Friday, September 16, 2005
A Few Thoughts on the Speech and Insurance
Last Night's Speech
First, a few thoughts on the President's speech last night. For the moment I'm not going to discuss substance, only visual and auditory impressions.
The setting itself was quite weird - kind of eerie, actually. The backdrop of Jackson Square was haunting, with the Cathedral shrouded in a reflective blue and the statue of jackson directly next to Bush. It seemed very... incongruous with other addresses. Bush's past speeches have either been with a backdrop of supporters (typically military) OR are formal addresses in a White House setting where the utter lack of other people in the shot is not quite so striking. It created for me, overall, a very weird sensation of the dead speaking through their total absence.
As to Bush's tone and appearance, I was surprised to see the casual mode, though I generally found it appropriate. It was just... strange. And let's face it - it's quite obvious when Bush is speaking "from the hip" about something for which he has personal convictions vs. speaking from a prepared speech where the stakes of how he appears
are very high. His posture and facial expressions, as well as oratory cadence fell in line with my experience of the latter. It's not his strongest suit and I think even supporters would agree with that. Generally speaking, however, compared to other speeches, I thought he got through it ok.
The analysis of the content continues to filter in and I'm not going to comment just yet on what he outlined because I would like to further investigate the substance of what he is offering and compare/contrast that to what people are saying is needed. At first blush, I'd say that it was a bit worrying that he didn't discuss how all of this will be financed. It's going to be HUGE bill and, at some point, detailed clarifications have to be made of how we will fund it and who will control oversight of the funding. Coming from where I am politically, of course, I can't see ANY juxtaposition of making the tax cuts permanent in light of the financial gravity of recovering from the disaster. I fear, however, that only the so-called "Death Tax" will be seriously considered since it hasn't as yet been repealed. That won't be enough - we will all need to be willing to make sacrifices given our new fiscal realities. It will be interesting to watch, to say the least.
My Pet Issue
We all have our pet issues, politically speaking. Mine has always been one which doesn't get much political traction: Insurance industry reform. I have a pretty basic view of the insurance industry. They need to be regulated. I cannot drive a car or have a mortgage without having automobile and homeowner's insurance respectively. Very simplistically put, I pay my premiums and take certain riders to protect myself and my possessions. The insurance company takes those premiums and invests them. They have earned record profits that have, largely, been insulated from parallel movement with the markets. There are many reasons for this which I won't go into here - but suffice it to say that, generally speaking, insurance companies will never pay a claim for the average homeowner that approaches what that same homeowner paid in premiums, especially not when you consider that the premiums themselves have earned compounded interest from the second the money leaves my bank account to the second it enters theirs.
It's a racket. And we're required to pay into that racket if we own a home or drive a car (though some states still allow for uninsured drivers - mine doesn't).
A few disturbing things are going on in the Gulf region as regards insurance, as reported by the Americans for Insurance Reform (AIR):
- "AIR has received many calls from Louisiana and Mississippi residents who are insured by smaller insurance companies (not the major companies like State Farm, Allstate or Travelers). Their insurance carriers are saying they are unwilling to supply policyholders with immediate living expenses until a claims adjuster has inspected their property. At the same time, these insurance representatives are unwilling to provide policyholders with even a broad estimate of when such an inspection might happen. Numerous people have told AIR, “Our money is running out and our insurance companies can't tell us when or if any help is on the way.”
- Several policyholders report that representatives of United Fire Insurance, which also owns Lafayette, Addison, American Indemnity, and United Fire Lloyds, are saying that the company has officially declared that the damage and forced evacuations in New Orleans and the out-lying areas were solely the result of flooding. While this apparent ruling has resulted in leaving many policy holders ineligible for the temporary “loss of use” funds guaranteed in their homeowners policies, if accurate, such a decision would have the long-term effect of leaving all of United Fire’s policy holders without flood insurance with little to no compensation for their damaged or destroyed homes. Calls to company headquarters for comment were not returned.
The larger issue that I think will get public attention is the fact that these insurers are going to try to deny damage claims in the affected areas on the basis of flooding. I've even heard one news reference on TV this morning to the effect that "poor levy construction" is to blame. This is significant. If the flooding is caused by the storm surge of a hurricane, it is viewed, generally, as "wind damage". Storm surge is a wind event, as water is literally lifted by the wind of the hurricane and carried inland. The insurance companies' lobbying organizations are already on the MSM in full-force, talking about the National Flood Insurance Program. it is the ONLY flood insurance a homeowner can get. It is administered by FEMA. The premium is fairly reasonable but the damage award amount is limited - $250K for the structure and $100K for contents. The payout is the same regardless of the value of the home in question. The private insurance companies want everyone to believe that flood insurance will more than suffice - only the damage wasn't caused by flooding. I*t was caused by wind.
These guys are trying to weasel out on their obligation after making money hand over fist. I expect this to become a huge issue and I will do a more comprehensive piece on it when time permits.
posted by RenaRF at 8:19 AM