Claims and Bad Faith Law Blog

New Health Insurance Options Reported

    Health Insurance options are reported today in newspaper articles by Anna Bernasek, "Health Care Problem?  Check the American Psyche" (New York Times, Sunday, December 31, 2006, Business Section p. 3, col. 1)  and by William J. Holstein, "Armchair M.B.A./For Better Care, Work Across Lines" (New York Times, Sunday, December 31, 2006, Business Section p. 9, col. 1).   The Bernasek article is well-written and in particular it is illuminating concerning "single-payer health insurance," a new concept to me, including administrative costs inherent in the health system with which Health Insurers must contend in the United States, versus the measurably more successful health system results in other comparison countries.

     The Holstein Armchair M.B.A. feature is the report of a thought-provoking interview with Professor Clayton Christensen of the Harvard Business School which addresses the health care business models prevailing in different countries including in the United States.  Here is a link to Prof. Christensen's web site which reveals among other things that he was made a White House Fellow during the Administration of President Ronald Reagan and that he once worked for Elizabeth Dole.

    Best wishes to all for a Happy New Year!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

The More, the Merrier ... But What Does the Policy Say?

    The Eleventh Circuit Court of Appeals just certified two  "additional insured" questions to the Supreme Court of Florida:

(1)  Will Courts applying Florida Insurance Law hold that a Liability Insurance Policy is "ambiguous" if that policy includes as a covered person "'any other person with respect to liability because of acts or omissions' of the insured"?
and
(2)  Will Courts applying Florida Insurance Law hold that a Liability Insurance Policy is limited to otherwise extending Coverage ONLY to where the additional insured is "vicariously liable" where the Liability Policy extends Coverage to additional insureds "'with respect to liability because of acts or omissions' of the named insured"?

Here is a link to  the Eleventh Circuit's  questions  in Maria Garcia v. Federal Insurance Co. (11th Cir. Opinion No. 05-14720, Questions Certified December 26, 2006).

    In Florida, the answers to questions about whether a person or entity is an "additional insured" often depend on the Insurance Policy language and on whether, under substantive law, the putative "additional insured" is actually or potentially vicariously liable for the conduct of the Named Insured, in basic terms.

    In Garcia, the Federal Trial Judge dismissed Ms. Garcia's lawsuit against Federal Insurance Company on these facts reported by the Eleventh Circuit on December 26, 2006, above.  The issues are not unfamiliar to many in Florida and in the United States outside of Florida.

    As reported by the Eleventh Circuit, Federal issued a Homeowners Policy that insured one Laura Anderson.  "Maria Garcia worked as a caregiver for Laura Anderson," and Ms. Garcia "served as a housekeeper and also ran errands" for Ms. Anderson in a used Volvo owned by a member of Ms. Anderson's family.  Slipsheet Opinion at 2.  Ms. Garcia had an accident with the Volvo in which the car struck one Gail Archer, "causing serious injuries."  Ms. Archer sued Ms. Anderson and Ms. Garcia, among others.  The Archer complaint alleged that Anderson was vicariously liable for Garcia's actions and omissions, but the claim of Anderson's vicarious liability does not appear to have been at issue for Insurance Coverage.

    What was at issue for Insurance Coverage was Ms. Archer's claim that Ms. Anderson and Ms. Garcia "negligently failed to maintain the car".  Slipsheet at 3.  Federal Insurance Company settled all claims against its Named Insured, Ms. Anderson, but denied any Coverage under the Anderson Homeowner's Policy for the claims alleged against Ms. Garcia.  "Garcia settled Archer's claim for $7,000,000" and filed suit against Federal for Coverage under Ms. Anderson's Homeowner's Policy issued by Federal.  Id.

    Perhaps particularly appropriate in this certification, but actually a standard part of the Eleventh Circuit's practice when certifying Florida State Law questions to the Supreme Court of Florida, the Eleventh Circuit openly stated that it did not mean to restrict, "in any way," the Florida Supreme Court's answer to the Eleventh Circuit's questions.  The Eleventh Circuit further broadly stated that "the questions posed are just a guide."  Slipsheet at 12.

    It will be interesting to see what, if any, response the Supreme Court of Florida has to the additional insured issues presented to it by the case of Maria Garcia v. Federal Insurance Co., linked above.

    Until then, best wishes to all for a Happy New Year!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
 

Discovery on Whether to Remand an Insurance Case.

    Remand is when a Federal District Court sends an Insurance case back to State Court that was filed in State Court in the first place, but then was "removed" to Federal Court for various reasons.   A pre-Christmas ruling in one of the Hurricane Katrina Insurance Coverage Cases teaches a lesson well learned.

    When discovery is available on the question of whether the Federal Judge should Remand the case back to State Court, or not, then the clear lesson in this new Insurance case is to take the discovery.  If the available discovery regarding Remand is not taken, then the Federal Judge may decide, not surprisingly, that the opportunity to take discovery regarding Remand knocked once, like Opportunity itself, and will not knock again, as in Download Ross and Sharon Dodds v. Nationwide (S.D. Miss. Case No. 1.06CV915, Opinion Filed December 20, 2006), and for this particular ruling see page 4.pdf.

    Best wishes to all for a Happy New Year!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
 

Contamination Exclusion in First-Party Policy Held Ambiguous to 911 Damages.

    On December 21, 2006, the Federal Second Circuit Court of Appeals reversed Summary Judgment and remanded for the Federal Trial Court to take evidence on the intent of a First-Party Property Insurance provision.  Here is a link to the Second Circuit Web Site, where you can reach this case by clicking on "Decisions":  Parks Real Estate Purchasing Group, et al. v. St. Paul Fire & Marine Insurance Co., et al. (Second Circuit Case No. 05-5890, Opinion Filed December 21, 2006).  Here is a brief summary why.

    Parks Real Estate and the other Plaintiffs-Appellants in this case, filed their Complaint to recover under a First-Party Property Policy, in pertinent part, "for building damage caused by particulate matter emanating from the collapse of the World Trade Center Twin Towers".  (Slipsheet at 1.)  Their Proof of Loss notified the insurance company that the Plaintiffs "has sustained damage" to a Building, together with Business Interruption Loss, totaling some $18,400,000.00.  (Id. at 5.)

    The Plaintiff Policyholders owned an "insured Building [that] was located a few blocks from the World Trade Center."  (Id. at 4.)  On 911, the World Trade Center Twin Towers were both struck and collapsed in a terrorist attack, causing particulates from the pulverized buildings to spread across New York City, among other things.  "The particulate matter apparently penetrated the Building and settled in its mechanical and electrical systems."  (Id. at 3.)

    The subject Policy is "an 'all-risk' property insurance policy providing that [the insurance company] would '[p]rotect against risks of direct physical loss or damage except as indicated in the Exclusions", said the Second Circuit.  (Id. at 13.)  The defendant insurance company that issued the Policy filed a Motion for Summary Judgment against Coverage, arguing that the subject  Policy's "Contamination Exclusion" barred all Coverage claimed by the Plaintiffs.  This Policy's Contamination Exclusion provides that Coverage is barred for "loss or damage caused by or made worse by any kind of contamination of ... products or property covered by this insuring agreement.'"  (Id. at 5-6.)

    The Second Circuit now holds that this First-Party Property Insurance Contamination Exclusion is ambiguous, that Summary Judgment for the insurance company in this case is reversed, and, further, that all parties "should be allowed to introduce evidence" in the Federal Trial Court regarding the intent of this Contamination Exclusion.  (Id. at 18-19.)

    Parenthetically, the insurance company's Motion for Summary Judgment also presented arguments that the Policy's "Mechanical Breakdown" and "Wear and Tear" Exclusions applied.   (Id. at 6.)  The Federal District Court held however that these particular Exclusions did not apply (id. at 11), and they were not otherwise addressed by the Second Circuit.

    Best wishes to all for a Happy New Year!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
 

Sigma 2005 and 2006 Results From Swiss Re.

    Swiss Re has released "sigma" results for 2005 and, tentatively, for 2006 to date.  "Sigma" is the Greek codeword used by Swiss Re to identify its computer-based reports.  A link to both reports, released separately by Swiss Re, is here.   The information is revealing.  Here is some of it.

2005

    Total Insurance Policy Premiums in 2005 were $3,426,000,000.00 or 7.7 % of the World's "Gross Domestic Product".  About 56 percent of Insurance Premiums are for Life Insurance.  There is a definite link to commerce here.   Swiss Re notes further that "the growing loan market generated more mortgage-related life insurance policies."  The rest of the Premiums went to pay for what Swiss Re categorizes as "non-life" Insurance Policies.

2006

    So far in 2006, Swiss Re's computer results reveal the third-lowest "insured losses" in the last 2 decades.  The "loss events" studied by Swiss Re's computers show that this year, typhoons and earthquakes predominated among the Catastrophe list and they "hit mainly newly industrialising countries where insured losses are relatively low."  The irreplaceable loss of Life to Catastrophes appears to be proportionately higher than Property Losses to date.  The role of Insurance available to relieve worldwide Catastrophes in 2006 is not necessarily great, it appears.

    Economic losses worldwide in 2006, Swiss Re says, total $40,000,000.00 and so far $15,000,000.00 or 37.5% "were actually covered by insurance."  There is no word on how if at all, the remaining 62.5% or $25,000,000.00 of economic losses is and are addressed in the countries where this year's Catastrophes have struck.

    Remembering to give thanks for our blessings, and remembering to remember those who may not be as fortunate,  Happy Holidays to All!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

 

   

Primary and Excess Flood Insurance ... And CatClaim Computer Models.

   Chubb has just issued a Press Release announcing that in addition to its Primary Flood Insurance offering, "Chubb Introduces Broad Excess Flood Policy ...."  Link to the Chubb December 20, 2006 Press Release here.

    A valuable gift is given us at this time of the rolling year, by taking a closer look at where Chubb is going.  A concise and valuable education is available in Coverage issues for Catastrophe Claims and what to offer to address and relieve them, as perceived by one of the world's leading Insurance Companies.  Chubb currently offers Primary Flood Insurance in 20 States in the United States.  Chubb's Primary offering is both broader in potential Coverage than the mainstay Federal Flood Insurance Policy provisions, and it offers much higher Policy Limits:  $15,000,000.00 in Home and Contents Coverage, attractive to high-tax-bracket Policyholders.

    The new Excess Flood Insurance Policy offered by Chubb will be made available in 15 of the 20 States in which the Primary Flood Policy is offered.  In the future, more States will receive the Excess offering, according to the linked Press Release. 

   Imagine a map of the United States with me for a moment.  10 of the 20 States where Chubb offers it Primary Flood Insurance are located inland.  These are places where rivers and lakes are likely to be the primary sources of flooding, such as Illinois, Missouri, and Pennsylvania.  8  States in this group are located on the Atlantic Coast.  Florida is the only State located on the Gulf Coast, and Florida is the only State on the list which is located on the Atlantic Coast south of Virginia.   Finally, 2 States on the Pacific Coast are on Chubb's Primary offering list.   15 of these 20 States make the cut for Chubb's Excess Flood offering:  Currently, Arizona, Colorado, Idaho, Ohio and Utah do not.

   Anyone would ask why, with several Insurance Companies refusing to tread where many different kinds of Claim risks are associated with Hurricanes and other Catastrophes -- such as from Wind -- why is Chubb, an admittedly bright group of people, offering any sort of new Coverage that would be available only in the event of a Catastrophe?

   One reason appears in a newspaper report apparently based at least in part on Chubb's linked Press Release, above.  The newspaper report contains a quote that is not found in the Press Release, along with other additional and useful information.  Stated on Web Site as Available ONLY TO WALL STREET JOURNAL ONLINE SUBSCRIBERS:  Lavonne Kuykendall, "Chubb to Offer Flood Insurance for Some Upscale Coastal Customers" (Wall Street Journal, Thursday, December 21, 2006, p. D2, col. 1).    In the newspaper report, Chubb's spokesperson who was responsible for rolling out this new Flood Insurance product is quoted as stating that some other Insurance Carriers are adjusting their offerings because those other Insurance Carriers are relying on "'new catastrophe models'" which suggest that "'they are more exposed than they thought they were.'"  In other words, Chubb is basing its projections and thus its new Flood Insurance offerings on the reliable fact-based Computer Model for Hurricanes and other Catastrophes.

   The clear and obvious result of some, but by no means all other Insurance Companies, buying in to a new 'model' based instead on opinions about past and future claims is that those other Insurance Companies are adjusting their own offerings down. 

   Hoping for protection to All which addresses Catastrophes in the United States and the World, Happy Holidays to All!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

 

Computer Models: Facts In, Opinions Way Out.

    All Catastrophe Insurance Premiums such as for Homeowners Insurance and all kinds of Property Insurance, are based on a solid, fact-based Computer Model.  For example, Florida is the first State -- and as of now, perhaps the only State -- to develop its own CatClaims Computer Model which is used to assess Rate Hike requests.  The history of Hurricane damage, for example, is input into that Computer Model to reflect the reality on the ground since statistics about Hurricane damages began.

    This year Florida spent $2,700,000 to obtain a "computer catastrophe model" of CatClaims.  Florida officials are also continuing to use Property Insurers' computer models, which were the only source of claims predictions data available to Florida and other States until Florida developed its own CatClaims Model this year.  See my November 6, 2006 post.

    Recently, some corporate headquarters in other States have quietly submitted Premium Increase Requests in Florida using opinion-based 'models' instead.  One such 'model' originates in California and is based on the input opinions of several paid anonymous persons, for example.   See  my December 3, 2006 post here, and see Peter G. Gosselin, "Insurers Learn to Pinpoint Risks -- and Avoid Them" (Los Angeles Times, Tuesday, November 28, 2006, page A1, col. 2)(Note: Registration for this newspaper article may be required, but is stated on their Web Site to be FREE).

  However, the Florida Office of Insurance Regulation, it seems, is not accepting Premium Increase submissions based on anything but the facts.  One recent example is given by the submissions of USAA, one of many examples and not unique to USAA, a good and exemplary Company in many ways.

   USAA at first requested an increase in premiums for homes and condominiums for a statewide average of 40% in Florida.  USAA's first request was made as of August 11, 2006.

   Within a month and  a half, a Hearing was held by the Florida O.I.R. on September 26, 2006.  The evidence for the Rate Hikes requested was examined and of particular interest here, the regulators questioned the model that was used as a basis for the requests.

  On November 2, 2006 the O.I.R. rejected the 40% rate hike request.  The reasons of especial interest here include that (1) "[t]he company failed to provide sufficient supporting data for the catastrophe model used" in the submission, i.e., there were not enough facts presented that would allow people to review the facts used to support the requested increase, and (2) the 'model' used in the submission "is not currently accepted ...." November 2, 2006 Notice of Intent to Disapprove, from the Florida Office of Insurance Regulation (Mr. Ken Ritzehthaler, Actuary) to U.S.A.A. (Ms. Janet Ogle, Compliance Analyst).

    USAA then "amended its filing and lowered the overall rate requests to 16.3 percent."  USAA's Rate Increase Request of 16.3 percent was approved by the Florida Office of Insurance Regulation on Thursday, December 21, 2006.  It will take effect for Florida Homeowners and Condominium Owners insured by USAA as of February 8, 2007.   See December 21, 2006 Press Release, Florida Office of Insurance Regulation.

    Reporting on these complex issues is done by very few, and very few people report on these issues better than Ms. Kathy Bushouse, for example, and one way to read current and past reporting on these complicated issues is to link to this article:   Kathy Bushouse, "USAA Rates on Home Insurance to Rise by 16.3% Across State" (South Florida Sun-Sentinel, Friday, December 22, 2006). 

    More information needs to be made public about shifts away from reality that are requested anonymously by some people, and to a 'model' that benefits their employers.  Facts are abundant such as in Florida to justify good arguments for many kinds of CatClaim Coverage Premiums.  Let any and all Premium Hikes be submitted in the open -- and if they are not, let them continue to be amended until they are submitted based on publicly available facts.

   Until that day, Happy Holidays to All!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

Schools Face Higher Premiums, Lower Coverage ....

                                        .... And Catastrophe Claims.

    Insurance Premiums for School Districts in Florida increased in 2006 while available Coverage went way down.  A current newspaper report is published for example in an article copyrighted by the Times Publishing Company, written by David DeCamp, "Insurance Bills Hit Schools Hard" (St. Petersburg Times, State Edition, published December 21, 2006).  Link here.

    Across the State of Florida, Premiums for Property Insurance jumped over 80 percent in 2006, from $98,000,000.00 for Coverage in 2005 to $178,000,000.00 for Coverage now, says the Florida Association of District School Superintendents in their report to the public.

    In addition, total covered School District property in Florida fell by 86%, measured by value.  When Hurricane Charley struck in 2004, Florida School Districts were able to -- and did -- insure 7 times the value of property for which they can purchase Coverage now.   In 2005, the amount of covered School District Property was worth $7,400,000,000.00; now, only $1,500,000,000.00 worth of the same Property can be covered.   The current value of covered School District Property is not even 3% of all School District Property in Florida.

    These are facts, and here is one more fact to consider:  In Florida, schools are lower risks for Catastrophic Claims and Property Claims than other kinds of buildings -- so much so, that schools are the location of choice as Hurricane Shelters.  The Shelter your Family flees to in a Catastrophe may not be insurable.

    That is not all.  Since School Districts are not able to obtain Coverage, if a Catastrophe strikes they have no choice but to hope for Federal assistance to rebuild.  The costs of having no other resource are enormous.   For example, in 2004 Hurricane Charley destroyed 7 schools in Charlotte County, which were rebuilt in whole or in part with Federal Funds.  It is reported in the above newspaper article, for example, that the Chief Financial Officer of Pasco County Schools reports that each new elementary school costs $20,000,000.00.

    School Districts are already building more schools.  Many of the new buildings are portables.  Little money has been used to build permanent school buildings, for many reasons not the least of which is the relative unavailability of funds.  When the next Hurricanes strike Florida, there will be many more portable school buildings waiting in the Hurricanes' path than ever before.

    The Florida Legislature is set to meet in a Special Session beginning on January 16, 2007 to address the Florida Insurance Crisis.  The opportunity exists then to address Homeowners and Property Insurance including CatClaims issues that confront the children, teachers and administrators who will preserve and protect Florida in years yet to come.

    In the meantime, Happy Holidays to All!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

The Nation Has Eyes to See With, And Ears to Hear With.

      And the Florida Legislature's Special Session on the Insurance Crisis                     Will Give Much to See and Hear.   

     The real estate market has bottomed out vastly.  Houses are not being built on lots that are already bought in Florida.  Unrelocated people are not investing in places to which they are not able to move, absent consumers are not buying goods, and employees are not available in many places because now they cannot afford to live there.  These effects of the housing market in Florida are watched and heard across the Nation, and reported in the national press.  See for example Fred A. Bernstein, "In These Florida Towns, They Bought But Never Built" (Sunday New York Times Real Estate Section, page 14, col. 1, December 17, 2006).

    Of course, where employees cannot be found businesses cannot succeed either.

    And all of these effects are effects just of the collapsing real estate market, before even addressing the facts that Property Insurance Coverage may not be available, that lenders may not get the collateral and loan protection that they require in order to make loans, and that Catastrophe Claims Coverage may not be available or may be too expensive for Homeowners and Businesses in Florida who can afford the Premiums.

    The Florida Legislature meets in Special Session beginning on January 16, 2007 to consider the Insurance Crisis.  Florida will be interested.  And the Nation can learn from Florida's example, for good or ill.  To all the participants in the process to come:  Let it be for good.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Spin Life: Is it "Insurance?"

                    "You Can't Call This Living, 'cause It Ain't."

    A front-page headline leads today into an article about "spin-life" Insurance Policies.  That stands for speculator-initiated Life Insurance Policies.   One type apparently consists of, first, a loan to a potential Policyholder to pay Life Insurance Premiums and obtain a Policy, followed by sale and assignment of the Life Policy proceeds to the speculator-investor.   Charles Duhigg, "Late in Life, Finding a Bonanza in Life Insurance" (Sunday New York Times,  December 17, 2006, page A1, col. 3.)

    On October 27, 2006, my post addressed the issue of "life settlement" agreements.  Those are arrangements in which people with great pain, or who are near death, sell the proceeds of their life insurance policies in exchange for money to pay current medical and other bills to continue daily life.  Today's linked article, above, lumps "life settlement" agreements with "spin-life" premium arrangements .

    Public Policy issues are many here.  However, one highly practical Insurance issue deserves immediate focus.  It is driven by economics and it is this:  Life Insurance Companies depend on historical evidence, like other Insurance Companies, to determine whether they will accept a risk and if they accept the risk, what kind of Policy they will issue and what Premiums they will charge the Policyholder.  The historical evidence summarized very well in today's article displays the fact that many Policyholders cancel their Life Insurance Policies.  That is a fact and Life Insurance Companies plan on this fact.  They include it in their basis for charging Premiums.

    If instead all or nearly all Life Insurance Policies now in effect will produce payouts rather than Policyholder-cancellations, there may not be any Life Insurance available over the course of time, or what Life Insurance is made available will carry a very high Premium, because of the great increase in risk.  The issues are addressed further in today's linked newspaper article.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Experts Need to Qualify, and with Demonstrably Reliable Opinon Testimony ....

                                    ....  On the Relevant Issue.

    A recent decision by the Federal Tenth Circuit Court of Appeals clarifies and applies both of the twin universal requirements that in order to testify as an Expert Witness, the witness must be shown to be qualified as an Expert on that particular issue and that the witness's Opinion will be reliable.  The illuminating ruling came in the non-Insurance case of 103 Investors I, L.P. v. Square D Co. (10th Cir. Case No. 05-3385, Opinion Filed December 12, 2006).

    In 103 Investors, the plaintiff business suffered a fire loss.  The defendant manufactured a product which the plaintiff alleged was the cause of the fire loss.  The Plaintiff, 103 Investors, proferred the  Opinion Testimony of a Witness as an Expert on the issue of whether the  Defendant's product in essence caused or contributed to the loss.  (10th Circuit Slipsheet Opinion at 9-10.)  The Witness was a fire investigator and the District Court "did not question [his] general qualifications as a fire investigator."  (Slipsheet at 9.)  As such, he was qualified to testify as to the origin of the fire.  (Id.)

    Nonetheless, the District Court excluded the Witness's testimony on the main issue because, the District Court determined, the Plaintiff "had not established that [the witness] had any expertise that was relevant to the question," and the Tenth Circuit affirmed.  (Id. at 9-10.)

    The legal bases of the Tenth Circuit's affirmance in this regard are (1) that the Trial Court is required by Federal Rule of Evidence 702 to make a determination of each Expert's Qualifications to render an Opinion, and (2) that the Trial Court is also required by the United States Supreme Court's  Daubert ruling to make a determination of each Expert Opinion's reliability, before any Expert Witness may testify as such in Federal Court.  (Id. at 8-11.)  Those twin determinations were made by the Trial Court (District Court) in 103 Investors and the Federal Appeals Court now affirms.

    This ruling in a non-Insurance case of course applies to Insurance Cases as well, and it is highly instructive.  As the Tenth Circuit held in this case:  "The district court did not abuse its discretion in excluding [the witness's] testimony on this issue."

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

And a global reinsurer shall lead them ....

    Swiss Re is the Scientific American magazine's Business Leader of the Year.  In 2003, Swiss Re announced that it was embarking on a ten-year program to reduce or counteract all of its many employees' net carbon emissions to "neutral," i.e., to zero.

    To some it may seem unlikely that a global reinsurance company would be a leader in combating global warming.  However, it has forever been the business of successful Insurance Companies to assess risk.  Based on evaluation of evidence, thereafter they assume risk they deem acceptable.  Insurance Companies are instead natural leaders in the identification of unpredictable and so unmanageable risk.

    The 2005 annual report released by Swiss Re is worth quoting in this regard, as quoted by Scientific American (December, 2006 issue) in giving its Business Leader of the Year Award to Swiss Re:  "As all insurers know, however, risk does not compliantly bow to the political or business agenda."

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Public Policy Drives the CatClaim Insurance Policy Premium

    Public Policies and Insurance Policies affect one another where Catastrophe Claims Coverage is concerned.  This blog ordinarily addresses Insurance Policies.  Public Policy concerns and physical facts involved in rebuilding  in Hurricane-prone places generally and the Coastal United States in particular, are addressed and considered this morning in  "Castles in the Sand", New York Times, Wednesday, December 13, 2006.

    The authors are two scientists and teachers in North Carolina:  Dr. Robert S. Young who is the Director of the Program for the Study of Developed Shorelines at Western Carolina University, and Dr. Orrin H. Pilkey, who is the Director of the Study of Developed Shorelines in the Division of Earth and Ocean Science at Duke University -- and who received his Doctorate in Geology from Florida State University.  Here is a link to the Western Carolina Web Site for Dr. Young, and here is a link to the Duke Web Site for Dr. Pilkey.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Update on Florida Insurance CatClaim Insurance Premium Increases.

On November 24, 2006, I presented evidence to the Board of Governors of the Florida Citizens Property Insurance Corporation to express my opinion on a new model for Catastrophe Claims. The new model would change the existing Computer Model based on input such as Hurricane Damage since time began, and it would cause massive increases in insurance premiums, over and above increases already required by the Computer Model, ranging from a statewide average of an additional 56 percent to 1,263 percent in some Florida Counties.

The new model relies on opinions instead. The effects on  Florida's economy would be enormous. Businesses facing high insurance premiums for example face relocating to areas least affected by Hurricanes, which may well affect businesses -- and people with jobs -- relocating outside of  Florida. The evidence I presented is input into my blog (see my post on December 3, 2006), linked to my web site.   

Based on the effects on Florida's economy, the Citizens' Board of Governors voted at its December 7, 2006 meeting to allow the Florida Legislature time to consider such insurance premium increases in the Special Session of the Florida Legislature in January.

      See, regarding the Citizens' Board of Governors December 7, 2006 meeting, for example, Tom Zucco, "Citizens Rate Hike is Put on Hold" (St. Pete Times, Friday, December 8, 2006), and regarding the issues confronting the Special Legislative Session in January, 2007, see for example, Jason Garcia, "Chasm About Citizens Remains/Lawmakers Volley Ideas on What to Do, Ahead of Next Month's Session on the Insurance Crisis" (Orlando Sentinel, Thursday, December 7, 2006).   

      The fact that you are reading this Blog and in particular this post, reflects your interest in Insurance particularly for Catastrophe Claims, as well as the interest of other persons with the same problem.  Your comments would be of great help toward the goal of getting the legislation we need.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

Expert Law: Sources and Resources.

    An outstanding new newspaper Commentary analyzes the development of Expert Opinion Evidence in the Courts from Frye (1923) to Daubert (1993) to today in "When Questions of Science Come to a Courtroom, Truth Has Many Faces", by Cornelia Dean and published by The New York Times, Tuesday, December 5, 2006 (page D3, Col. 1).

    This outstanding source cites to two very good resources on the subject of Expert Opinion Evidence generally.  One is Prof. David L. Faigman of the University of California Hastings College of Law.  With other law professors, Prof. Faigman offers a Blog displaying many articles and analyses of noteworthy issues concerning evidence of Expert Witnesses allowed or rejected in lawsuits.  Here is a link to this informative Blog:   Science & Law Blog. 

    The New York Times Commentary also cites to a recognized empirical evidence proponent including for all scientific Experts, Prof. Sheila Sen Jasanoff.  No Blog has been located yet for Dr. Jasanoff, but here is a link to the Web Site posted for her by Harvard:  Dr. Sheila Sen Jasanoff Harvard Web Site Home Page.

    Here is another source with resources regarding Experts, although not yet including Insurance Expert Witnesses it appears:  http://www.daubertontheweb.com/.  This highly useful site regarding Expert Witnesses in general, contains previously posted articles of and from Dr. Sheila Jasanoff, among others.

    For specific case law and experience references to Experts in Insurance Cases, see for example Dennis J. Wall, "Experts, Gatekeepers, and Insurance Issues in Federal Cases" (Daubert Online, 2006) and Dennis J. Wall, "Insurance Expert Witnesses:  When is Their Opinion Testimony Admissible and When is it Desirable?" (Coverage, published by the American Bar Association, 2004).

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Where "regardless of cause" Means "REGARDLESS OF CAUSE" ....

        And an Undefined "Flood" in an Insurance Policy Does Not Mean
        Water Washout Allegedly Caused by Negligence  of Human
        Beings.

    A Federal Judge in Louisiana is faced with a special set of claims.  The Consolidated Case of all of these claims would be special by reason of the claims alone.  There is another reason the Consolidated Federal Case is special.  The Federal Judge just issued an 85-page Opinion ordering the Coverages of almost as many Insurance Companies.  Here is a link to this Order which is now "attached" to this post:  In re:  Katrina Canal Breaches Consolidated Litigation Pertains to Insurance (E.D. La. Case No. 05-4182 et al., Opinion Filed Mon., Nov. 27, 2006).

    Each of the Claimants in that Consolidated Insurance Coverage Case has sued her and his own Insurance Company for Insurance Coverage for Damages after Hurricane Katrina in the City of New Orleans.  However, the claims they allege are not alleged for Damages caused by the Hurricane .  The claims are for Damages allegedly caused by the alleged negligence of People, i.e., the members of the Board of Commissioners for the Orleans Levee District.   Parenthetically, the Federal Judge kept all the Insurance Coverage Claims for disposition in Federal Court, but remanded all Damages claims against the Orleans Levee District to Louisiana State Court.

    "This case began the stream of complaints that have been filed as a result of damages arising out of all levee breaches which occurred in the aftermath of Hurricane Katrina."  So begins the very recent Order on various motions by  the U.S. District Judge in In Re:  Katrina Canal Breaches Consolidated Litigation/Pertains to Insurance" (Eastern District of Louisiana).

    This is a summary of the 85-page Order of the Federal Court.  It is a summary of some of the significant Insurance Coverage Issues addressed by the Federal Judge. 

    1.  All of the Policies involved in this Consolidated Federal Case were Homeowners Policies and they all provided "all-risks" Coverage, said the Federal Court.  That means that, in the face of many Federal Rule 12(b) Motions to Dismiss in particular, said the Federal Judge, "under Louisiana law, unless there is a specific exclusion for the type of water damage that an insured has incurred, coverage is presumed under these policies.  The focus of a court's inquiry then is on the relevant exclusions to coverage."  (The Federal Judge, it should be pointed out, also confronted and resolved Motions for Judgment on the Pleadings and Motions for Summary Judgment, although most of the Motions were Rule 12(b) Motions to Dismiss.)  The quoted ruling is found on page 9.  The Homeowners Policies are quoted in pertinent part in the opinion.   "ISO Policies" are quoted by the Court on page 15; State Farm Policy language is published on page 16, and Hartford Policy language is found on pages 16-18.

    2.    The State Farm and Hartford Policies are held to Exclude Coverage for "flooding" regardless of cause, in this Federal Order under Louisiana law.   After consulting and analyzing numerous authorities, the Federal Judge ruled that a disaster caused by the alleged negligence of Human Beings regarding levee breaches and ensuing water damage is not an otherwise undefined "flood" in the first place.  Hurricane Katrina may have caused a "flood", but the Claimants in this case did not sue for alleged Katrina Damages -- they sued for Damages that resulted after Katrina was all or almost totally gone.

    The State Farm and Hartford Exclusions for damage by flooding "regardless of cause", however, are held to mean exactly what they express in the attached ruling which of course applies to all of these consolidated cases.  (Pages 50 and 73 regarding State Farm; Pages 53-54 regarding Hartford).  [Emphasis added.]

    3.    ISO Flood Exclusions, which the Federal Judge referred to as "Water Damage Exclusions," were held to be ambiguous in this particular Consolidated Coverage Case.  Under Louisiana law, an ambiguous Insurance Policy provision is strictly construed against the Insurance Company since, said the Federal Judge, the Policy provisions are prepared by the Insurance Company and in Louisiana an Insurance Policy is commonly referred to as an adhesion contract.  (Page 10.)  "ISO Policies" subject to this ruling and strict construction were issued by many Insurance Companies which are Defendants in this Consolidated Insurance Case.  (See, for example, the Federal Judge's rulings regarding all these types of Policies on pages 15, 39, 44-45, 58, 65-66, 68-69, 74, 74-75, and 77-78.)

    The Federal Judge in part analyzed case law from other Gulf Coast States in the course of reaching the ruling of ambiguity, such as case law from Alabama and from Florida, as well as from North Carolina, an Atlantic Coast State which has had some experience too with Hurricanes (page 13).  Of particular interest to Florida Attorneys, the Federal Judge's attached Opinion focuses at one point on a decision of the Supreme Court of Florida (pages 35-36).

    Further, those familiar with rulings previously issued by the Federal Court in the Southern District of Mississippi will find them analyzed in the attached Opinion, too.  The guts of those rulings were attached to "anti-concurrent cause" Exclusions, which did not yet apply in the Federal Consolidated Coverage Case in Louisiana, Order attached; the Federal Judge in the Eastern District of Louisiana distinguished those rulings because there were no allegations presented in the challenged complaints in Louisiana Federal Court that involved any more than one cause.  (Pages 49 and 71.)  The Federal Court noted in the attached Order that the actual evidence may reflect more than one cause, and the Court would in that case revisit the anti-concurrent cause Exclusions relied on by the Insurance Companies, at that time.  (See for example Pages 33, 69, and 78.)

    4.    The Federal Court in the attached Eastern District of Louisiana Consolidated Insurance Coverage case concluded its rulings by candidly holding that there is a substantial ground for differences of opinion as to the governing Insurance Law Questions, such that the Court ordered that an immediate appeal may be taken from these orders.  (Page 85.)

    A Notice of such Appeal is expected on or before Thursday, December 7, 2006.  Further known developments, if any, in this Consolidated Insurance Coverage Case will be posted here.

REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
   

Re: December 7, 2006 Meeting of the Board of Governors of Florida's Citizens Property Insurance Corporation.

 

This post includes the evidence presented to the Board of Governors of Citizens Property Insurance Corporation by Dennis J. Wall.

 

You're thinking about this place all wrong, George Bailey said, describing the Bailey Building and Loan in the movie, "It's A Wonderful Life". It is my understanding that three things are set to occur in the life of Citizens. Only one is arguably compatible with Citizens' mission as the insurer of last resort in Florida for certain kinds of Property Coverage.

Booting up the computer is a big help here.  The background is massive and it may take a computer to put the facts in focus.  A lot of solid recent newspaper reporting (some of which is linked here) helps a great deal, too.

First, a Premium Rate increase of some 25.9 percent for Wind Coverage is going to take effect January 1, 2007 based on a fact-based computer Model that predicts future Hurricane occurrences including Catastrophe Claims.  The fact-based Model Rate Increase applies to all of the 1.2 Million to 1.3 Million Citizens Policyholders.  Citizens Policyholders include Homeowners and Businesses.

The effect is illustrated by the situation of a typical Homeowner or Business Owner who pays, say, $1,000.00 a year in Citizens Property Premiums.  The fact-based 25.9 percent Increase means that the Premium for a manufactured home in The Villages, Florida, is going to increase to $1,259.00 a year on January 1st.

Parenthetically, this illustration comes from a real-life example of an experience possible in any area of Florida.  Last year, my Mother sold her condo and essentially swapped the sale price of her condo, for the purchase price of a manufactured house she moved into in The Villages.  She died without Insurance on her newly acquired house.  In order to sell her house, my wife and I had to buy Insurance on it.  We paid a Premium to Citizens for Homeowner's Insurance earlier in 2006 on my deceased Mother's manufactured house in The Villages.  For present purposes, my Mother could have moved into many other areas of Florida, and this is only an example, of course.

The same effect is going to be borne, of course, by a Small Business in Orlando -- or anywhere else in Florida.

This first proposed Premium Increase is at least arguably compatible with Citizens' mission to be a source of Insurance Coverage, yet charge higher Premiums than are charged on the open market so as to be the insurer of last resort in Florida. For Wind Coverage, Citizens is in reality the only insurer in many areas in Florida.  See for example John Hielscher, "Citizens Insurance Seeks Big Increase"  published on November 18, 2006 by the Sarasota Herald Tribune (Registration required to access this article, stated on the site to be "FREE"). 

Second, the Citizens' Rate structure is apparently set to be changed, for the first time, to include opinions and estimates and not facts. This will add 55.8 percent on top of the 25.9 percent Increase.  The 55.8 percent increase is set to take effect as of March 1, 2007 on the 700,000 people holding residential Wind Coverage under their Citizens Policies.

Our hypothetical Homeowner currently paying $1,000.00 in Premium on her Home in The Villages will start paying the $1,259.00 on January 1st, but her total jumps as of March 1st to $1,962.00.  This is what the second and addtional Rate Increase means.

It is an additional Wind Coverage Premium Rate increase that is compounded on top of the first Increase.  Reports advise that this second proposal is based in part on new requirements for Citizens to increase "reserves".  Reserves are amounts of money taken out of circulation by Citizens to pay future claims.  The new law taking effect March 1st requires Citizens to maximize reserves to pay claims from storms that might hit Florida on average once every 70 years.  Thereafter, Citizens is required to increase reserves to cover claims from a once-every-100-years Hurricane.  See Beatrice E. Garcia, "Citizens Insurance Chief Wants to Scrap Rate-Hike Law" (MiamiHerald.com, Tuesday, November 28, 2006).

Further, this proposed second Rate Increase is also reported to add into the mix estimated charges for "reinsurance" for Policyholders in the High Risk Account category.  See  Paige  St. John,  "Citizens  Property  Insurance Looks  to  Raise  Rates  Again",  published  November 17, 2006  in the Tallahassee Democrat online  access here for "Archives" search, fee may be required by tallahassee.com. This effective tax on Citizens Policyholders will take effect March 1, 2007 under this 2006 legislation, based at least in part on the prevailing charge for reinsurance in the open market -- whether or not reinsurance is actually purchased.

It is reported that Citizens does not purchase reinsurance in the open market, however.  Randy Diamond, "Special Session on Insurance up to Crist" (Palm Beach Post, Thursday, November 16, 2006). 

Recently, some corporate headquarters interested in Premium Increases, based outside of Florida are agitating to encourage a switch to opinion-based input predictions.  See Peter G. Gosselin, "Insurers Learn to Pinpoint Risks -- and Avoid Them" (Los Angeles Times, Tuesday, November 28, 2006, page A1, col. 2)(Note:  Registration for this newspaper article is required, but is stated to be FREE).  Citizens Property Insurance Corporation rightly rejects the use of agendas other than empirical evidence as a basis for computer Models on which Hurricanes are predicted and resulting Premiums are charged. See the Post here on this site on November 6, 2006, "CatClaims Computer Models and Reality in Florida", and the links in it.

At the end of the most recent legislative session, Florida lawmakers may have been provided the opinion-based proposals to rely on.  See Tom Zucco, "Citizens Chief Resists Rate Hike" (St. Pete Times Online Thursday, November 23, 2006).  Some legislators describe the second proposed Citizens Rate Increase as coming to them at the last minute.  See Kevin Begos & Michael Fechter, "Legislature Targets Insurance"  (Tampa Tribune, Thursday, November 30, 2006).

Premium Rates charged by Citizens since its inception, however, are based instead on the same base of empirical evidence that is input into the invaluable Computer Model of Hurricane and other Catastrophe Claims by which Rate increases sought by private, commercially run Insurance Companies are judged. Moreover,  Florida taxpayers have input $2.7 Million  ($2,700,000.00) into exactly a fact-based Computer Model to predict the Hurricanes Floridians and their Insurance Carriers are likely to experience.      

The members of the Board of Governors of Citizens are obliged to operate Citizens pursuant to a Plan of Operation using their demonstrated expertise in insurance. See Fla. Stat. § 627.351(6){here is a link to the statute as made available through the Citizens Property Insurance Corp. website}; Plan of Operation Section 6 {and here is a link to the Plan of Operation also made available through the Citizens website}.  The members of the Citizens Board of Governors have the authority to advise the Florida Legislature that this additional Wind Coverage Rate Premium increase scheduled to take place on March 1, 2007 should not be implemented or that any and all non-Model non-evidence requirements should be eliminated. Individual Floridians will not be financially able to pay Premiums that are thereby allowed to increase the already skyrocketing costs of Insurance Coverage needed to purchase Homes. Businesses will not locate to areas in Florida  where individuals cannot afford to live and work.  "The lack of available and affordable property insurance is the biggest threat to our economy," says the Governor of Florida:  Governor Jeb Bush quoted on Thursday, November 30, 2006 in the South Florida Sun-Sentinel, article by Mark Hollis, "Special Session Will Seek Ways to Ease Soaring Homeowner Insurance Rates".

If this second and additional Premium Increase takes effect because of short-sighted greed for quick Premium dollars, it will truly kill the economic "golden goose"in Florida.  Already, reports are rising of many undesirable unintended consequences, including:  Individual Floridians will not be able to pay maintenance fees to keep up their houses and condominiums, prospective employees of Florida Businesses just cannot afford the cost of these Insurance Premium Increases, many Businesses will not be able to afford or even to find Property Insurance in Florida, and banks and other lenders may begin to foreclose.  See, for example, in addition to many other articles including links in this post:  Beatrice E. Garcia & Gary Fineout, "Insurance Crisis Will be a Tough Test for Legislators" (MiamiHerald.com, Thursday, November 30, 2006); John Hielscher, "Businesses Brace for Citizens Rate Hike", published by the Sarasota Herald Tribune, Tuesday, November 21, 2006 ("FREE" Registration stated as such is required on the Herald Tribune Web Site through this link).   Thus the requirements imposed as bases for a second additional and separate Premium Rate increase should be revisited immediately.

Third, regarding Commercial Nonresidential Property Insurance policies in a High Risk Account that provide coverage for the peril of Wind, Citizens' actuarial and underwriting committee has apparently recommended yet a third additional increase. Citizens Prop. Ins. Corp. Press Release dated November 16, 2006, "Citizens Committee Considers Rate Increases to Include Cost of Reinsurance".  The proposed Premium Rate increase would be limited to such HRA Businesses, but this would still affect 16,800 Businesses seeking this Insurance.  The proposal would increase their Premiums by 610 percent across the State.  Increases would be greater along the Florida Coasts, where Wind is an even greater Peril to Property.  In Sarasota, for example, the projected Premium Increase may be as high as 1,263 percent.  If our hypothetical Small Business has to pay that kind of Premium Increase, then its current $1,000.00 Citizens Premium would jump first to $1,259.00 as of January 1st under the first proposal, and then to $15,901.17 two months later.  It is no wonder, then, that such Increases knock the breath even out of some people who are used to past Insurance Increases.  They are too much for Business Owners in Florida to consider, let alone to pay.  It is reported, for example, that not one Business has signed up for the even higher Rates that are going to be charged by the new Florida Property and Casualty Joint Underwriting Association.   

Perhaps ironically, the Citizens committee's announced justification is a desire to match the Rates likely to be charged by the new Florida Property and Casualty Joint Underwriting Association.  See Kathy Bushouse, "Citizens Proposes Massive Insurance Increases" (South Florida Sun-Sentinel, Friday, November 17, 2006)(Note:  Registration is required for this newspaper article, but is stated to be FREE).  If HRA Rates charged by Citizens are going to rise for Businesses in this category, however, the consequences represent a policy choice that should be made directly by the elected representatives in the Florida Legislature. If the members of the Florida Legislature want this type of Premium Rate Increase by Citizens, then that is a policy choice which they alone have the authority to make.

To make it, the Florida Legislature would have to declare that the effects of this third additional proposed increase on an already burdened economy in Florida are mandated, for some reason, by the existence of the new PCJUA or by any other cause.  Nothing in the statutory authority provided to Citizens Property Insurance Corporation exists to allow Citizens to impose this six-fold Insurance Premium Rate increase, not in 2007 or ever.

      In brief summary, three (3) Premium Rate Increase Proposals are pending, as of December 1, 2007, before the Florida Board of Governors of Florida's Citizens Property Insurance Corporation. Only the first of these three (3) proposals are based on empirical evidence that predicts Catastrophe Claims:

 

First, a Premium Rate increase of some 25.9 percent for Wind Coverage has been authorized by the Florida Legislature to take effect January 1, 2007 based on a fact-based computer Model that predicts future Hurricane occurrences including Catastrophe Claims. This proposed Increase is the only pending proposed Increase which is arguably compatible with the fact-based Computer Model that predicts future Hurricane CatClaims including on insurance policies written through Citizens.

 

Second, despite some agitation by some people who live outside of Florida to encourage a switch to opinion-based input predictions, previous Florida Legislatures enacting Citizens Property Insurance Corporation rightly reject the use of agendas other than empirical evidence as a basis for computer Models on which Hurricanes are predicted and resulting Premiums are charged.

 

Third and finally, a committee of the Corporation has apparently recommended yet a third additional Premium Increase, this one regarding Commercial Nonresidential Property Insurance policies at High Risk to Wind perils. The consequences are potentially disastrous to businesses already in Florida or considering relocation to Florida. This third proposed additional Citizens Premium Increase represents a policy decision which only the Legislature of Florida should make.

 

I respectfully urge the members of the Citizens Board of Governors, to remember the purposes of Citizens exists and to think about why this place has life, as Mr. George Bailey might say. Thank you for your consideration.

 
This post includes the evidence presented to the Board of Governors of Citizens Property Insurance Corporation by Dennis J. Wall.

 
REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.