Insurance Information Institute Report Examines High Risk Property Casualty Programs

Source: Insurance Information Institute

Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice - 2010

BY DR. ROBERT P. HARTWIG, CPCU AND CLAIRE WILKINSON

NOVEMBER 17, 2010

A myriad of different programs in place across the United States provide insurance to high risk policyholders who may have difficulty obtaining coverage from the standard market. So called residual, shared or involuntary market programs make basic insurance coverage more readily available. An updated report by the Insurance Information Institute (I.I.I.) titled “Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice” examines the property insurance coverage provided by Fair Access to Insurance Requirements (FAIR) Plans, Beach and Windstorm Plans, and two state-run insurance companies in Florida and Louisiana: Florida Citizens Property Insurance Company (CPIC) and Louisiana Citizens Property Insurance Corporation (Louisiana Citizens). Also discussed in detail are the plans in Alabama, Massachusetts, Mississippi, North Carolina, South Carolina and Texas. This year’s I.I.I. report, like the reports of the last two years, records the ongoing growth in the exposure base of the residual market property insurers along with the still precarious financial condition of some plans. The growth comes despite a collapse in the housing sector that has brought development in many catastrophe-prone areas to a near standstill.

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Prepare for Hurricane Season by Reviewing Tax Rules on Casualty Losses

Source: IRS

Topic 515 - Casualty, Disaster, and Theft Losses

A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption.

A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent.

If your property is not completely destroyed, or if it is personal-use property, the amount of your casualty or theft loss is the lesser of the adjusted basis of your property or the decrease in fair market value of your property as a result of the casualty or theft. The adjusted basis of your property is usually your cost, increased or decreased by certain events such as improvements or depreciation. For more information about the basis of property, refer to Topic 703, or Publication 547, Casualties, Disasters, and Thefts. You may determine the decrease in fair market value by appraisal or, if certain conditions are met, by the cost of repairing the property. For more information, refer to Publication 547. Keep in mind the general definition of fair market value is the price at which property would change hands between a buyer and seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts.

If the property was held by you for personal-use, you must further reduce your loss by $100. This $100 reduction for losses of personal-use property applies to each casualty or theft event that occurred during the year. The total of all your casualty and theft losses of personal-use property must be further reduced by 10% of your adjusted gross income. In addition, individuals are required to claim their casualty and theft losses as an itemized deduction.

The National Disaster Relief Act of 2008 changed some of the tax rules pertaining to losses resulting from federally declared disasters. The new law, which is effective for losses attributable to disasters federally declared in taxable years beginning after December 31, 2007, and before January 1, 2010, provides the following:

• Allows all taxpayers, not just those who itemize, to claim the net disaster loss deduction regardless of the taxpayer's adjusted gross income
• Removes the 10 percent of adjusted gross income limitation for net disaster losses
• Provides a 5-year net operating loss (NOL) carryback for qualified disaster losses
• Changes the amount by which all individual taxpayers must reduce their personal casualty or theft losses for each casualty or theft event from $100 to $500. This applies to deductions claimed in 2009. The reduction amount returns to $100 for taxable years beginning after December 31, 2009

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The Most Stolen Cars

Source: Insurance Institute for Highway Safety

Cadillac Escalade, Ford F-250 pickup, and Infiniti G37 top list of highest insurance claims for theft

ARLINGTON, VA — The rate at which people file insurance claims for theft is highest for versions of the 2007-09 Cadillac Escalade, a luxury SUV, followed by the Ford F-250 crew pickup, Infiniti G37 luxury car, and Dodge Charger with a HEMI engine. Theft rates for these vehicles are 3 to 5 times as high as the average for all vehicles. These are the latest theft loss results for passenger vehicles 1 to 3 years old published by the Highway Loss Data Institute (HLDI), an affiliate of the Insurance Institute for Highway Safety.

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United Policyholders Offers Consumer Resources on Insurance

Source: United Policyholders

United Policyholders was founded in 1991 as non-profit tax-exempt organization dedicated to educating the public on insurance issues and consumer rights. Our first major project was working with over a thousand victims of a devastating October, 1991 firestorm in the Oakland/Berkeley, California hills to help them understand their policies and receive prompt, fair insurance claim settlements.

Link.

The most and least expensive states for car insurance in 2010

Source: Insure.com

The most and least expensive states for car insurance in 2010
Insure.com’s new national survey of car insurance rates reveals that Louisiana has the highest average rates in the nation, followed by Michigan. Maine can boast the lowest average rates.

The results came from a study that collected average auto insurance rates for more than 2,400 vehicles, based on 10 ZIP codes per state and rates from six large carriers, with averages calculated nationally and for each state. This allows you to compare auto insurance prices among the states.

Louisiana is the most expensive; Maine is the least expensive.

CRS Report on Mandatory Flood Insurance

Source: Congressional Research Reports

CRS — Mandatory Flood Insurance Purchase in Remapped Residual Risk Areas Behind Levees
Tuesday, March 9th, 2010

This report examines the amount of flood insurance that must be purchased (and retained) on loans secured by real property located in federally designated special flood hazard areas (SFHAs). It is written in response to three situations: (1) the Federal Emergency Management Agency’s remapping efforts that include verifying the status of all levees as providing protection against a 100-year flood, which are currently depicted on Flood Insurance Rate Maps, and widespread concerns among homeowners about new requirements to purchase flood insurance should the levee become decertified; (2) uncertainty as to whether the mandatory amount of flood insurance should be equal to the assessed value of the insured residential structure or the unpaid principal balance (UPB) of the mortgage loan; and (3) concerns that homeowners may be inappropriately asked to purchase an amount of flood insurance that is several times the value of the actual property. This report will be updated as events warrant.

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Rand: No-Fault Insurance Fails Goals

Source: Rand Corporation

No-Fault Automobile Insurance's Fall from Popularity Caused by Increased Medical Costs

No-fault automobile insurance, once seen as a way to limit court costs and lower premiums, has declined in popularity among both insurers and consumers because it largely has failed to accomplish either goal, according to a new study issued today by the RAND Corporation.

While no-fault insurance was intended to lower the cost of compensating people involved in automobile accidents by taking most cases out of the court system, it actually increased costs because medical claims rose sharply instead, according to the study.

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Amazing Disgrace: 2009 Insurance Fraud Hall of Shame

Source: Coalition Against Insurance Fraud

America’s newest pharaohs of fraud have been dishonored with election to the Coalition’s Insurance Fraud Hall of Shame. The No-Class of 2009 represents some of our most memorable masters of mayhem. All were convicted or had other legal closure during the past year. These mea-culprits help put a human face on insurance fraud.

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Illustrated Maps of Helmet and Automated Safety Laws

From the website:

The Insurance Institute for Highway Safety (IIHS) is enhancing its online presentation of state laws by using interactive maps of the United States. The first such laws to be illustrated are motorcycle and bicycle helmet laws and automated enforcement laws, with additional state law maps becoming available. The maps provide geographic representations of the laws to illustrate the extent to which US states are addressing highway safety concerns.

Insurance Fraud Hall of Shame

Angry about paying insurance premiums all those years and receiving nothing in return? Thinking of cheating your insurer? Well, think again. You should be happy you never had to submit a claim. What you received in return for your premiums was a reduction in risk and a good night's sleep. This is neither costless nor valueless.

The Insurance Fraud Hall of Fame sponsored by the Coalition Against Insurance Fraud includes a number of shysters who all thought they were too smart to get caught.

Hard Times Likely to Increase Number of Uninsured Motorists

From the Insurance Research Council: Economic Downturn May Push Percentage of Uninsured Motorists to All-Time High

MALVERN, Pa.—Approximately one in six drivers across the United States may be driving uninsured by 2010, according to a recent study from Insurance Research Council (IRC). Although the estimated percentage of uninsured motorists decreased nationally, from 14.9 percent in 2003 to 13.8 percent in 2007, the recent economic downturn is expected to trigger a sharp rise in the uninsured motorist rate.

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Judicial Hellholes 2008

Each year the American Tort Reform Association lists what they perceive are the most unfair jurisdictions in which to be sued. Depending on your point of view, these could also be the most favorable jurisdictions for awarding damages. West Virginia has received top honors for several years in a row.

Terrorism and Homeowners Insurance

Now that Congress has issued a report indicating we are likely to suffer a terrorist attach by 2013 maybe it is time to review your homeowners policy. The Insurance Information Institute states the following:

Standard homeowners insurance policies include coverage for damage to property and personal possessions resulting from acts of terrorism. Terrorism is not specifically referenced in homeowners policies. However, the policy does cover the homeowner for damage due to explosion, fire and smoke—the likely causes of damage in a terrorist attack.

Condominium or co-op owner policies also provide coverage for damage to personal possessions resulting from acts of terrorism. Damage to the common areas of a building like the roof, basement, elevator, boiler and walkways would only be covered if the condo/co-op board has purchased terrorism coverage.

Standard renters policies include coverage for damage to personal possessions due to a terrorist attack. Again, coverage for the apartment complex itself must be purchased by the property owner or landlord.Auto insurance policies will cover a car that is damaged or destroyed in a terrorist attack only if the policyholder has purchased “comprehensive” coverage. Most people who have loans on their cars or lease are required by lenders and leasing companies to carry this optional form of coverage. People who buy liability coverage only are not covered in the event their vehicle is damaged or destroyed as the result of a terrorist attack.

Life insurance policies do not contain terrorism exclusions. Proceeds will be paid to the beneficiary as designated on the policy.

Looks like you should be pretty well covered. But what if the losses exceed the ability of the company to pay? That contingency is covered by the Terrorism Risk Insurance Act (TRIA).

Consumer Federation of American Reviews State Insurance Department Websites

The CFA has issued State Insurance Department Websites: A Consumer Assessment by J. Robert Hunter, Director of Insurance. In addition to reviewing all of the state insurance department websites, the report provides links to all of the sites and a summary of the information posted by each state insurance department.