, who assured me that every resource of the United States Navy has been made available.
The good news is that because the oil rig was so far out to sea, the Mississippi coast is a long way from the source. As of today, there is no oil in the Mississippi Sound. That works in our favor.
On Saturday, I saw firsthand that the oil was further away from the Mississippi Sound and the Louisiana Marshes than the media had reported and predicted. Several days of heavy seas helped to break down some of the oil into a thin sheen. According to experts such as Dr. Bill Walker, Director of the Mississippi Department of Marine Resources, most of that oil sheen will evaporate in direct sunlight.
The thicker portions of the oil spill were still further offshore, closer to the source of the spill, so we still have time to prevent the worst-case scenario from happening. I have conferred with Admiral Thad Allen, the Commandant of the U.S. Coast Guard, and Captain Ed Stanton, the Federal On-Scene Coordinator for the Coast Guard, and I am confident that they are doing everything possible to minimize and mitigate the impact of the oil spill.
The people working to contain the spill have been encouraged that the dispersants sprayed on the oil at the surface and released near the oil leaks 5,000 feet below the surface are achieving the desired result of breaking-up the oil into smaller droplets and oil sheen—which, again, can more easily evaporate or naturally degrade. This is good news.
Thankfully, it appears that we are going to have a few days of good weather and calm seas that will allow the Coast Guard and other responders to contain and collect more of the oil-water mix and skim it into barges and tankers, or burn it in a controlled manner. Calmer winds also allow them to resume spraying dispersants from the air to continue to break up the thick portions of the spill.
Congress passed the Oil Pollution act of 1990 after the Exxon Valdez spill. Almost every response happening now is a result of that legislation that I voted for back then. The legislation calls on the oil companies to have virtually unlimited liability for the damages and the cleanup. BP is going to pay the bill, and the federal government will make sure that they do so.
I also want to make it clear that what is happening out in the Gulf is not the same as Hurricane Katrina, which was the most destructive natural disaster in our nation’s history. With Katrina, an estimated 70,000 Mississippi families were displaced from their homes, and 235 people died in our state alone.
Hurricane Katrina caused billions of dollars of property damage, of course, but it also caused substantial environmental damage. The storm surge pushed toxic chemicals, dead animal carcasses, raw sewage, and other hazardous debris all around the coastline and into coastal waters. So far, this oil spill has not caused nearly as much environmental damage as Katrina, and we all are working to keep it that way.
I continue to closely monitor the sub-surface efforts to stem the leak. I continue to work with the Coast Guard and other local, state, and federal agencies to ensure that individuals or companies that are interested in assisting with the response efforts are put in touch with the appropriate officials.
I assure you that this oil spill is being taken very seriously. But I also want to calm some of the hysteria that has resulted from those who have aired or published stories with doomsday headlines. Rather than adding to the panic, I am trying to accurately describe the current situation.
We are preparing for the worst and hoping for the best. That is how most of us live our lives. The Mississippi Department of Marine Resources is already training people to respond should help be necessary.
As a South Mississippian, I am very proud of the thousands of South Mississippians who have volunteered to help. Thank you.
Sincerely,
Rep. Gene Taylor's signature
GENE TAYLOR
Member of Congress
The oil spill out in the Gulf is a big deal to all of us. It's deadly serious. Like you, I very much want to see the oil leak capped as quickly as possible. In fact, I wrote Secretary of Defense Robert Gates on Friday urging him to make available all of the resources of the U.S. military to help in the effort to stop the spill and mitigate its effects, and I spoke personally with Admiral Gary Roughead, Chief of Naval Operations for the Navy, who assured me that every resource of the United States Navy has been made available.
The good news is that because the oil rig was so far out to sea, the Mississippi coast is a long way from the source. As of today, there is no oil in the Mississippi Sound. That works in our favor.
On Saturday, I saw firsthand that the oil was further away from the Mississippi Sound and the Louisiana Marshes than the media had reported and predicted. Several days of heavy seas helped to break down some of the oil into a thin sheen. According to experts such as Dr. Bill Walker, Director of the Mississippi Department of Marine Resources, most of that oil sheen will evaporate in direct sunlight.
The thicker portions of the oil spill were still further offshore, closer to the source of the spill, so we still have time to prevent the worst-case scenario from happening. I have conferred with Admiral Thad Allen, the Commandant of the U.S. Coast Guard, and Captain Ed Stanton, the Federal On-Scene Coordinator for the Coast Guard, and I am confident that they are doing everything possible to minimize and mitigate the impact of the oil spill.
The people working to contain the spill have been encouraged that the dispersants sprayed on the oil at the surface and released near the oil leaks 5,000 feet below the surface are achieving the desired result of breaking-up the oil into smaller droplets and oil sheen—which, again, can more easily evaporate or naturally degrade. This is good news.
Thankfully, it appears that we are going to have a few days of good weather and calm seas that will allow the Coast Guard and other responders to contain and collect more of the oil-water mix and skim it into barges and tankers, or burn it in a controlled manner. Calmer winds also allow them to resume spraying dispersants from the air to continue to break up the thick portions of the spill.
Congress passed the Oil Pollution act of 1990 after the Exxon Valdez spill. Almost every response happening now is a result of that legislation that I voted for back then. The legislation calls on the oil companies to have virtually unlimited liability for the damages and the cleanup. BP is going to pay the bill, and the federal government will make sure that they do so.
I also want to make it clear that what is happening out in the Gulf is not the same as Hurricane Katrina, which was the most destructive natural disaster in our nation’s history. With Katrina, an estimated 70,000 Mississippi families were displaced from their homes, and 235 people died in our state alone.
Hurricane Katrina caused billions of dollars of property damage, of course, but it also caused substantial environmental damage. The storm surge pushed toxic chemicals, dead animal carcasses, raw sewage, and other hazardous debris all around the coastline and into coastal waters. So far, this oil spill has not caused nearly as much environmental damage as Katrina, and we all are working to keep it that way.
I continue to closely monitor the sub-surface efforts to stem the leak. I continue to work with the Coast Guard and other local, state, and federal agencies to ensure that individuals or companies that are interested in assisting with the response efforts are put in touch with the appropriate officials.
I assure you that this oil spill is being taken very seriously. But I also want to calm some of the hysteria that has resulted from those who have aired or published stories with doomsday headlines. Rather than adding to the panic, I am trying to accurately describe the current situation.
We are preparing for the worst and hoping for the best. That is how most of us live our lives. The Mississippi Department of Marine Resources is already training people to respond should help be necessary.
As a South Mississippian, I am very proud of the thousands of South Mississippians who have volunteered to help. Thank you.
Sincerely,
Rep. Gene Taylor's signature
GENE TAYLOR
Member of Congress
Monday, May 3, 2010
Same house. Same repairs. Same insurer. Why different prices?
Print
Evidence suggests Allstate pays far more for flood repair than for wind damage. The reason? The government picks up the flood tab, and the company minimizes its own payout.
By Rebecca Mowbray - Times-Picayune, May 20, 2007
"For every dollar paid out of the federal treasury under flood, Allstate takes a credit and keeps a dollar. Essentially Allstate is profiting at the expense of the American taxpayer."
JOHN DENENEA
attorney for couple suing Allstate
Something about the insurance settlement on the Slidell townhouse seemed fishy to Chris Karpells, a prospective buyer who would be collecting the insurance money as part of the deal.
As he pored over the fine print, what caught Karpells' eye was this: Allstate seemed to have two different ways of pricing the damage repair costs, depending on whether the damage at 286 Marina Drive was chalked up to flooding or wind.
If Allstate attributed the damage to wind or rain, for example -- putting it on the hook for payment under the customer's homeowner policy -- the company priced the cost of removing and replacing the drywall at 76 cents per square foot. But if the damage was blamed on storm surge or flooding, the estimated cost of removing and replacing the drywall more than quadrupled, to $3.31 per square foot.
"On my best day, I couldn't get my client paid that much for Sheetrock. It would almost be misrepresentation or fraud," said Karpells, a registered public insurance adjuster as well as a real estate investor. "What the hell's the difference between wind Sheetrock and flood Sheetrock?"
A key difference between flood Sheetrock and wind Sheetrock is this: Allstate must pay for damage covered by its homeowner policy. But damage blamed on flooding is covered by the National Flood Insurance program, set up by the federal government and subsidized by taxpayers. And who decides which policy covers which damages? As with 96 percent of flood policies these days, it is the private insurer, in this case Allstate.
Drywall wasn't the only construction material cost that suddenly skyrocketed when Allstate was assigning the damage to the flood insurance program, Karpells noted.
The cost to recarpet the master bedroom, bathroom, loft and stairwell -- upstairs spaces that hadn't flooded and therefore were covered under the homeowner policy -- was pegged by Allstate at $23.48 a square foot. But when it came to replacing the same carpet in downstairs areas covered by the flood policy, Allstate set the price at $28.43, a 21 percent jump.
And so it went: For texturizing and repainting upstairs walls, Allstate set costs at 80 cents a square foot. The cost to the government program for apparently identical work downstairs: $1.15 per square foot, a difference of more than 40 percent.
Karpells said that, in his work as a public adjuster, he has seen the dual pricing on almost every Allstate adjustment that lists the damage line by line. And from his experience, Allstate is the only company that's doing it, said Karpells, a third-generation carpenter from Massachusetts who moved to Slidell several years before Katrina hit. Karpells said he believes that "someone is saying, 'On a flood policy, we use this database. On a wind policy, we use this database.' They're front-loading all the money on the flood policy."
Karpells is not alone in his suspicion that Allstate is gouging the government in order to minimize its own exposure to post-Katrina repair costs -- a charge Allstate flatly denies.
"Our firm position is that there are not any discrepancies in the rates charged," said Mike Trevino, a spokesman for Allstate. "The component prices reflect current market conditions. And they are the same for wind and flood."
Cindy Montgomery, a public adjuster from LaPorte, Texas, said she has seen the dual pricing in numerous Allstate cases in St. Tammany, Orleans and St. Bernard parishes and on the Mississippi Gulf Coast.
"I ended up with probably a hundred of these," said Montgomery, who is with Anchor Mitigation and Proof of Loss LLC. "Seventy-seven cents was nowhere near reality, and they knew it. I told them, and hundreds of other adjusters told them."
And the dual price list for repair costs has not been the only method of adjustment that lets Allstate be more generous with the public's money than its own.
Sometimes almost the entire burden is passed to the flood program. Down the street from the townhouse Karpells' business partner bought, for example, is Guy Smith's unit at 1546 Marina Drive: an almost identical townhouse with Allstate coverage and similar damage.
Even though both had flooded to the same depth, 42 to 48 inches, the financial burden at 1546 Marina Drive was tilted even more heavily to the federal insurance program, saving Allstate money. Smith was offered $170,927 for flood damage, while Allstate agreed to shoulder only $20,172 for roof and upstairs damage.
Indeed, in a one-page summary that contained no breakdown of costs or damages, Allstate's adjuster had declared that the appropriate response to damage at 1546 Marina Drive was to "replace" the three-story building, even though only the ground floor flooded.
"In my wildest dreams, I couldn't submit something like that and get it paid," Karpells said. "It's just so nonreflective of the damage that it's bizarre. The building was not destroyed. It was not a total loss."
Karpells thinks the flood damage at Smith's unit was probably about $80,000 to $85,000. Smith, a New Orleans firefighter, agrees that the unit wasn't a total loss. He was able to repair the damage and has been living in his townhouse since last September.
More disturbing still was the experience of Allstate customers Robert and Merryl Weiss, a Slidell couple who eventually took Allstate to court. As part of their flood insurance claim, Merryl Weiss drew up a handwritten list of damaged household contents, mostly fishing equipment. Her claim came to $38,848.35.
During depositions taken in connection with the litigation, they discovered that on the contents list submitted by Allstate for payment under the Weisses' flood policy, the value of the loss billed to the federal program had soared to more than $139,000. Fishing gear was nowhere on the list, but things had been added that the Weisses didn't even own, including furs, jewelry and the like.
"When Allstate pays a claim under a flood policy, they are using the checkbook of the United States Treasury. When they pay a claim under their homeowners policy, they are using the Allstate checkbook. For every dollar paid out of the federal treasury under flood, Allstate takes a credit and keeps a dollar. Essentially Allstate is profiting at the expense of the American taxpayer," Weiss attorney John Denenea said.
'It's apples to apples'
Allstate's Trevino declined to discuss the specifics of the claim on Karpells' townhouse, but said that the cost of repairs changes over time, and the cost of repairing one room versus another can vary, depending on how the damage occurred.
"The cost to repair wet drywall versus dry drywall is different. The cost to repair carpet from one room to carpet of another room may be different because you may have different quality carpet from room to room," Trevino said. "You can have different methods and approaches regarding paint. In one room, you may have one coat of paint, but in another room, you may need more than one coat of paint depending on the color."
Trevino further noted that public insurance adjusters, people who are hired to represent consumers after disasters to make sure they're paid properly, have an agenda.
Karpells rejected Trevino's insinuation that his profession as public adjuster was a factor in the dispute. The adjustments, he noted, were done for the previous owner of the townhouse at 246 Marina Drive. No public adjuster -- with or without an agenda -- was involved.
Moreover, Karpells argued, market fluctuations in repair costs couldn't account for the differences between prices on the flood and homeowner adjustments. They were done within two months of each other, too short a time for them to have been so extreme.
As for Trevino's suggestion that materials used upstairs might have been of different quality than those used downstairs: Not so, Karpells said. The carpet was the same on all floors, and the texture and paint on the walls was identical throughout the house.
"It's apples to apples," Karpells said. "The facts speak for themselves."
Craig Berthelot, vice president of the Home Builders Association of Greater New Orleans and owner of Berthelot Construction Services, which renovates and repairs storm-damaged homes in the New Orleans area, said that the real price for replacing drywall is between the prices that Allstate calculated.
Without the tear-out portion of the job, it costs about $2 to $2.50 per square foot to replace drywall, he said. The $3.31 billed to the flood program for tearing out and replacing drywall is high but more realistic than Allstate's 76 cents on the homeowners policy, Berthelot said.
The Katrina memo
Allstate is the nation's largest publicly held insurer of homes, autos and other personal risks. But when Katrina hit, the policies it had written in Louisiana were not backed up by reinsurance, a corporate policy that kicks in to cover an insurer's losses beyond a certain level in the event of a catastrophe like a hurricane.
Reinsurance paid for an estimated 45 percent of U.S. losses incurred by insurers as a result of the 2005 storms, according to the Insurance Information Institute, but Allstate was on the hook for the entire cost of damages covered by its Louisiana customers' homeowner policies. By the end of 2006, it had paid $1.4 billion in homeowners claims in Louisiana, where it is, after State Farm, the state's second-largest residential insurer.
Trevino said that reinsurance wouldn't have saved the company much money, and having to pay out of its own pocket didn't affect the company's generosity in handling claims. Nor did it inspire the company to slough off damages onto flood policies, he said.
Facing at least 200,000 claims after Katrina, the largest disaster it had confronted, the National Flood Insurance Program looked for ways to expedite payments to policyholders.
On Sept. 21, 2005, three weeks after the storm, acting flood program Director David Maurstad, who consulted regularly with insurers after the storm, issued a memo expediting the processing of flood claims.
The memo waived the requirements that customers prove their losses and instructed the insurance companies to pay the flood policy limits if the home was washed off of its foundation or if the home was in "standing water" for "an extended period of time."
Ed Pasterick, a senior adviser to the flood program, offered this explanation: "What we didn't want people to do was be penalized while we were determining if it was wind or water. He (Maurstad) just made a decision that he didn't want people to have suffer because of it."
The memo is widely credited with getting money into disaster victims' hands quickly and is upheld as an example of business and government working together to handle a challenging situation.
In hindsight, others have begun to wonder if it didn't send a signal to the private insurance industry that the federal treasury was their cookie jar and that no one would be looking if insurers helped themselves at the public's expense.
As the flood program went broke after Katrina, requiring a massive taxpayer bailout, U.S. Rep. Gene Taylor, D-Miss., began to ask pointed questions about how the rules got eased so quickly and in ways that were so advantageous to the private insurers. After all, FEMA, the agency that runs the flood program, was also the agency that had proved too hopelessly dysfunctional to make the adjustments that might have smoothed the flow of desperately needed public money to prostrate local governments.
"Our experience is that these guys didn't do anything to speed up the program anywhere else. Why did they do it here?" asked Brian Martin, a Slidell native who is Taylor's policy director. "I suspect that the idea came from the insurance companies."
Taylor's hunch is that the flood program eased its rules at the behest of the private insurers, who stood to benefit directly if the lion's share of losses could be laid off on the flood program, rather than homeowner policies.
"They get to go right out there and give them a check. It's from the federal government," Martin said. "It gives the homeowner something so that there's not huge pressure on the insurance company to pay something now.
"The flood insurance program made it easy for a few of the insurance companies to manipulate those claims to put it all on flooding," Martin said. "The taxpayers pick it all up."
"It was a very bad idea," said Bob Hunter, who oversaw the federal flood insurance program in the Ford and Carter administrations and now is a consumer advocate as director of insurance at the Consumer Federation of America. "It allowed these insurance companies to come in and say, 'This was all flood damage,' and hand out a check without any analysis of whether it was wind damage."
Officials bewildered
But even Hunter, skeptical as he was, didn't imagine that a company would develop two different price lists for nearly identical repair work. He thought the insurance companies would stop at trying to argue that damages were due to flooding, rather than wind. Indeed they have in a number of well-publicized lawsuits -- notably including U.S. Sen. Trent Lott's fight to recover more money from the homeowner policy that covered his destroyed waterfront home in Pascagoula, Miss.
The dual price lists are something else again. "I had no idea they would be so blatant," Hunter said.
FEMA also expressed bewilderment over the idea of charging government and private insurers different prices, when told about practices in the New Orleans area.
"I don't have an explanation for that," said Tim Johnson, senior insurance examiner on the claims section at FEMA. "If that's what they say is happening, I would love to see it. The overpayment surely does affect me."
The lack of uproar from customers is easier to understand. Essentially, claims adjustment, when both flood and homeowner policies are in play, is a zero-sum game. The customer wants insurance to cover the cost of repairing or replacing the house and has little reason to care whether the federal program or the private insurer foots the bill.
Smith, the firefighter who owns 1546 Marina Drive, said Allstate told him not to worry about whether the damage was attributed to wind or flood, that it would all come out in the wash. "It was basically, 'Look at the entire package, don't look at the wind claim for what it is, just look at the entire package,' " Smith said. "It was pretty clear."
Evidence suggests Allstate pays far more for flood repair than for wind damage. The reason? The government picks up the flood tab, and the company minimizes its own payout.
By Rebecca Mowbray - Times-Picayune, May 20, 2007
"For every dollar paid out of the federal treasury under flood, Allstate takes a credit and keeps a dollar. Essentially Allstate is profiting at the expense of the American taxpayer."
JOHN DENENEA
attorney for couple suing Allstate
Something about the insurance settlement on the Slidell townhouse seemed fishy to Chris Karpells, a prospective buyer who would be collecting the insurance money as part of the deal.
As he pored over the fine print, what caught Karpells' eye was this: Allstate seemed to have two different ways of pricing the damage repair costs, depending on whether the damage at 286 Marina Drive was chalked up to flooding or wind.
If Allstate attributed the damage to wind or rain, for example -- putting it on the hook for payment under the customer's homeowner policy -- the company priced the cost of removing and replacing the drywall at 76 cents per square foot. But if the damage was blamed on storm surge or flooding, the estimated cost of removing and replacing the drywall more than quadrupled, to $3.31 per square foot.
"On my best day, I couldn't get my client paid that much for Sheetrock. It would almost be misrepresentation or fraud," said Karpells, a registered public insurance adjuster as well as a real estate investor. "What the hell's the difference between wind Sheetrock and flood Sheetrock?"
A key difference between flood Sheetrock and wind Sheetrock is this: Allstate must pay for damage covered by its homeowner policy. But damage blamed on flooding is covered by the National Flood Insurance program, set up by the federal government and subsidized by taxpayers. And who decides which policy covers which damages? As with 96 percent of flood policies these days, it is the private insurer, in this case Allstate.
Drywall wasn't the only construction material cost that suddenly skyrocketed when Allstate was assigning the damage to the flood insurance program, Karpells noted.
The cost to recarpet the master bedroom, bathroom, loft and stairwell -- upstairs spaces that hadn't flooded and therefore were covered under the homeowner policy -- was pegged by Allstate at $23.48 a square foot. But when it came to replacing the same carpet in downstairs areas covered by the flood policy, Allstate set the price at $28.43, a 21 percent jump.
And so it went: For texturizing and repainting upstairs walls, Allstate set costs at 80 cents a square foot. The cost to the government program for apparently identical work downstairs: $1.15 per square foot, a difference of more than 40 percent.
Karpells said that, in his work as a public adjuster, he has seen the dual pricing on almost every Allstate adjustment that lists the damage line by line. And from his experience, Allstate is the only company that's doing it, said Karpells, a third-generation carpenter from Massachusetts who moved to Slidell several years before Katrina hit. Karpells said he believes that "someone is saying, 'On a flood policy, we use this database. On a wind policy, we use this database.' They're front-loading all the money on the flood policy."
Karpells is not alone in his suspicion that Allstate is gouging the government in order to minimize its own exposure to post-Katrina repair costs -- a charge Allstate flatly denies.
"Our firm position is that there are not any discrepancies in the rates charged," said Mike Trevino, a spokesman for Allstate. "The component prices reflect current market conditions. And they are the same for wind and flood."
Cindy Montgomery, a public adjuster from LaPorte, Texas, said she has seen the dual pricing in numerous Allstate cases in St. Tammany, Orleans and St. Bernard parishes and on the Mississippi Gulf Coast.
"I ended up with probably a hundred of these," said Montgomery, who is with Anchor Mitigation and Proof of Loss LLC. "Seventy-seven cents was nowhere near reality, and they knew it. I told them, and hundreds of other adjusters told them."
And the dual price list for repair costs has not been the only method of adjustment that lets Allstate be more generous with the public's money than its own.
Sometimes almost the entire burden is passed to the flood program. Down the street from the townhouse Karpells' business partner bought, for example, is Guy Smith's unit at 1546 Marina Drive: an almost identical townhouse with Allstate coverage and similar damage.
Even though both had flooded to the same depth, 42 to 48 inches, the financial burden at 1546 Marina Drive was tilted even more heavily to the federal insurance program, saving Allstate money. Smith was offered $170,927 for flood damage, while Allstate agreed to shoulder only $20,172 for roof and upstairs damage.
Indeed, in a one-page summary that contained no breakdown of costs or damages, Allstate's adjuster had declared that the appropriate response to damage at 1546 Marina Drive was to "replace" the three-story building, even though only the ground floor flooded.
"In my wildest dreams, I couldn't submit something like that and get it paid," Karpells said. "It's just so nonreflective of the damage that it's bizarre. The building was not destroyed. It was not a total loss."
Karpells thinks the flood damage at Smith's unit was probably about $80,000 to $85,000. Smith, a New Orleans firefighter, agrees that the unit wasn't a total loss. He was able to repair the damage and has been living in his townhouse since last September.
More disturbing still was the experience of Allstate customers Robert and Merryl Weiss, a Slidell couple who eventually took Allstate to court. As part of their flood insurance claim, Merryl Weiss drew up a handwritten list of damaged household contents, mostly fishing equipment. Her claim came to $38,848.35.
During depositions taken in connection with the litigation, they discovered that on the contents list submitted by Allstate for payment under the Weisses' flood policy, the value of the loss billed to the federal program had soared to more than $139,000. Fishing gear was nowhere on the list, but things had been added that the Weisses didn't even own, including furs, jewelry and the like.
"When Allstate pays a claim under a flood policy, they are using the checkbook of the United States Treasury. When they pay a claim under their homeowners policy, they are using the Allstate checkbook. For every dollar paid out of the federal treasury under flood, Allstate takes a credit and keeps a dollar. Essentially Allstate is profiting at the expense of the American taxpayer," Weiss attorney John Denenea said.
'It's apples to apples'
Allstate's Trevino declined to discuss the specifics of the claim on Karpells' townhouse, but said that the cost of repairs changes over time, and the cost of repairing one room versus another can vary, depending on how the damage occurred.
"The cost to repair wet drywall versus dry drywall is different. The cost to repair carpet from one room to carpet of another room may be different because you may have different quality carpet from room to room," Trevino said. "You can have different methods and approaches regarding paint. In one room, you may have one coat of paint, but in another room, you may need more than one coat of paint depending on the color."
Trevino further noted that public insurance adjusters, people who are hired to represent consumers after disasters to make sure they're paid properly, have an agenda.
Karpells rejected Trevino's insinuation that his profession as public adjuster was a factor in the dispute. The adjustments, he noted, were done for the previous owner of the townhouse at 246 Marina Drive. No public adjuster -- with or without an agenda -- was involved.
Moreover, Karpells argued, market fluctuations in repair costs couldn't account for the differences between prices on the flood and homeowner adjustments. They were done within two months of each other, too short a time for them to have been so extreme.
As for Trevino's suggestion that materials used upstairs might have been of different quality than those used downstairs: Not so, Karpells said. The carpet was the same on all floors, and the texture and paint on the walls was identical throughout the house.
"It's apples to apples," Karpells said. "The facts speak for themselves."
Craig Berthelot, vice president of the Home Builders Association of Greater New Orleans and owner of Berthelot Construction Services, which renovates and repairs storm-damaged homes in the New Orleans area, said that the real price for replacing drywall is between the prices that Allstate calculated.
Without the tear-out portion of the job, it costs about $2 to $2.50 per square foot to replace drywall, he said. The $3.31 billed to the flood program for tearing out and replacing drywall is high but more realistic than Allstate's 76 cents on the homeowners policy, Berthelot said.
The Katrina memo
Allstate is the nation's largest publicly held insurer of homes, autos and other personal risks. But when Katrina hit, the policies it had written in Louisiana were not backed up by reinsurance, a corporate policy that kicks in to cover an insurer's losses beyond a certain level in the event of a catastrophe like a hurricane.
Reinsurance paid for an estimated 45 percent of U.S. losses incurred by insurers as a result of the 2005 storms, according to the Insurance Information Institute, but Allstate was on the hook for the entire cost of damages covered by its Louisiana customers' homeowner policies. By the end of 2006, it had paid $1.4 billion in homeowners claims in Louisiana, where it is, after State Farm, the state's second-largest residential insurer.
Trevino said that reinsurance wouldn't have saved the company much money, and having to pay out of its own pocket didn't affect the company's generosity in handling claims. Nor did it inspire the company to slough off damages onto flood policies, he said.
Facing at least 200,000 claims after Katrina, the largest disaster it had confronted, the National Flood Insurance Program looked for ways to expedite payments to policyholders.
On Sept. 21, 2005, three weeks after the storm, acting flood program Director David Maurstad, who consulted regularly with insurers after the storm, issued a memo expediting the processing of flood claims.
The memo waived the requirements that customers prove their losses and instructed the insurance companies to pay the flood policy limits if the home was washed off of its foundation or if the home was in "standing water" for "an extended period of time."
Ed Pasterick, a senior adviser to the flood program, offered this explanation: "What we didn't want people to do was be penalized while we were determining if it was wind or water. He (Maurstad) just made a decision that he didn't want people to have suffer because of it."
The memo is widely credited with getting money into disaster victims' hands quickly and is upheld as an example of business and government working together to handle a challenging situation.
In hindsight, others have begun to wonder if it didn't send a signal to the private insurance industry that the federal treasury was their cookie jar and that no one would be looking if insurers helped themselves at the public's expense.
As the flood program went broke after Katrina, requiring a massive taxpayer bailout, U.S. Rep. Gene Taylor, D-Miss., began to ask pointed questions about how the rules got eased so quickly and in ways that were so advantageous to the private insurers. After all, FEMA, the agency that runs the flood program, was also the agency that had proved too hopelessly dysfunctional to make the adjustments that might have smoothed the flow of desperately needed public money to prostrate local governments.
"Our experience is that these guys didn't do anything to speed up the program anywhere else. Why did they do it here?" asked Brian Martin, a Slidell native who is Taylor's policy director. "I suspect that the idea came from the insurance companies."
Taylor's hunch is that the flood program eased its rules at the behest of the private insurers, who stood to benefit directly if the lion's share of losses could be laid off on the flood program, rather than homeowner policies.
"They get to go right out there and give them a check. It's from the federal government," Martin said. "It gives the homeowner something so that there's not huge pressure on the insurance company to pay something now.
"The flood insurance program made it easy for a few of the insurance companies to manipulate those claims to put it all on flooding," Martin said. "The taxpayers pick it all up."
"It was a very bad idea," said Bob Hunter, who oversaw the federal flood insurance program in the Ford and Carter administrations and now is a consumer advocate as director of insurance at the Consumer Federation of America. "It allowed these insurance companies to come in and say, 'This was all flood damage,' and hand out a check without any analysis of whether it was wind damage."
Officials bewildered
But even Hunter, skeptical as he was, didn't imagine that a company would develop two different price lists for nearly identical repair work. He thought the insurance companies would stop at trying to argue that damages were due to flooding, rather than wind. Indeed they have in a number of well-publicized lawsuits -- notably including U.S. Sen. Trent Lott's fight to recover more money from the homeowner policy that covered his destroyed waterfront home in Pascagoula, Miss.
The dual price lists are something else again. "I had no idea they would be so blatant," Hunter said.
FEMA also expressed bewilderment over the idea of charging government and private insurers different prices, when told about practices in the New Orleans area.
"I don't have an explanation for that," said Tim Johnson, senior insurance examiner on the claims section at FEMA. "If that's what they say is happening, I would love to see it. The overpayment surely does affect me."
The lack of uproar from customers is easier to understand. Essentially, claims adjustment, when both flood and homeowner policies are in play, is a zero-sum game. The customer wants insurance to cover the cost of repairing or replacing the house and has little reason to care whether the federal program or the private insurer foots the bill.
Smith, the firefighter who owns 1546 Marina Drive, said Allstate told him not to worry about whether the damage was attributed to wind or flood, that it would all come out in the wash. "It was basically, 'Look at the entire package, don't look at the wind claim for what it is, just look at the entire package,' " Smith said. "It was pretty clear."
Saturday, May 1, 2010
My letter to Senator Shelby
My letter to Senator Shelby
The Honorable Richard Shelby
335 Russell Senate Office Building
Washington, D.C. 20510
Dear Senator Shelby,
I want to thank you for taking the time to read this. I am writing this on behalf of the roughly 250,000 people of Mobile and surrounding areas, including Baldwin County, Al. I am an active member in the Eastern Shore Chamber of Commerce. I am involved in two committees, Governmental Affairs and the Insurance Sub Committee, as well as an Ambassador. My goal in writing you this letter is to inform you of the dire crisis we face as a community in South Alabama. Insurance Reform is no longer an option, but a crucial mandate for our area to survive, much less flourish.
I would not attempt to bring this to your attention if I did not feel it was a matter that is worthy of national attention. I am an Insurance Broker, specializing in Homeowners Insurance in Baldwin County. My clients consist of residents of Baldwin and Mobile county. I moved here around a year and a half ago, so I have a unique view of the situation. I have not witnessed a major storm on these shores, but as a former Catastrophic Claims Adjuster, I have been present in many dire situations. I was one of the first to arrive after a major hurricane/tornado. I have witnessed the devastation that a Category 3 or higher storm can bring to an area. Enough about me.
I understand that many think that there is no crisis affecting South Alabama. As I understand, this is where the wealthy folk of the State live and work. I myself have not met many of these wealthy people, but each and every day I talk to the average citizens that make up the bulk of our community.
In 1969 Hurricane Camille roared ashore, primarily on the Mississippi Coast. While doing substantial damage to both states, the storm quickly moved inland, flooding large areas of Kentucky and even West Virginia and Virginia (my home state).
In 1979, the one that people still mention to this day, Hurricane Frederic was the costliest hurricane to ever hit the Gulf Coast, until Andrew and Katrina. On the night of September 12th, my birthday, Fredric made landfall on Dauphin Island. This storm changed Gulf Shores and Alabama forever.
In 1997, Hurricane Danny entered the Gulf of Mexico and made landfall, affecting Alabama. Danny was widely known for the large amounts of rain fall and flood. Danny went on to affect Massachusetts with record rain and wind.
In 1998, Hurricane Georges affected Alabama, but causing far more damage in other states and countries, making landfall a total of seven times during its formation.
2004 gave the Gulf Coast Hurricane Ivan, making landfall with 132 mph winds. Gulf Shores took the brunt of this storm as a Category 3. This was an unusual storm, being the 6th most intense storm on record, with a minimum pressure of 910 millibars. Ivan may have the largest ocean wave ever recorded, ranging from 91 feet to 131 feet. Ivan also continued to proceed to the north, devastating Kentucky and Ohio with record amounts of rain and flood.
2005 was, well, the Katrina years. We all know about the destruction caused to New Orleans. While almost destroying New Orleans, it also caused damage here locally, in Alabama.
But, through all that, many of the residents and homes survived. And businesses re established and communities continue to try to grow.
First of all, to even attempt to predict the future, we must learn about the past. As I understand, several years ago, pre Katrina, hurricane deductibles were optional, allowing the homeowner to save premium by opting for a separate deductible. Generally, this deductible is a percentage of the structural amount. It is unknown to anyone why it’s a percent of the full structural amount, and not of the damage caused. For example, if the structure is insured for $200,000 and the damage is $50,000, a reasonable person would assume that the percentage of wind deductible would apply to the damage, not the structural coverage. A 5% deductible of the entire amount would equal $10,000. A 5% deductible of the damage would equal $2500.
Based on current conditions, there are no admitted carriers writing with wind. State Farm, like many coastal states, has begun to pick and choose the homes it wants to insure. Alfa, Farmers and Allstate recently cancelled or non-renewed up to 14,000 home here in the Mobile area. Imagine receiving that news in your mailbox one day. After 23 years, and no claims, the company you trusted for a combination of insurance products is no longer willing to insure you. Of course, keep in mind, the mortgage companies require wind/hail insurance on the home. So, you are forced to satisfy the mortgage requirements and find insurance somewhere. Well, for most cases, you have two options. Geovera, a non admitted carrier, or the Alabama Wind Pool, which is widely known as the carrier of last resort. So, you begin to call various agents attempting to receive quotes, which all come back the same because there simply is no competition to drive prices down. Many times, if there is no mortgage, the client will decide to self insure.
Homeowners are reporting rate increases of 250% since 2005. The homeowner then reads the Newspaper about more cancellations. As an example, Alfa cancels thousands of policies, then later announces they only made $500 million profit for the year. All the while, companies are cancelling insurance policies, but we are forced to watch their smiling faces on commercials. They tell us they are our friends and will take care of us when we need them, or how they can save us money by switching today.
Another thing to mention, is how the North part of the State, generally believes they are subsidizing our rates locally. A $200,000 home in North Alabama may cost $700 a year to insure. Many companies will fight for this business, all admitted carriers. Yet, twice a year, tornados will pass through and cause focused damage to towns all over the northern part of the State. Ripping off roofs, damaging buildings that are insured for moderate fees. That same home in Baldwin County would cost $2300 to insure, if it is even remotely close to the shore line.
So, to recap, many of the hurricanes caused damage here. No one will deny that. But, it also caused damage to inland cities and other states, such as Kentucky and Ohio. Northern Alabama will receive widespread damage, from tornados , twice a year, and we are paying the brunt of all of this.
Now, imagine the worst. It’s estimated by industry professionals locally that as much as 20% of homeowners in this area are uninsured, typically by choice as they simply cannot afford the premiums. A storm hits, 20% of this community will not be able to rebuild. They will be forced to spend savings to move to another part of the State, or even another part of the country. I think it’s safe to assume that another 20-40% will simply not rebuild here, due to fear of even higher increased fees from insurance companies. So now, we are left with 40-60% of a once thriving community. Mobile was recently named one of the top ten cities to quickly recover from a recession. With only 40% of the community left, devastated by a storm, the area’s population will likely continue to erode. Schools will no longer have the revenue to operate, as a large portion of the tax base will have left the area. Our schools are already underfunded, like many across the country. It’s estimated that they have 16 hours worth of funds needed to operate in a crisis. Businesses will begin to shut down, because they simply have no traffic to generate revenue. Home Depot’s, hotels, restaurants and movie theatres will close their doors. Over a very short period of time, this area will be a shell of its former self.
A young couple decides to venture out into life and purchase a new home. With a $800 a month budget, options are great right now. They go to a Realtor to view houses. They choose the perfect home to begin their family. Unfortunately, the home costs $1000 a month. Well, they can trim back on the cell phone, cut the cable bill and make that extra $200 a month available. It’s a stretch, but it’s also a dream. Then the Realtor contacts me, and the price is another $240 a month for insurance. So, the builder doesn’t sell a home. The Realtor doesn’t sell a home. The insurance agent doesn’t write a policy. An industry segment is not stimulated to continue. And lets not forget, the most important factor, a young couple doesn’t realize their dreams in starting a new family.
As I have explained, we are in a crisis. It invades everyone’s minds, dominates almost every casual conversation. It’s the top news topic for this area. Just today, on the front page, we read how Farmers Insurance is cancelling another 10,400 policies. Its estimated that over 50,000 policies have been dropped/non renewed since 2005. What part of this situation is not a crisis? We are caught in a political situation that lets the wants of a few dictate the needs of many. We are in a situation where the insurance companies are running the State, not the State running the insurance companies. Insurance is primarily based upon the Law of Large Numbers. The profits of many gain more than the loss of a few. Insurance is not a guarantee, yet the insurance companies are creating that. I am not one that is against profit. Profit creates wealth, wealth creates industry. I own two businesses here locally; I get up every morning to make money. However, when a company that pulls out from insuring the area, cancels thousands of policies states that they only made a $500 million profit for the year, the general populace gets confused, me being one of them. How can the northern part of the State claim to subsidize us when we pay the outrageous rates? These storms, as stated above, do damage here. But they also do damage in other states, far north of us. We just pay the rates associated with the damage. Locals are beginning to get angry about the current status here. I have heard mention that we hold 40% of the State’s tourism dollar, with all of the States Gulf Oil revenue. This is estimated to be 30% of the entire States revenue. One gets the feeling that people will no longer be satisfied with asking and will start demanding our representatives to represent us. I firmly believe that we have to start with building better homes, more wind resistant. I also believe that until we give competition a reason to compete, we will remain in this situation. There is a local uproar about where the money is going that we contribute, only to be told by State Senator Lloyd Barron “I am 400 miles away from the coast line, I don’t have to care about the insurance rates.” Sen. Roger Bedford, D-Russellville is quoted as stating “that north Alabama lawmakers would frown on subsidizing the Gulf Coast. “ People are angry because we are sending all this money north, only to pay three to four times what others in the State are paying. People can only be consoled for so long before they begin to react. State Senator Ben Brooks and State Senator Tripp Pittman work hard to take ideas, write a bill proposal, only to encounter repeated resistance from law makers in North Alabama. Why? For fear of rate increases to their constituents? Or fear of reprimand from the large PAC’s that they represent? When a representative of my State, of any part of it, tells me how they do not care about my quality of life, it breaks down my belief in the entire system of government we have in place.
My goal is to achieve insurance reform. I intend to make this a State, and if possible, a national issue. So often our Federal and State governments come in after the disaster to provide assistance. For once, lets be involved before the disaster hits to minimize the disaster itself. I honestly do not know what the solution is. I talk to others on the matter every day. There are some sane and some radical ideas presented, but the worst ideas are those unspoken. We need to address this situation immediately, before we watch history re written, in a way that will not be remembered well. It starts with competition and knowledge. We cannot stop the hurricanes, but we can build more wind resistant homes. We can give tax incentives to citizens that will retro fit with safety features such as wind resistant windows, hurricane straps, etc. We can work with the insurance companies to develop a plan to keep this area insured, instead of working against the insurance companies. We can have better State regulation. We can have more informed citizens by instructing on how to prepare for a storm, how to prepare for claims. We simply must find a way to allow this area to be insurable again. After all, the only thing worse than high priced insurance is no insurance at all. Please focus your attention on this matter, the crisis that we are facing. We have continued to face this alone, feeling separated and alienated from the rest of our State. We also feel that our Northern representatives are not representing the interests of the entire State. It is of utmost importance that we act now, today, this very minute.
Sincerely,
Jason Horn
The Insurance Guy
Daphne, Al.
Jason.horn@mchsi.com
251-445-8777
The Honorable Richard Shelby
335 Russell Senate Office Building
Washington, D.C. 20510
Dear Senator Shelby,
I want to thank you for taking the time to read this. I am writing this on behalf of the roughly 250,000 people of Mobile and surrounding areas, including Baldwin County, Al. I am an active member in the Eastern Shore Chamber of Commerce. I am involved in two committees, Governmental Affairs and the Insurance Sub Committee, as well as an Ambassador. My goal in writing you this letter is to inform you of the dire crisis we face as a community in South Alabama. Insurance Reform is no longer an option, but a crucial mandate for our area to survive, much less flourish.
I would not attempt to bring this to your attention if I did not feel it was a matter that is worthy of national attention. I am an Insurance Broker, specializing in Homeowners Insurance in Baldwin County. My clients consist of residents of Baldwin and Mobile county. I moved here around a year and a half ago, so I have a unique view of the situation. I have not witnessed a major storm on these shores, but as a former Catastrophic Claims Adjuster, I have been present in many dire situations. I was one of the first to arrive after a major hurricane/tornado. I have witnessed the devastation that a Category 3 or higher storm can bring to an area. Enough about me.
I understand that many think that there is no crisis affecting South Alabama. As I understand, this is where the wealthy folk of the State live and work. I myself have not met many of these wealthy people, but each and every day I talk to the average citizens that make up the bulk of our community.
In 1969 Hurricane Camille roared ashore, primarily on the Mississippi Coast. While doing substantial damage to both states, the storm quickly moved inland, flooding large areas of Kentucky and even West Virginia and Virginia (my home state).
In 1979, the one that people still mention to this day, Hurricane Frederic was the costliest hurricane to ever hit the Gulf Coast, until Andrew and Katrina. On the night of September 12th, my birthday, Fredric made landfall on Dauphin Island. This storm changed Gulf Shores and Alabama forever.
In 1997, Hurricane Danny entered the Gulf of Mexico and made landfall, affecting Alabama. Danny was widely known for the large amounts of rain fall and flood. Danny went on to affect Massachusetts with record rain and wind.
In 1998, Hurricane Georges affected Alabama, but causing far more damage in other states and countries, making landfall a total of seven times during its formation.
2004 gave the Gulf Coast Hurricane Ivan, making landfall with 132 mph winds. Gulf Shores took the brunt of this storm as a Category 3. This was an unusual storm, being the 6th most intense storm on record, with a minimum pressure of 910 millibars. Ivan may have the largest ocean wave ever recorded, ranging from 91 feet to 131 feet. Ivan also continued to proceed to the north, devastating Kentucky and Ohio with record amounts of rain and flood.
2005 was, well, the Katrina years. We all know about the destruction caused to New Orleans. While almost destroying New Orleans, it also caused damage here locally, in Alabama.
But, through all that, many of the residents and homes survived. And businesses re established and communities continue to try to grow.
First of all, to even attempt to predict the future, we must learn about the past. As I understand, several years ago, pre Katrina, hurricane deductibles were optional, allowing the homeowner to save premium by opting for a separate deductible. Generally, this deductible is a percentage of the structural amount. It is unknown to anyone why it’s a percent of the full structural amount, and not of the damage caused. For example, if the structure is insured for $200,000 and the damage is $50,000, a reasonable person would assume that the percentage of wind deductible would apply to the damage, not the structural coverage. A 5% deductible of the entire amount would equal $10,000. A 5% deductible of the damage would equal $2500.
Based on current conditions, there are no admitted carriers writing with wind. State Farm, like many coastal states, has begun to pick and choose the homes it wants to insure. Alfa, Farmers and Allstate recently cancelled or non-renewed up to 14,000 home here in the Mobile area. Imagine receiving that news in your mailbox one day. After 23 years, and no claims, the company you trusted for a combination of insurance products is no longer willing to insure you. Of course, keep in mind, the mortgage companies require wind/hail insurance on the home. So, you are forced to satisfy the mortgage requirements and find insurance somewhere. Well, for most cases, you have two options. Geovera, a non admitted carrier, or the Alabama Wind Pool, which is widely known as the carrier of last resort. So, you begin to call various agents attempting to receive quotes, which all come back the same because there simply is no competition to drive prices down. Many times, if there is no mortgage, the client will decide to self insure.
Homeowners are reporting rate increases of 250% since 2005. The homeowner then reads the Newspaper about more cancellations. As an example, Alfa cancels thousands of policies, then later announces they only made $500 million profit for the year. All the while, companies are cancelling insurance policies, but we are forced to watch their smiling faces on commercials. They tell us they are our friends and will take care of us when we need them, or how they can save us money by switching today.
Another thing to mention, is how the North part of the State, generally believes they are subsidizing our rates locally. A $200,000 home in North Alabama may cost $700 a year to insure. Many companies will fight for this business, all admitted carriers. Yet, twice a year, tornados will pass through and cause focused damage to towns all over the northern part of the State. Ripping off roofs, damaging buildings that are insured for moderate fees. That same home in Baldwin County would cost $2300 to insure, if it is even remotely close to the shore line.
So, to recap, many of the hurricanes caused damage here. No one will deny that. But, it also caused damage to inland cities and other states, such as Kentucky and Ohio. Northern Alabama will receive widespread damage, from tornados , twice a year, and we are paying the brunt of all of this.
Now, imagine the worst. It’s estimated by industry professionals locally that as much as 20% of homeowners in this area are uninsured, typically by choice as they simply cannot afford the premiums. A storm hits, 20% of this community will not be able to rebuild. They will be forced to spend savings to move to another part of the State, or even another part of the country. I think it’s safe to assume that another 20-40% will simply not rebuild here, due to fear of even higher increased fees from insurance companies. So now, we are left with 40-60% of a once thriving community. Mobile was recently named one of the top ten cities to quickly recover from a recession. With only 40% of the community left, devastated by a storm, the area’s population will likely continue to erode. Schools will no longer have the revenue to operate, as a large portion of the tax base will have left the area. Our schools are already underfunded, like many across the country. It’s estimated that they have 16 hours worth of funds needed to operate in a crisis. Businesses will begin to shut down, because they simply have no traffic to generate revenue. Home Depot’s, hotels, restaurants and movie theatres will close their doors. Over a very short period of time, this area will be a shell of its former self.
A young couple decides to venture out into life and purchase a new home. With a $800 a month budget, options are great right now. They go to a Realtor to view houses. They choose the perfect home to begin their family. Unfortunately, the home costs $1000 a month. Well, they can trim back on the cell phone, cut the cable bill and make that extra $200 a month available. It’s a stretch, but it’s also a dream. Then the Realtor contacts me, and the price is another $240 a month for insurance. So, the builder doesn’t sell a home. The Realtor doesn’t sell a home. The insurance agent doesn’t write a policy. An industry segment is not stimulated to continue. And lets not forget, the most important factor, a young couple doesn’t realize their dreams in starting a new family.
As I have explained, we are in a crisis. It invades everyone’s minds, dominates almost every casual conversation. It’s the top news topic for this area. Just today, on the front page, we read how Farmers Insurance is cancelling another 10,400 policies. Its estimated that over 50,000 policies have been dropped/non renewed since 2005. What part of this situation is not a crisis? We are caught in a political situation that lets the wants of a few dictate the needs of many. We are in a situation where the insurance companies are running the State, not the State running the insurance companies. Insurance is primarily based upon the Law of Large Numbers. The profits of many gain more than the loss of a few. Insurance is not a guarantee, yet the insurance companies are creating that. I am not one that is against profit. Profit creates wealth, wealth creates industry. I own two businesses here locally; I get up every morning to make money. However, when a company that pulls out from insuring the area, cancels thousands of policies states that they only made a $500 million profit for the year, the general populace gets confused, me being one of them. How can the northern part of the State claim to subsidize us when we pay the outrageous rates? These storms, as stated above, do damage here. But they also do damage in other states, far north of us. We just pay the rates associated with the damage. Locals are beginning to get angry about the current status here. I have heard mention that we hold 40% of the State’s tourism dollar, with all of the States Gulf Oil revenue. This is estimated to be 30% of the entire States revenue. One gets the feeling that people will no longer be satisfied with asking and will start demanding our representatives to represent us. I firmly believe that we have to start with building better homes, more wind resistant. I also believe that until we give competition a reason to compete, we will remain in this situation. There is a local uproar about where the money is going that we contribute, only to be told by State Senator Lloyd Barron “I am 400 miles away from the coast line, I don’t have to care about the insurance rates.” Sen. Roger Bedford, D-Russellville is quoted as stating “that north Alabama lawmakers would frown on subsidizing the Gulf Coast. “ People are angry because we are sending all this money north, only to pay three to four times what others in the State are paying. People can only be consoled for so long before they begin to react. State Senator Ben Brooks and State Senator Tripp Pittman work hard to take ideas, write a bill proposal, only to encounter repeated resistance from law makers in North Alabama. Why? For fear of rate increases to their constituents? Or fear of reprimand from the large PAC’s that they represent? When a representative of my State, of any part of it, tells me how they do not care about my quality of life, it breaks down my belief in the entire system of government we have in place.
My goal is to achieve insurance reform. I intend to make this a State, and if possible, a national issue. So often our Federal and State governments come in after the disaster to provide assistance. For once, lets be involved before the disaster hits to minimize the disaster itself. I honestly do not know what the solution is. I talk to others on the matter every day. There are some sane and some radical ideas presented, but the worst ideas are those unspoken. We need to address this situation immediately, before we watch history re written, in a way that will not be remembered well. It starts with competition and knowledge. We cannot stop the hurricanes, but we can build more wind resistant homes. We can give tax incentives to citizens that will retro fit with safety features such as wind resistant windows, hurricane straps, etc. We can work with the insurance companies to develop a plan to keep this area insured, instead of working against the insurance companies. We can have better State regulation. We can have more informed citizens by instructing on how to prepare for a storm, how to prepare for claims. We simply must find a way to allow this area to be insurable again. After all, the only thing worse than high priced insurance is no insurance at all. Please focus your attention on this matter, the crisis that we are facing. We have continued to face this alone, feeling separated and alienated from the rest of our State. We also feel that our Northern representatives are not representing the interests of the entire State. It is of utmost importance that we act now, today, this very minute.
Sincerely,
Jason Horn
The Insurance Guy
Daphne, Al.
Jason.horn@mchsi.com
251-445-8777
Editorial: It's not just south Alabama that's affected by hurricanes
Editorial: It's not just south Alabama that's affected by hurricanes
By Press-Register Editorial Board
April 08, 2010, 9:00AM
THE LATE-session massacre of six coastal insurance bills left Mobile and Baldwin residents to wonder whether the powerbrokers in the Legislature understand the importance of the coastal counties to the state’s economy.
Lawmakers like Sen. Lowell Barron, a Democrat from Fyffe, seem to only grudgingly accept that Mobile and Baldwin counties are part of the state of Alabama.
During a debate two years ago on bills designed to bolster the struggling homeowners’ insurance market in southwest Alabama, Sen. Barron advised Sen. Ben Brooks, R-Mobile, that he didn’t have to support his insurance proposals because Fyffe was a long way — about 400 miles — from Mobile.
It’s hard to top that expression of parochialism, but Sen. Barron may have done it last week when he explained why he was, once again, opposing Sen. Brooks’ insurance reform bills.
"He’s just an abrasive personality," Sen. Barron said, referring to his colleague from Mobile. "He doesn’t understand the legislative process enough to get others to help him solve his problems."
Sen. Barron obviously personalizes the legislative process to the extent that he cannot recognize a problem that affects the entire state, including Fyffe.
To be fair, Sen. Barron also invoked the hazards of government intrusion in private business as a reason for opposing the insurance bills.
But we suspect that this was just a high-minded cover for the personal and parochial considerations that drive his opposition to virtually all efforts to help property owners in Mobile and Baldwin.
Since 2004, the state’s major insurers have dropped wind coverage for more than 51,000 policyholders in Mobile and Baldwin.
Thousands of homeowners have been forced to buy high-priced wind coverage from the wind pool, the state’s insurer of last resort.
Thousands more have watched their insurance premiums soar by as much as 100 percent in just a few years.
This is a problem for all of Alabama. The coastal counties anchor the state’s $9 billion tourism industry.
State Revenue Commissioner Tim Russell says Mobile and Baldwin generate $1.8 billion in state revenue.
Indeed, almost 20 percent of the state’s take from individual income taxes comes from Mobile and Baldwin residents.
The insurance crisis already is hurting the coastal economy, and the problem will likely get worse unless the Legislature takes action to provide some relief.
If the coastal economy, hammered by soaring insurance rates, stops generating its usual share of state revenue, those who’ve thwarted insurance reform will be hard-pressed to defend their narrow view of state priorities.
By Press-Register Editorial Board
April 08, 2010, 9:00AM
THE LATE-session massacre of six coastal insurance bills left Mobile and Baldwin residents to wonder whether the powerbrokers in the Legislature understand the importance of the coastal counties to the state’s economy.
Lawmakers like Sen. Lowell Barron, a Democrat from Fyffe, seem to only grudgingly accept that Mobile and Baldwin counties are part of the state of Alabama.
During a debate two years ago on bills designed to bolster the struggling homeowners’ insurance market in southwest Alabama, Sen. Barron advised Sen. Ben Brooks, R-Mobile, that he didn’t have to support his insurance proposals because Fyffe was a long way — about 400 miles — from Mobile.
It’s hard to top that expression of parochialism, but Sen. Barron may have done it last week when he explained why he was, once again, opposing Sen. Brooks’ insurance reform bills.
"He’s just an abrasive personality," Sen. Barron said, referring to his colleague from Mobile. "He doesn’t understand the legislative process enough to get others to help him solve his problems."
Sen. Barron obviously personalizes the legislative process to the extent that he cannot recognize a problem that affects the entire state, including Fyffe.
To be fair, Sen. Barron also invoked the hazards of government intrusion in private business as a reason for opposing the insurance bills.
But we suspect that this was just a high-minded cover for the personal and parochial considerations that drive his opposition to virtually all efforts to help property owners in Mobile and Baldwin.
Since 2004, the state’s major insurers have dropped wind coverage for more than 51,000 policyholders in Mobile and Baldwin.
Thousands of homeowners have been forced to buy high-priced wind coverage from the wind pool, the state’s insurer of last resort.
Thousands more have watched their insurance premiums soar by as much as 100 percent in just a few years.
This is a problem for all of Alabama. The coastal counties anchor the state’s $9 billion tourism industry.
State Revenue Commissioner Tim Russell says Mobile and Baldwin generate $1.8 billion in state revenue.
Indeed, almost 20 percent of the state’s take from individual income taxes comes from Mobile and Baldwin residents.
The insurance crisis already is hurting the coastal economy, and the problem will likely get worse unless the Legislature takes action to provide some relief.
If the coastal economy, hammered by soaring insurance rates, stops generating its usual share of state revenue, those who’ve thwarted insurance reform will be hard-pressed to defend their narrow view of state priorities.
Friday, April 30, 2010
Long read, but well worth it.
LESSONS IN LEADERSHIP: From a Janitor
Wharton Leadership Digest, December 2001
By Colonel James E. Moschgat, Commander of the 12th
Operations Group, 12th Flying Training Wing, Randolph
Air Force Base, Texas
William “Bill” Crawford certainly was an unimpressive figure,
one you could easily overlook during a hectic day at the
U.S. Air Force Academy. Mr. Crawford, as most of us
referred to him back in the late 1970s, was our squadron
janitor.
While we cadets busied ourselves preparing for academic
exams, athletic events, Saturday morning parades and room inspections, or
never-ending leadership classes, Bill quietly moved about the squadron mopping
and buffing floors, emptying trash cans, cleaning toilets, or just tidying up the
mess 100 college-age kids can leave in a dormitory. Sadly, and for many years,
few of us gave him much notice, rendering little more than a passing nod or
throwing a curt, “G’morning!” in his direction as we hurried off to our daily duties.
Why? Perhaps it was because of the way he did his job-he always kept the
squadron area spotlessly clean, even the toilets and showers gleamed. Frankly,
he did his job so well, none of us had to notice or get involved. After all, cleaning
toilets was his job, not ours. Maybe it was is physical appearance that made him
disappear into the background. Bill didn’t move very quickly and, in fact, you
could say he even shuffled a bit, as if he suffered from some sort of injury. His
gray hair and wrinkled face made him appear ancient to a group of young cadets.
And his crooked smile, well, it looked a little funny. Face it, Bill was an old man
working in a young person’s world. What did he have to offer us on a personal
level?
Finally, maybe it was Mr. Crawford’s personality that rendered him almost
invisible to the young people around him. Bill was shy, almost painfully so. He
seldom spoke to a cadet unless they addressed him first, and that didn’t happen
very often. Our janitor always buried himself in his work, moving about with
stooped shoulders, a quiet gait, and an averted gaze. If he noticed the hustle
and bustle of cadet life around him, it was hard to tell. So, for whatever reason,
Bill blended into the woodwork and became just another fixture around the
squadron. The Academy, one of our nation’s premier leadership laboratories,
kept us busy from dawn till dusk. And Mr. Crawford...well, he was just a janitor.
That changed one fall Saturday afternoon in 1976. I was reading a book about
World War II and the tough Allied ground campaign in Italy, when I stumbled
across an incredible story. On September 13, 1943, a Private William Crawford
from Colorado, assigned to the 36th Infantry Division, had been involved in some
bloody fighting on Hill 424 near Altavilla, Italy. The words on the page leapt out at
me: “in the face of intense and overwhelming hostile fire ... with no regard for
personal safety ... on his own initiative, Private Crawford single-handedly
attacked fortified enemy positions.” It continued, “for conspicuous gallantry and
intrepidity at risk of life above and beyond the call of duty, the President of the
United States ...”
“Holy cow,” I said to my roommate, “you’re not going to believe this, but I think
our janitor is a Medal of Honor winner.” We all knew Mr. Crawford was a WWII
Army vet, but that didn’t keep my friend from looking at me as if I was some sort
of alien being. Nonetheless, we couldn’t wait to ask Bill about the story on
Monday. We met Mr. Crawford bright and early Monday and showed him the
page in question from the book, anticipation and doubt in our faces. He starred
at it for a few silent moments and then quietly uttered something like, “Yep, that’s
me.”
Mouths agape, my roommate and I looked at one another,
then at the book, and quickly back at our janitor. Almost at
once we both stuttered, “Why didn’t you ever tell us about it?”
He slowly replied after some thought, “That was one day in
my life and it happened a long time ago.”
I guess we were all at a loss for words after that. We had to
hurry off to class and Bill, well, he had chores to attend to.
However, after that brief exchange, things were never again
the same around our squadron. Word spread like wildfire
among the cadets that we had a hero in our midst-Mr. Crawford, our janitor, had
won the Medal! Cadets who had once passed by Bill with hardly a glance, now
greeted him with a smile and a respectful, “Good morning, Mr. Crawford.”
Those who had before left a mess for the “janitor” to clean up started taking it
upon themselves to put things in order. Most cadets routinely stopped to talk to
Bill throughout the day and we even began inviting him to our formal squadron
functions. He’d show up dressed in a conservative dark suit and quietly talk to
those who approached him, the only sign of his heroics being a simple blue, starspangled
lapel pin.
Almost overnight, Bill went from being a simple fixture in our squadron to one of
our teammates. Mr. Crawford changed too, but you had to look closely to notice
the difference. After that fall day in 1976, he seemed to move with more
purpose, his shoulders didn’t seem to be as stooped, he met our greetings with a
direct gaze and a stronger “good morning” in return, and he flashed his crooked
smile more often. The squadron gleamed as always, but everyone now seemed
to notice it more. Bill even got to know most of us by our first names, something
that didn’t happen often at the Academy. While no one ever formally
acknowledged the change, I think we became Bill’s cadets and his squadron.
As often happens in life, events sweep us away from those in
our past. The last time I saw Bill was on graduation day in
June 1977. As I walked out of the squadron for the last time,
he shook my hand and simply said, “Good luck, young man.”
With that, I embarked on a career that has been truly lucky
and blessed. Mr. Crawford continued to work at the
Academy and eventually retired in his native Colorado where
he resides today, one of four Medal of Honor winners living in
a small town.
A wise person once said, “It’s not life that’s important, but
those you meet along the way that make the difference.” Bill was one who made
a difference for me. While I haven’t seen Mr. Crawford in over twenty years,
he’d probably be surprised to know I think of him often. Bill Crawford, our janitor,
taught me many valuable, unforgettable leadership lessons. Here are ten I’d like
to share with you.
1. Be Cautious of Labels. Labels you place on people may define your
relationship to them and bound their potential. Sadly, and for a long time, we
labeled Bill as just a janitor, but he was so much more. Therefore, be cautious of
a leader who callously says, “Hey, he’s just an Airman.” Likewise, don’t tolerate
the O-1, who says, “I can’t do that, I’m just a lieutenant.”
2. Everyone Deserves Respect. Because we hung the “janitor” label on Mr.
Crawford, we often wrongly treated him with less respect than others around us.
He deserved much more, and not just because he was a Medal of Honor winner.
Bill deserved respect because he was a janitor, walked among us, and was a
part of our team.
3. Courtesy Makes a Difference. Be courteous to all around you, regardless of
rank or position. Military customs, as well as common courtesies, help bond a
team. When our daily words to Mr. Crawford turned from perfunctory “hellos” to
heartfelt greetings, his demeanor and personality outwardly changed. It made a
difference for all of us.
4. Take Time to Know Your People. Life in the military is hectic, but that’s no
excuse for not knowing the people you work for and with. For years a hero
walked among us at the Academy and we never knew it. Who are the heroes
that walk in your midst?
5. Anyone Can Be a Hero. Mr. Crawford certainly didn’t fit anyone’s standard
definition of a hero. Moreover, he was just a private on the day he won his
Medal. Don’t sell your people short, for any one of them may be the hero who
rises to the occasion when duty calls. On the other hand, it’s easy to turn to your
proven performers when the chips are down, but don’t ignore the rest of the
team. Today’s rookie could and should be tomorrow’s superstar.
6. Leaders Should Be Humble. Most modern day heroes and some leaders are
anything but humble, especially if you calibrate your “hero meter” on today’s
athletic fields. End zone celebrations and self-aggrandizement are what we’ve
come to expect from sports greats. Not Mr. Crawford-he was too busy working to
celebrate his past heroics. Leaders would be well-served to do the same.
7. Life Won’t Always Hand You What You Think You Deserve. We in the military
work hard and, dang it, we deserve recognition, right? However, sometimes you
just have to persevere, even when accolades don’t come your way. Perhaps you
weren’t nominated for junior officer or airman of the quarter as you thought you
should - don’t let that stop you.
8. Don’t pursue glory; pursue excellence. Private Bill Crawford didn’t pursue
glory; he did his duty and then swept floors for a living. No job is beneath a
Leader. If Bill Crawford, a Medal of Honor winner, could clean latrines and smile,
is there a job beneath your dignity? Think about it.
9. Pursue Excellence. No matter what task life hands you, do it well. Dr. Martin
Luther King said, “If life makes you a street sweeper, be the best street sweeper
you can be.” Mr. Crawford modeled that philosophy and helped make our
dormitory area a home.
10. Life is a Leadership Laboratory. All too often we look to some school or PME
class to teach us about leadership when, in fact, life is a leadership laboratory.
Those you meet everyday will teach you enduring lessons if you just take time to
stop, look and listen. I spent four years at the Air Force Academy, took dozens
of classes, read hundreds of books, and met thousands of great people. I
gleaned leadership skills from all of them, but one of the people I remember most
is Mr. Bill Crawford and the lessons he unknowingly taught. Don’t miss your
opportunity to learn.
Bill Crawford was a janitor. However, he was also a teacher, friend, role model
and one great American hero. Thanks, Mr. Crawford, for some valuable
leadership lessons.
Dale Pyeatt, Executive Director of the National Guard Association of Texas,
comments: And now, for the “rest of the story”: Pvt William John Crawford was
a platoon scout for 3rd Platoon of Company L 1 42nd Regiment 36th Division
(Texas National Guard) and won the Medal Of Honor for his actions on Hill 424,
just 4 days after the invasion at Salerno.
On Hill 424, Pvt Crawford took out 3 enemy machine guns before darkness fell,
halting the platoon’s advance. Pvt Crawford could not be found and was
assumed dead. The request for his MOH was quickly approved. Major General
Terry Allen presented the posthumous MOH to Bill Crawford’s father, George, on
11 May 1944 in Camp (now Fort) Carson, near Pueblo. Nearly two months after
that, it was learned that Pvt Crawford was alive in a POW camp in Germany.
During his captivity, a German guard clubbed him with his rifle. Bill overpowered
him, took the rifle away, and beat the guard unconscious. A German doctor’s
testimony saved him from severe punishment, perhaps death. To stay ahead of
the advancing Russian army, the prisoners were marched 500 miles in 52 days
in the middle of the German winter, subsisting on one potato a day. An allied
tank column liberated the camp in the spring of 1945, and Pvt Crawford took his
first hot shower in 18 months on VE Day. Pvt Crawford stayed in the army before
retiring as a MSG and becoming a janitor. In 1984, President Ronald Reagan
officially presented the MOH to Bill Crawford.
William Crawford passed away in 2000. He is the only U.S. Army veteran and
sole Medal of Honor winner to be buried in the cemetery of the U.S. Air Force
Academy.
Note: Co. James Moschgat can be contacted at
james.moschgat@randolph.af.mil. A profile of William Crawford is available at
http://www.homeofheroes.com/profiles/profiles_crawford.html, and his Medal of
Honor citation can be found at www.army.mil/cmh-pg/mohiia1.htm.
Wharton Leadership Digest, December 2001
By Colonel James E. Moschgat, Commander of the 12th
Operations Group, 12th Flying Training Wing, Randolph
Air Force Base, Texas
William “Bill” Crawford certainly was an unimpressive figure,
one you could easily overlook during a hectic day at the
U.S. Air Force Academy. Mr. Crawford, as most of us
referred to him back in the late 1970s, was our squadron
janitor.
While we cadets busied ourselves preparing for academic
exams, athletic events, Saturday morning parades and room inspections, or
never-ending leadership classes, Bill quietly moved about the squadron mopping
and buffing floors, emptying trash cans, cleaning toilets, or just tidying up the
mess 100 college-age kids can leave in a dormitory. Sadly, and for many years,
few of us gave him much notice, rendering little more than a passing nod or
throwing a curt, “G’morning!” in his direction as we hurried off to our daily duties.
Why? Perhaps it was because of the way he did his job-he always kept the
squadron area spotlessly clean, even the toilets and showers gleamed. Frankly,
he did his job so well, none of us had to notice or get involved. After all, cleaning
toilets was his job, not ours. Maybe it was is physical appearance that made him
disappear into the background. Bill didn’t move very quickly and, in fact, you
could say he even shuffled a bit, as if he suffered from some sort of injury. His
gray hair and wrinkled face made him appear ancient to a group of young cadets.
And his crooked smile, well, it looked a little funny. Face it, Bill was an old man
working in a young person’s world. What did he have to offer us on a personal
level?
Finally, maybe it was Mr. Crawford’s personality that rendered him almost
invisible to the young people around him. Bill was shy, almost painfully so. He
seldom spoke to a cadet unless they addressed him first, and that didn’t happen
very often. Our janitor always buried himself in his work, moving about with
stooped shoulders, a quiet gait, and an averted gaze. If he noticed the hustle
and bustle of cadet life around him, it was hard to tell. So, for whatever reason,
Bill blended into the woodwork and became just another fixture around the
squadron. The Academy, one of our nation’s premier leadership laboratories,
kept us busy from dawn till dusk. And Mr. Crawford...well, he was just a janitor.
That changed one fall Saturday afternoon in 1976. I was reading a book about
World War II and the tough Allied ground campaign in Italy, when I stumbled
across an incredible story. On September 13, 1943, a Private William Crawford
from Colorado, assigned to the 36th Infantry Division, had been involved in some
bloody fighting on Hill 424 near Altavilla, Italy. The words on the page leapt out at
me: “in the face of intense and overwhelming hostile fire ... with no regard for
personal safety ... on his own initiative, Private Crawford single-handedly
attacked fortified enemy positions.” It continued, “for conspicuous gallantry and
intrepidity at risk of life above and beyond the call of duty, the President of the
United States ...”
“Holy cow,” I said to my roommate, “you’re not going to believe this, but I think
our janitor is a Medal of Honor winner.” We all knew Mr. Crawford was a WWII
Army vet, but that didn’t keep my friend from looking at me as if I was some sort
of alien being. Nonetheless, we couldn’t wait to ask Bill about the story on
Monday. We met Mr. Crawford bright and early Monday and showed him the
page in question from the book, anticipation and doubt in our faces. He starred
at it for a few silent moments and then quietly uttered something like, “Yep, that’s
me.”
Mouths agape, my roommate and I looked at one another,
then at the book, and quickly back at our janitor. Almost at
once we both stuttered, “Why didn’t you ever tell us about it?”
He slowly replied after some thought, “That was one day in
my life and it happened a long time ago.”
I guess we were all at a loss for words after that. We had to
hurry off to class and Bill, well, he had chores to attend to.
However, after that brief exchange, things were never again
the same around our squadron. Word spread like wildfire
among the cadets that we had a hero in our midst-Mr. Crawford, our janitor, had
won the Medal! Cadets who had once passed by Bill with hardly a glance, now
greeted him with a smile and a respectful, “Good morning, Mr. Crawford.”
Those who had before left a mess for the “janitor” to clean up started taking it
upon themselves to put things in order. Most cadets routinely stopped to talk to
Bill throughout the day and we even began inviting him to our formal squadron
functions. He’d show up dressed in a conservative dark suit and quietly talk to
those who approached him, the only sign of his heroics being a simple blue, starspangled
lapel pin.
Almost overnight, Bill went from being a simple fixture in our squadron to one of
our teammates. Mr. Crawford changed too, but you had to look closely to notice
the difference. After that fall day in 1976, he seemed to move with more
purpose, his shoulders didn’t seem to be as stooped, he met our greetings with a
direct gaze and a stronger “good morning” in return, and he flashed his crooked
smile more often. The squadron gleamed as always, but everyone now seemed
to notice it more. Bill even got to know most of us by our first names, something
that didn’t happen often at the Academy. While no one ever formally
acknowledged the change, I think we became Bill’s cadets and his squadron.
As often happens in life, events sweep us away from those in
our past. The last time I saw Bill was on graduation day in
June 1977. As I walked out of the squadron for the last time,
he shook my hand and simply said, “Good luck, young man.”
With that, I embarked on a career that has been truly lucky
and blessed. Mr. Crawford continued to work at the
Academy and eventually retired in his native Colorado where
he resides today, one of four Medal of Honor winners living in
a small town.
A wise person once said, “It’s not life that’s important, but
those you meet along the way that make the difference.” Bill was one who made
a difference for me. While I haven’t seen Mr. Crawford in over twenty years,
he’d probably be surprised to know I think of him often. Bill Crawford, our janitor,
taught me many valuable, unforgettable leadership lessons. Here are ten I’d like
to share with you.
1. Be Cautious of Labels. Labels you place on people may define your
relationship to them and bound their potential. Sadly, and for a long time, we
labeled Bill as just a janitor, but he was so much more. Therefore, be cautious of
a leader who callously says, “Hey, he’s just an Airman.” Likewise, don’t tolerate
the O-1, who says, “I can’t do that, I’m just a lieutenant.”
2. Everyone Deserves Respect. Because we hung the “janitor” label on Mr.
Crawford, we often wrongly treated him with less respect than others around us.
He deserved much more, and not just because he was a Medal of Honor winner.
Bill deserved respect because he was a janitor, walked among us, and was a
part of our team.
3. Courtesy Makes a Difference. Be courteous to all around you, regardless of
rank or position. Military customs, as well as common courtesies, help bond a
team. When our daily words to Mr. Crawford turned from perfunctory “hellos” to
heartfelt greetings, his demeanor and personality outwardly changed. It made a
difference for all of us.
4. Take Time to Know Your People. Life in the military is hectic, but that’s no
excuse for not knowing the people you work for and with. For years a hero
walked among us at the Academy and we never knew it. Who are the heroes
that walk in your midst?
5. Anyone Can Be a Hero. Mr. Crawford certainly didn’t fit anyone’s standard
definition of a hero. Moreover, he was just a private on the day he won his
Medal. Don’t sell your people short, for any one of them may be the hero who
rises to the occasion when duty calls. On the other hand, it’s easy to turn to your
proven performers when the chips are down, but don’t ignore the rest of the
team. Today’s rookie could and should be tomorrow’s superstar.
6. Leaders Should Be Humble. Most modern day heroes and some leaders are
anything but humble, especially if you calibrate your “hero meter” on today’s
athletic fields. End zone celebrations and self-aggrandizement are what we’ve
come to expect from sports greats. Not Mr. Crawford-he was too busy working to
celebrate his past heroics. Leaders would be well-served to do the same.
7. Life Won’t Always Hand You What You Think You Deserve. We in the military
work hard and, dang it, we deserve recognition, right? However, sometimes you
just have to persevere, even when accolades don’t come your way. Perhaps you
weren’t nominated for junior officer or airman of the quarter as you thought you
should - don’t let that stop you.
8. Don’t pursue glory; pursue excellence. Private Bill Crawford didn’t pursue
glory; he did his duty and then swept floors for a living. No job is beneath a
Leader. If Bill Crawford, a Medal of Honor winner, could clean latrines and smile,
is there a job beneath your dignity? Think about it.
9. Pursue Excellence. No matter what task life hands you, do it well. Dr. Martin
Luther King said, “If life makes you a street sweeper, be the best street sweeper
you can be.” Mr. Crawford modeled that philosophy and helped make our
dormitory area a home.
10. Life is a Leadership Laboratory. All too often we look to some school or PME
class to teach us about leadership when, in fact, life is a leadership laboratory.
Those you meet everyday will teach you enduring lessons if you just take time to
stop, look and listen. I spent four years at the Air Force Academy, took dozens
of classes, read hundreds of books, and met thousands of great people. I
gleaned leadership skills from all of them, but one of the people I remember most
is Mr. Bill Crawford and the lessons he unknowingly taught. Don’t miss your
opportunity to learn.
Bill Crawford was a janitor. However, he was also a teacher, friend, role model
and one great American hero. Thanks, Mr. Crawford, for some valuable
leadership lessons.
Dale Pyeatt, Executive Director of the National Guard Association of Texas,
comments: And now, for the “rest of the story”: Pvt William John Crawford was
a platoon scout for 3rd Platoon of Company L 1 42nd Regiment 36th Division
(Texas National Guard) and won the Medal Of Honor for his actions on Hill 424,
just 4 days after the invasion at Salerno.
On Hill 424, Pvt Crawford took out 3 enemy machine guns before darkness fell,
halting the platoon’s advance. Pvt Crawford could not be found and was
assumed dead. The request for his MOH was quickly approved. Major General
Terry Allen presented the posthumous MOH to Bill Crawford’s father, George, on
11 May 1944 in Camp (now Fort) Carson, near Pueblo. Nearly two months after
that, it was learned that Pvt Crawford was alive in a POW camp in Germany.
During his captivity, a German guard clubbed him with his rifle. Bill overpowered
him, took the rifle away, and beat the guard unconscious. A German doctor’s
testimony saved him from severe punishment, perhaps death. To stay ahead of
the advancing Russian army, the prisoners were marched 500 miles in 52 days
in the middle of the German winter, subsisting on one potato a day. An allied
tank column liberated the camp in the spring of 1945, and Pvt Crawford took his
first hot shower in 18 months on VE Day. Pvt Crawford stayed in the army before
retiring as a MSG and becoming a janitor. In 1984, President Ronald Reagan
officially presented the MOH to Bill Crawford.
William Crawford passed away in 2000. He is the only U.S. Army veteran and
sole Medal of Honor winner to be buried in the cemetery of the U.S. Air Force
Academy.
Note: Co. James Moschgat can be contacted at
james.moschgat@randolph.af.mil. A profile of William Crawford is available at
http://www.homeofheroes.com/profiles/profiles_crawford.html, and his Medal of
Honor citation can be found at www.army.mil/cmh-pg/mohiia1.htm.
Thursday, April 29, 2010
Insurance CEO Pay
The hurricanes of 2004 and 2005 are long gone, but they left a lasting gouge on the property insurance market along the Gulf Coast. Insurance companies have raised rates, dropped thousands of policyholders and, in some cases, even stopped writing new business in the region, generally on the grounds that they must cut their potential losses from future storms.
But there is little sign the belt-tightening extends to top executives at those firms, when measured by pay. Since Hurricane Ivan struck in 2004 many industry leaders have enjoyed handsome boosts in compensation, according to public records reviewed by The Press-Register of Mobile. The companies defend their pay practices, offering a variety of reasons for the increases, such as strong corporate performance and pay scales at similarly sized firms.
At State Farm, which announced in February it was dropping homeowner coverage for some 2,600 policyholders in Mobile and Baldwin counties, Chairman and Chief Executive Officer Edward Rust Jr. collected about $11.7 million in salary and bonus last year - more than double the $5.5 million he received in 2004. Other top executives shared in the wealth. Michael Tipsord, the company's chief financial officer, made almost $5 million last year, compared with $1.1 million in 2004.
At Alfa Insurance Corp., which is dropping wind coverage for 4,600 coastal policyholders in Alabama, President and CEO Jerry Newby's compensation package last year totaled about $1.7 million, up by more than one-quarter since 2004. For chief executives at California-based Fire Insurance Exchange and Texas-based USAA, two other leading writers of homeowner policies in the state, the percentage increases in compensation during the 2004-06 time frame were about 75 and 150 percent, respectively.
The Press-Register obtained the numbers from the Nebraska Department of Insurance, which requires all insurers licensed in the state to report the total compensation of their 10 highest-paid executives each year. Of the leading homeowner-insurance providers in Alabama, the Nebraska agency lacked complete records for only one, the Automobile Insurance Company of Hartford.
At State Farm, which was Alabama's leading property insurer last year with almost 30 percent of the market, compensation "has been very modest compared to companies of our size," spokesman Phil Supple said. While the Illinois-based insurance giant ranked 22nd last year on Fortune magazine's list of the top 500 companies in the United States, Rust's compensation placed 124th, Supple said.
He also saw no connection between State Farm's executive pay scale and its efforts to limit exposure to future hurricane losses.
"That, in a way, is what's called good business," he said on the latter subject. "You need to make sure that you don't overextend your company and harm its financial strength."
Echoing that argument was Dave Rickey, a spokesman for Alfa, whose headquarters are in Montgomery. "We're always looking at the risk ahead, not necessarily what's happened in past years," Rickey said. He did not know all the factors behind the jump in Newby's compensation. About one-third came from salary and bonus increases; the remainder resulted from a boost in "all other compensation," according to Alfa's latest filing with the Nebraska insurance department. That category may include everything from stock options to long-term disability reimbursement, Rickey said.
One industry critic saw the growing pay packages as evidence of an industry awash in cash.
"They're making so much money, they've got to spend it somewhere," said Robert Hunter, director of insurance for the Consumer Federation of America, an advocacy group. "Why not spend it on themselves?"
In a study released early this year, Hunter concluded the property and casualty insurers garnered record profits of about $60 billion last year. At the same time, in a continuation of a trend dating to the late 1980s, claims payouts by the top 10 insurers fell to 52 percent of total premium revenue, the report estimated.
One partial exception to the trend of skyrocketing executive pay was Illinois-based Allstate Insurance Co., which has taken steps to drop between 9,500 and 10,000 homeowner policies in Alabama, according to the state insurance department. Chief Executive Edward Liddy's total compensation fell by almost one-third between 2004 and 2006. Still, his pay package, including stock options, last year amounted to about $20.1 million.
That figure, which comes from the company's filing with the Nebraska insurance department, is almost $4 million lower than Allstate reported in a proxy statement to the U.S. Securities and Exchange Commission earlier this year. Company spokeswoman Laura Strykowski could not explain the discrepancy. Liddy stepped down as Allstate's CEO at the end of last year, while keeping the chairman's post.
Of the nine other Allstate executives listed in the latest Nebraska report, seven had seen their compensation rise since 2004, sometimes significantly. For Robert Pike, executive vice president and secretary, last year's total added up to $11.1 million, well more than twice what he had earned two years earlier.
Allstate ties executive compensation to performance, Strykowski said. "With a superior year of performance in '06, Allstate's executives were paid superior levels of compensation," she said.
But there is little sign the belt-tightening extends to top executives at those firms, when measured by pay. Since Hurricane Ivan struck in 2004 many industry leaders have enjoyed handsome boosts in compensation, according to public records reviewed by The Press-Register of Mobile. The companies defend their pay practices, offering a variety of reasons for the increases, such as strong corporate performance and pay scales at similarly sized firms.
At State Farm, which announced in February it was dropping homeowner coverage for some 2,600 policyholders in Mobile and Baldwin counties, Chairman and Chief Executive Officer Edward Rust Jr. collected about $11.7 million in salary and bonus last year - more than double the $5.5 million he received in 2004. Other top executives shared in the wealth. Michael Tipsord, the company's chief financial officer, made almost $5 million last year, compared with $1.1 million in 2004.
At Alfa Insurance Corp., which is dropping wind coverage for 4,600 coastal policyholders in Alabama, President and CEO Jerry Newby's compensation package last year totaled about $1.7 million, up by more than one-quarter since 2004. For chief executives at California-based Fire Insurance Exchange and Texas-based USAA, two other leading writers of homeowner policies in the state, the percentage increases in compensation during the 2004-06 time frame were about 75 and 150 percent, respectively.
The Press-Register obtained the numbers from the Nebraska Department of Insurance, which requires all insurers licensed in the state to report the total compensation of their 10 highest-paid executives each year. Of the leading homeowner-insurance providers in Alabama, the Nebraska agency lacked complete records for only one, the Automobile Insurance Company of Hartford.
At State Farm, which was Alabama's leading property insurer last year with almost 30 percent of the market, compensation "has been very modest compared to companies of our size," spokesman Phil Supple said. While the Illinois-based insurance giant ranked 22nd last year on Fortune magazine's list of the top 500 companies in the United States, Rust's compensation placed 124th, Supple said.
He also saw no connection between State Farm's executive pay scale and its efforts to limit exposure to future hurricane losses.
"That, in a way, is what's called good business," he said on the latter subject. "You need to make sure that you don't overextend your company and harm its financial strength."
Echoing that argument was Dave Rickey, a spokesman for Alfa, whose headquarters are in Montgomery. "We're always looking at the risk ahead, not necessarily what's happened in past years," Rickey said. He did not know all the factors behind the jump in Newby's compensation. About one-third came from salary and bonus increases; the remainder resulted from a boost in "all other compensation," according to Alfa's latest filing with the Nebraska insurance department. That category may include everything from stock options to long-term disability reimbursement, Rickey said.
One industry critic saw the growing pay packages as evidence of an industry awash in cash.
"They're making so much money, they've got to spend it somewhere," said Robert Hunter, director of insurance for the Consumer Federation of America, an advocacy group. "Why not spend it on themselves?"
In a study released early this year, Hunter concluded the property and casualty insurers garnered record profits of about $60 billion last year. At the same time, in a continuation of a trend dating to the late 1980s, claims payouts by the top 10 insurers fell to 52 percent of total premium revenue, the report estimated.
One partial exception to the trend of skyrocketing executive pay was Illinois-based Allstate Insurance Co., which has taken steps to drop between 9,500 and 10,000 homeowner policies in Alabama, according to the state insurance department. Chief Executive Edward Liddy's total compensation fell by almost one-third between 2004 and 2006. Still, his pay package, including stock options, last year amounted to about $20.1 million.
That figure, which comes from the company's filing with the Nebraska insurance department, is almost $4 million lower than Allstate reported in a proxy statement to the U.S. Securities and Exchange Commission earlier this year. Company spokeswoman Laura Strykowski could not explain the discrepancy. Liddy stepped down as Allstate's CEO at the end of last year, while keeping the chairman's post.
Of the nine other Allstate executives listed in the latest Nebraska report, seven had seen their compensation rise since 2004, sometimes significantly. For Robert Pike, executive vice president and secretary, last year's total added up to $11.1 million, well more than twice what he had earned two years earlier.
Allstate ties executive compensation to performance, Strykowski said. "With a superior year of performance in '06, Allstate's executives were paid superior levels of compensation," she said.
Pocketing Premiums, Padding Profits & Passing Out Big Salaries and Bonuses
Pocketing Premiums, Padding Profits & Passing Out Big Salaries and Bonuses
While families, business owners, and community leaders were still digging their way through Katrina's rubble, insurance executives focused on pocketing policyholder premiums, padding corporate profits, and passing out big salaries and bonuses.
Pocketing Premiums, Padding Profits
Insurance company memos specifically directed employees to deny American policyholders wind damage claims for properties on which so much as a drop of water had been involved in the property damage. The insurance companies sent a $23 billion bill to the federal government's National Flood Insurance Program (NFIP). The amount of this $23 billion that stems from claims that the insurance companies willfully and fraudulently submitted to the federal government has yet to be determined.
What has been determined, however, is the billions of dollars in profit that the property insurance industry has publicly reported. In 2005--the year that Katrina hit the Gulf Coast, the Insurance Industry Institute reported te property insurance industry had a net gain of $19.5 billion--roughly the amount sent to the federal flood insurance program. That sectors total profit for the years was $44 billion. For 2006, the Institute reported $64 billion in profits for the industry. For 2005 and 2006 combined, property insurance companies cleared--after taxes and after submitting an untold number of fraudulent flood claims to the federal government --$108 billion in net profit.
Passing Out Big Bonuses and Salaries
ed_rust_stfarm_ceo.jpg
Ed Rust, Jr., State Farm
CEO and Chairman
photo from
State Farm website
State Farm
The Associated Press reported that State Farm's board of directors rewarded Ed Rust, Jr., chariman and CEO, with a $5.26 million raise in 2006, the year after Katrina devastaed the Gulf Coast. "He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million."
ed_liddy_allstate_ceo.jpg
Ed Liddy, Allstate CEO and
Chairman
photo: Allstate website
Allstate
Forbes Magazine reported the total compensation for Allstate's CEO Ed Liddy was $27 million in 2005 and $18 million for 2006.
Liddy, Allstate, and AIG
"On September 18, 2008, the Board of Directors of American International Group, Inc. elected Edward M. Liddy as Chief Executive Officer and a director of AIG and appointed him as Chairman of the Board. Mr. Liddy, age 62, joined the private equity investment firm of Clayton, Dubilier & Rice, Inc. earlier this year. He served as Chairman of the Board of The Allstate Corporation, the parent of Allstate Insurance Company, from January 1999 until his retirement in April 2008. He also served as Chief Executive Officer of Allstate from January 1999 to December 2006, President from January 1995 to May 2005, and Chief Operating Officer from August 1994 to January 1999." Forbes Magazine
While families, business owners, and community leaders were still digging their way through Katrina's rubble, insurance executives focused on pocketing policyholder premiums, padding corporate profits, and passing out big salaries and bonuses.
Pocketing Premiums, Padding Profits
Insurance company memos specifically directed employees to deny American policyholders wind damage claims for properties on which so much as a drop of water had been involved in the property damage. The insurance companies sent a $23 billion bill to the federal government's National Flood Insurance Program (NFIP). The amount of this $23 billion that stems from claims that the insurance companies willfully and fraudulently submitted to the federal government has yet to be determined.
What has been determined, however, is the billions of dollars in profit that the property insurance industry has publicly reported. In 2005--the year that Katrina hit the Gulf Coast, the Insurance Industry Institute reported te property insurance industry had a net gain of $19.5 billion--roughly the amount sent to the federal flood insurance program. That sectors total profit for the years was $44 billion. For 2006, the Institute reported $64 billion in profits for the industry. For 2005 and 2006 combined, property insurance companies cleared--after taxes and after submitting an untold number of fraudulent flood claims to the federal government --$108 billion in net profit.
Passing Out Big Bonuses and Salaries
ed_rust_stfarm_ceo.jpg
Ed Rust, Jr., State Farm
CEO and Chairman
photo from
State Farm website
State Farm
The Associated Press reported that State Farm's board of directors rewarded Ed Rust, Jr., chariman and CEO, with a $5.26 million raise in 2006, the year after Katrina devastaed the Gulf Coast. "He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million."
ed_liddy_allstate_ceo.jpg
Ed Liddy, Allstate CEO and
Chairman
photo: Allstate website
Allstate
Forbes Magazine reported the total compensation for Allstate's CEO Ed Liddy was $27 million in 2005 and $18 million for 2006.
Liddy, Allstate, and AIG
"On September 18, 2008, the Board of Directors of American International Group, Inc. elected Edward M. Liddy as Chief Executive Officer and a director of AIG and appointed him as Chairman of the Board. Mr. Liddy, age 62, joined the private equity investment firm of Clayton, Dubilier & Rice, Inc. earlier this year. He served as Chairman of the Board of The Allstate Corporation, the parent of Allstate Insurance Company, from January 1999 until his retirement in April 2008. He also served as Chief Executive Officer of Allstate from January 1999 to December 2006, President from January 1995 to May 2005, and Chief Operating Officer from August 1994 to January 1999." Forbes Magazine
Update from Congressman Gene Taylor
Dear Friends,
In last week's newsletter, I mentioned that a subcommittee was going to hold a hearing on my Multiple Peril Insurance legislation H.R. 1264) Wednesday, April 21, the Subcommittee on Housing and Community Opportunity held a hearing on my legislation and other reforms of the National Flood Insurance Program.
This week, the House Financial Services Committee approved my bill to allow homeowners and business owners to buy flood and wind insurance in one policy from the National Flood Insurance Program (NFIP). On Tuesday, April 27, the full House Financial Services Committee voted in favor of the Multiple Peril Insurance Act by a vote of 40-25.
The Multiple Peril Insurance Act should soon come to a vote in the full House of Representatives. Below are a number of articles that provide much detail on the committees' activities.
In addition to the news articles, I am providing links to my written testimony and a video of my questioning FEMA Administrator Craig Fugate during the April 21 hearing. (The National Flood Insurance Program is part of FEMA.) I pointed out to Administrator Fugate that federal taxpayers paid more than $54 billion after Katrina on NFIP claims, housing assistance, FEMA trailers, homeowner grants, and subsidized disaster loans. The federal government stepped in to provide necessary relief for thousands of homeowners who thought that they had the hurricane insurance coverage they needed but instead were denied legitimate coverage by their insurance companies.
I asked Administrator Fugate if he was aware of any FEMA investigations of fraud committed by the insurance companies that contract with NFIP. Those private companies have a contract with the nation that requires them to conduct a fair adjustment of flood and wind claims. However, these private insurance companies have an inherent conflict of interest when FEMA allows them to decide whether to blame damage on flooding and bill it to the taxpayers or blame it on wind coverage in their own policies.
As many South Mississippi families are well aware, the Multiple Peril Insurance Act would eliminate the insurance companies' conflict of interest and close the gaps between wind and flood coverage by allowing homeowners to buy insurance that will cover hurricane damage without any delays or disputes over the cause of the damage. This program would save taxpayers billions of dollars by reducing the need for FEMA trailers, homeowner grants, and subsidized loans after future hurricanes.
Sincerely,
In last week's newsletter, I mentioned that a subcommittee was going to hold a hearing on my Multiple Peril Insurance legislation H.R. 1264) Wednesday, April 21, the Subcommittee on Housing and Community Opportunity held a hearing on my legislation and other reforms of the National Flood Insurance Program.
This week, the House Financial Services Committee approved my bill to allow homeowners and business owners to buy flood and wind insurance in one policy from the National Flood Insurance Program (NFIP). On Tuesday, April 27, the full House Financial Services Committee voted in favor of the Multiple Peril Insurance Act by a vote of 40-25.
The Multiple Peril Insurance Act should soon come to a vote in the full House of Representatives. Below are a number of articles that provide much detail on the committees' activities.
In addition to the news articles, I am providing links to my written testimony and a video of my questioning FEMA Administrator Craig Fugate during the April 21 hearing. (The National Flood Insurance Program is part of FEMA.) I pointed out to Administrator Fugate that federal taxpayers paid more than $54 billion after Katrina on NFIP claims, housing assistance, FEMA trailers, homeowner grants, and subsidized disaster loans. The federal government stepped in to provide necessary relief for thousands of homeowners who thought that they had the hurricane insurance coverage they needed but instead were denied legitimate coverage by their insurance companies.
I asked Administrator Fugate if he was aware of any FEMA investigations of fraud committed by the insurance companies that contract with NFIP. Those private companies have a contract with the nation that requires them to conduct a fair adjustment of flood and wind claims. However, these private insurance companies have an inherent conflict of interest when FEMA allows them to decide whether to blame damage on flooding and bill it to the taxpayers or blame it on wind coverage in their own policies.
As many South Mississippi families are well aware, the Multiple Peril Insurance Act would eliminate the insurance companies' conflict of interest and close the gaps between wind and flood coverage by allowing homeowners to buy insurance that will cover hurricane damage without any delays or disputes over the cause of the damage. This program would save taxpayers billions of dollars by reducing the need for FEMA trailers, homeowner grants, and subsidized loans after future hurricanes.
Sincerely,
Bradley Byrnes stance on the Insurance Crisis
March 12, 2010, 12:13PM
Republican gubernatorial candidate Bradley Byrne today introduced a plan to address Alabama’s coastal insurance crisis, saying the issue threatens one of the state’s most powerful economic engines. 
(Press-Register/Kate Mercer)Bradley Byrne
Byrne, a Mobile native and resident of Montrose in Baldwin County, said he would form a coalition of governors from coastal states to focus attention on the issue and introduce a package of legislation designed to encourage insurers to write affordable policies in coastal areas.
The coalition’s first task, he said, will be lobbying Congress for changes that would stabilize the reinsurance market and create more favorable conditions for private insurance companies.
“There is no one silver bullet,” Byrne said in an interview with the Press-Register. “This is a complex problem that will require reforms at both the state and federal levels. As governor, I won’t waste any time getting started on it.”
Byrne said private insurers have essentially pulled out of Mobile and Baldwin counties and are continuing to retreat northward. Byrne said his own wind coverage was canceled last year despite the fact that he never filed a wind damage claim or missed a premium payment.
“It’s more than just a coastal issue,” he said. “While I understand the perceptions of lawmakers who don’t live near the coast or represent constituencies that share the concerns of coastal Alabamians, I strongly disagree with any who contend that this insurance coverage crisis does not affect them.”
Byrne’s proposal includes legislation that would strengthen building codes for Mobile and Baldwin counties and establish tax-exempt “catastrophe savings accounts” that would help homeowners pay for storm damages.
Byrne, one of nine candidates seeking the Republican party’s nomination for governor, also said he would work to open Alabama’s insurance market to competition and eliminate the blanket practice of “red-lining” policies across wide areas.
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