Insurance: September 2009 Archives

An estimated 2,000 people in Austell, GA, lost their homes or sustained significant damage in last week’s flood when damage exceeded flood map boundaries.  Many property owners whose homes were ruined had no idea that their standard homeowners insurance policy would not cover damage caused by a massive flood. Those who did understand the policies probably had no inkling that a property located outside the flood zone still faced a significant chance of getting hit. Mapping experts all over Atlanta are anxious to compare the floodplain maps with aerial maps of the flooding that actually occurred. Ernie Smith, the GIS coordinator in Newton County, said the flooding appeared to remain close to the predicted flood zone around the Alcovy and South rivers. But around the Yellow River the flooding appears to exceed the expected boundaries, he said.

Only 60 flood insurance policies were in force on Austell properties, federal data show. It’s unclear now how far off the maps are for the Atlanta area. In some parts of town, the rainfall that came with the recent storm exceeded the so-called “100 year flood,” the event that has a 1-in-100 chance of occurring each year.  The U.S. Geological Survey concluded last week that rainfall in parts of Cobb and Douglas counties was so intense that it had only a 1-in-500 chance of occurring. With such an event, the flooding would be expected to extend beyond the official floodplain.

Excerpted from www.ajc.com.

Research by Moneysupermarket.com reveals that a fifth of motorists in Britain admit to driving without insurance - up by a third on 2008. The price comparison site also found that 62% of people feel that those who drive without insurance should be punished harder. Although 15% felt that the government or providers should subsidize young drivers, as a greater proportion of young people are likely to drive without insurance. Insurance expert and head of motor insurance at Moneysupermarket.com Steve Sweeney says:

Premiums can run into the thousands meaning they are out of reach for many drivers. However, I don't think harsher punishments are the right way to combat this. We need a solution, not more fines. Some car insurance providers had piloted a pay-as-you-drive insurance scheme which saw lower premiums for Britain's younger motorists. It also made them think twice about driving their cars unnecessarily. I would suggest it is time for the insurance industry to revisit these innovative models to help drive down the cost of insurance.

The Government could also take a look at driving tests and whether they should be changed to reflect actual driving habits. More lessons for younger drivers, the inclusion of motorway driving and lessons at night could reduce the underwriting risks associated with younger drivers.

Excerpted from www.which.co.uk.

Monrovia is one of 22 southern California cities to pool their money to insure themselves against losses from litigation as a member of the Independent Cities Risk Management Authority (ICRMA). For a city, or any large employer, a settlement may appear to make more financial sense than continuing a court battle. But settlements can also attract more lawsuits, according to Michael Kaddatz, interim general manager of ICRMA.

Because of insurance and other considerations, decisions on whether to fight lawsuits in court are not made just on the merits of the case.  The rising costs of fighting a case can trigger ICRMA to settle out of court.  A range of factors is taken into account when ICRMA considers whether or not to settle a case, Kaddatz said: the consortium looks at the case facts, severity of the claim and even the tendencies of the court where the suit may be tried. The costs to prevail - attorneys fees, costs to hire expert witnesses, etc. - are also taken into account, he said.  Once a city reaches its deductible, which can range from $200,000 to $2 million, ICRMA has the authority to force a settlement if it believes continued litigation costs would outweigh settlement costs.

Excerpted from www.pasadenastarnews.com.

The U.S. Department of Transportation says the death toll on the nation's highways dropped in 2008 to 37,261, a 9.7 decrease from the 2007 total and the lowest level since 1961. The trend continued in the first quarter of 2009; the 7,689 traffic related fatalities from January through March represent a 9 percent decline from the same period a year ago.

Insurance expert Adrian Lund, president of the Insurance Institute for Highway Safety, says that in 1970 around 55,000 people were dying on U.S. roadways every year, so recent trends are definitely going in the right direction. Speaking at a conference held by the Insurance Council of Texas in July 2009, Lund said much of the recent decrease in traffic fatalities has a lot to do with the economic downturn.

"When the economy tanks one of the few good things about it is people are driving less, they are driving more safely and we don't kill as many people on the roads. That's unfortunately why we're down to 37,000 deaths in 2008," Lund said. Vehicle miles traveled during the first three months of 2009 declined by about 11.7 billion miles, according to preliminary data collected by the Federal Highway Administration. Lund suggested that those numbers will start to creep back up as the economy recovers.

Excerpted from InsuranceJournal.com.