homesmillbrae.com » Insurance Industry

Overdevelopment widens Florida sinkhole problem

Thu, 15 Aug 2013 23:22:48 +0000

The insurance industry in Florida has taken note. Florida law requires insurers to cover “catastrophic ground collapse,” and many homeowners buy additional riders to cover more minor damage.

“The number of insurance claims for sinkhole damage has increased significantly over the last several years. According to Office of Insurance Regulation, total reported claims in Florida increased from 2,360 in 2006 to 3,135 in 2010, according to information from the website of Citizens Property Insurance Corp. “The Florida Insurance Commissioner has identified sinkhole claims as a major cost-driver and expressed concern that these claims could threaten the solvency of Florida’s property insurance market.”

(Read more: Map: Tracking the recovery)

Sinkhole insurance can run anywhere from around $200 to $2,000 depending on where a home is located. The Tampa Bay area is considered “Sinkhole Alley,” but some have referred to Florida as the “Swiss Cheese State.”

In 2012, Citizens collected $56.7 million in sinkhole premiums, but estimates sinkhole losses for 2012 totaling $18.7 million, according to its website.

“Mother Earth controls this,” said Paul Caldwell, president and general manager of the Summer Bay resort where Sunday’s collapse occurred. He said its developer does not build in “dense” areas. “We test as we develop.”

Article source: http://www.cnbc.com/id/100965671

Homeowners Hit by Sandy May Save Thousands of Dollars

Thu, 01 Nov 2012 19:54:11 +0000

The fact that Hurricane Sandy was downgraded to a “Post-Tropical Cyclone” before it made landfall on the East Coast will save homeowners potentially thousands of dollars in home insurance deductibles.

New Jersey’s Department of Banking and Insurance Acting Commissioner Ken Kobylowski communicated that to the insurance industry Tuesday night and New York’s Governor Andrew Cuomo announced the same Thursday morning.

“Homeowners should not have to pay hurricane deductibles for damage caused by the storm and insurers should understand the Department of Financial Services will be monitoring how claims are handled,” Governor Cuomo said in a release. (Read More: For Builders, the Storm is Good for Business.)

How is a hurricane deductible different from your basic homeowner policy deductible? It is based on a percentage of your property’s insured value, and it can be up to 5 percent. So let’s say your home is insured for $300,000. That’s a $15,000 deductible, which is likely far higher than your regular deductible. The average homeowner deductible is between $500 and $1000.

“We have informed the insurance industry that hurricane deductibles are not triggered because Sandy did not have sustained hurricane-force winds when it made land in New York,” noted NY’s Superintendent of Financial Services Benjamin Lawsky in the release. “We will be working with insurers to help them respond as quickly as possible to homeowners who need to file claims. And we will be sending our mobile command center to hard hit areas to help consumers with insurance questions and problems.”

(Read More: Trains Roll, but Northeast Struggles Back From Sandy.)

There is very specific language in homeowner insurance policies in terms of hurricane deductibles. Usually the storm has to reach specific wind speeds to trigger the deductible. A state governor couldn’t necessarily override that private contract.

“The way the insurers look at it is that this is a private contract between the insurer and the policy holder, and the policy as written is going to be enforced,” noted Michael Barry of the Insurance Information Institute. “In this case Sandy does not appear to have reached the threshold to activate the hurricane deductible.”

The insurance companies probably didn’t need Governor Cuomo’s directive as such, since they were already doing their own assessments immediately following the storm. (Read More: Sandy’s Economic Cost: Up to $50 Billion and Counting.)

“We have done a review of the best available National Weather Service data and compared that to our language, and we have determined that the hurricane deductible will not apply in those states,” said State Farm spokesman Phil Supple.

As for how much the difference in the deductibles will cost the nation’s insurance companies, that is impossible to calculate at this point, as the companies are still waiting to get in to the hardest hit areas and tally the damage. It is also, as Supple added, “moot” to do any figuring, as they higher deductible clearly doesn’t apply.

—By CNBC’s Diana Olick; Follow Her on Twitter @Diana_Olick and Facebook.
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Article source: http://www.cnbc.com/id/49641797?__source=RSS*blog*&par=RSS

Does Private Mortgage Insurance Have a Place in the New Mortgage Order?

Sat, 16 Apr 2011 04:50:27 +0000

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It’s no surprise that the private mortgage insurance industry is fighting hard against proposed new risk retention rules for the mortgage industry.

They are already trying to pick themselves up and dust themselves off from the near knockout punch the Federal Housing Administration (FHA) gave them, when the government mortgage insurer took over their market share while saving the housing market from complete and total bust.

The FHA became the only game in town for the less credit-worthy borrowers with lower down payments. Now, just when the private guys are trying to get back in the game, they’re getting battered again.

The proposal for a “Qualified Residential Mortgage,” which would be exempt from 5 percent risk retention by the banks, which of course the banks don’t want to retain, requires, among many things, that the buyer put 20 percent down on the home.

“We do not believe that affordability and sustainability are mutually exclusive goals,” Kevin Schneider, president of the Mortgage Insurance Companies of America testified before Congress yesterday (he’s also CEO of U.S. Mortgage Insurance of Genworth Financial [ GNW 12.26 +0.00 (+0.00%) ]). “We understand the drivers of sustainable, affordable homeownership because the private MI industry has a vested interest in assuring that low down payment homebuyers purchase homes with loans that they can afford to pay over time.”

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Article source: http://www.cnbc.com/id/42613396?__source=RSS*blog*&par=RSS