To recap the issues raised during Wednesday’s conference call, here are some of the key media stories, and the messages we’re conveying.
If there is a subject you would like to see addressed on Wednesday, June 12, please email Mike Barry at michaelb@iii.org.
HURRICANE SEASON BEGINS; MILLIONS OF HOMES AT RISK FOR STORM SURGE
CoreLogic released a report on Friday, May 31, which estimates about 4.2 million U.S. homes valued at an estimated $1.1 trillion are at risk of hurricane storm-surge damage. Their analysis got picked up in Reuters, MarketWatch, the Baton Rouge Advocate and numerous other media outlets, and was included in Claire Wilkinson’s blog Terms + Conditions. I.I.I. staff have gotten a number of media calls related to the start of what is expected to be a severe hurricane season. The I.I.I.’s Bob Hartwig spoke about Florida’s vulnerability with the Huffington Post and the Insurance Journal, and questioned whether Florida’s insurance system was living on borrowed time. The I.I.I. issued a media advisory on May 31, reminding reporters doing stories this hurricane season about the I.I.I.’s resources and experts.
CHRYSLER HAS REJECTED REGULATOR’S REQUEST TO RECALL JEEPS
A piece by Bill Vlasic of The New York Times noted that on June 4 Chrysler said that it would not recall 2.7 million Jeeps, an unusual refusal of a request from the National Highway Traffic Safety Administration (NHTSA), which decided that the vehicles are defective and prone to fires in rear impact collisions. Chrysler said that it did not agree with the regulators about the safety of one of its most profitable models and that any fires in accidents did not result from a defective design. Generally automakers quickly agree to comply with regulators’ request for a voluntary recall in order to avoid a lengthy and costly dispute, and the auto industry has been very responsive to recall requests since Toyota was forced to recall millions of cars in 2009 because of sudden, unintended acceleration. But Chrysler now seems to be willing to defend the quality and safety of its Jeep sport utility vehicles. Michelle Krebs, an analyst with Edmunds.com, a car research site, characterized Chrysler’s position as bold, suggesting that the automaker is confident about the vehicles.
WALL STREET JOURNAL LOOKS AT COLLATERALIZED DEBT OBLIGATION
Katy Burne’s article (subscription required), said that in its effort to satisfy the strong demand for higher returns at a time of extremely low interest rates, the financial industry has revived collateralized debt obligations (CDOs), a risky investment that played a major role in the financial crisis. J.P. Morgan Chase & Co. and Morgan Stanley bankers in London are currently putting together CDOs that allow investors to bet on the creditworthiness of a wide variety of companies. Basic CDOs pool bonds and sell portions to investors, while synthetic CDOs pool derivative contracts, which are similar to insurance, rather than the bonds themselves. Just as in the era leading up to the crisis, the new CDOs offer investors a variety of levels of risk and return.
CATASTROPHE BONDS PROVE ANYTHING BUT A DISASTER
An article by Steve Johnson of the Financial Times on Sunday, June 2, said that superstorm Sandy had the potential to be a disaster for the market for catastrophe bonds, financial instruments that allow insurance companies to transfer risk to capital markets. However, even though insured losses from the storm were about $20 billion, he writes, the amount was not large enough to trigger wide scale cat bond payouts.
CEO SHOW INTERVIEWS I.I.I.’S HARTWIG
Bob Hartwig’s interview with Forbes magazine’s CEO Show, discussing the role of insurance in the economy was posted on Sunday, May 26.
I.I.I.’s WORTERS GUEST BLOGGER FOR EQUIFAX FINANCE
Loretta Worters has been a guest blogger on the Equifax Finance website three times in May. Her piece Business Income Insurance for Small Businesses (which dealt with issues from superstorm Sandy) was posted on Tuesday, May 28.
CNBC LOOKS AT HURRICANE SEASON AND INSURANCE COVERAGE FOR ASTEROIDS
Jeanne Salvatore was interviewed last Thursday, May 30, by CNBC on Four Questions to Ask Before Hurricane Season Hits. She also did an interview with CNBC on whether your homeowners insurance covers you if a meteorite hits your home.
UNINSURED DRIVERS ON HOW STUFF WORKS
Mike Barry was interviewed by How Stuff Works online, which came out Wednesday, June 5, on the consequences of driving uninsured.
STATES
California
Moderating winds, cooler temperatures and higher humidity have helped Southern California firefighters gain the upper hand over the 32,000-acre Powerhouse Fire. The fire, which in previous days had torn through dry, thick bush and caused thousands of evacuations, was 60 percent contained Tuesday morning, June 4, and all evacuation orders were being lifted.
Florida
The Virtual News Conference to Dispel Tornado Myths and Misinformation will be held tomorrow, June 6 at 10:00 a.m. EDT. The conference is being sponsored by the Federal Alliance for Safe Homes (FLASH), according to this Wednesday, June 5 news release.
Even though Florida has not had a major hurricane in the past seven years, one-third of the insurance companies that have taken policies out of the state’s property insurer of last resort, Citizens Property Insurance Corporation, have gone out of business, costing taxpayers $400 million, it was reported in a story in the June 3 Miami Herald. As Citizens steps up its efforts to offload policies to smaller insurers through a so-called “takeout” program, concern is growing that the young, untested companies may not be able to withstand this year’s hurricane season. Full Text
Louisiana
The New Orleans metropolitan area is better prepared than ever before for the Atlantic hurricane season that begins Saturday, June 1, especially with the lessons learned from Hurricane Isaac and the virtual completion of improvements to the hurricane levee system, a chorus of local, state and federal officials said Friday, May 31, according to the Times-Picayune.
With the disturbing memories of Hurricanes Katrina, Isaac and Sandy still fresh, and forecasters predicting an extremely active 2013 hurricane season, emergency officials are worried that residents have been lulled into a false sense of security by the new levee systems and don not have their evacuation plans nailed down, according to this Times-Picayune article, which also ran the same day, Friday, May 31.
After Hurricane Isaac swamped hundreds of homes in Louisiana last August, and dozens of residents in New York and New Jersey drowned during Hurricane Sandy a month later, the need for better surge warnings was painfully clear. And yet the 2013 Atlantic hurricane season arrived Saturday without new warnings in place, noted this Saturday, June 1 Times-Picayune editorial. The NOLA editorial board noted that the National Hurricane Center is working on color-coded maps indicating how much water is expected in various communities during a storm. That sort of easily accessible information would help residents understand how much danger they might be in and encourage them to evacuate; however, the center is not yet ready to launch the maps.
U.S. Rep. Bill Cassidy, R-Baton Rouge, is attempting to block stiff increases in flood insurance premiums by denying the Federal Emergency Management Administration money to implement the changes. He is proposing an amendment to an upcoming spending bill, which includes FEMA financing. It would deny the agency any funds to implement a 2012 flood insurance law that authorizes significant increases, particularly for properties now considered out of compliance with agency elevation and other flood-resistance requirements, according to this June 3 Times-Picayune article.
Mississippi
State Insurance Commissioner Mike Chaney said the predicted hurricanes would make it the most active hurricane season since 1949, according to this Monday, June 3 article in the Clarion Ledger. The more prepared you are in advance of a storm, the more it helps save lives and property and prevents unpleasant insurance surprises should a storm take aim at the state, Chaney said.
Oklahoma
The total number of tornado-related insurance claims filed by Oklahomans has climbed to 32,433 since May 19. The filings represent insured losses of nearly $250 million, including 13,938 homeowners claims, 17,492 auto claims and 724 commercial property claims, according to a Tuesday, June 4, Oklahoma Department of Insurance release.
Due to a growing number of reports of fraud targeting Oklahoma’s senior population,the Oklahoma Insurance Department (OID) is holding a series of educational conferences across the state. Those who attend the half-day events will learn how to spot, avoid and fight fraud.
In a sweeping decision Tuesday, June 4, the Oklahoma Supreme Court tossed out a comprehensive lawsuit reform measure approved and signed into law in 2009, according to an article in Tuesday, June 6, Oklahoman. The high court in a 7-2 ruling stated that the measure, called the Comprehensive Lawsuit Reform Act of 2009, was unconstitutional because it violated the single-subject rule of the state constitution by logrolling several subjects into one. “This bill is unconstitutional and void in its entirety,” the order reads. The measure, House Bill 1603, dealt with how lawsuits are treated in court cases ranging from personal injury to medical malpractice. It was intended to help curb frivolous lawsuits and reduce costs associated with the justice system, among other things. The ruling means the handling of lawsuits and how they are filed will revert to the practices followed before the measure took in effect in 2009.
SOCIAL MEDIA REPORT
A trend in social media is the #CatBondCat meme—a new take on the classic use of funny cat pictures which pairs the images with insurance messages that deal with catastrophe bonds and other securitized products. #CatBondCat creations are being tweeted out by several journalists, including Ben Berkowitz of Reuters and Erik Holm of the Wall Street Journal, as well as insurance agents.
Flood insurance continues to be a popular topic amongst insurance companies and agents. An ABC news video clip, featuring the I.I.I.’s Lynn McChristian being interviewed on the topic with the quote, “Everyone is in a flood zone, it’s just a difference level of risk,” is being shared on Twitter, Facebook and YouTube, where people are talking about preparing for hurricane season.
MEDIA MATTERS
Kelly Evans is the new co-anchor for CNBC Cable Network’s Squawk on the Street. She had previously been an anchor for Worldwide Exchange since May 2012 where she was based in London. Prior to her arrival at CNBC in February 2012 as a reporter, she was a columnist and reporter for the Wall Street Journal. Evans replaced Melissa Lee ,who stepped down from the show in April 2013.
Liz Heron (@lheron) was named emerging media editor at the Wall Street Journal (@WSJ) and Dow Jones Newswires. She joined the paper in April 1012 and was previously the social media editor.
The NAIC has named two new editors for the Journal of Insurance Regulation (JIR), which they announced in a press release on Wednesday, May 29. They are Cassandra R. Cole, Ph.D., and Kathleen A. McCullough, Ph.D, named new co-editors. The JIR provides high quality research and offers a variety of perspectives on insurance regulatory and public policy issues.
The I.I.I. is cited regularly in the media as an authoritative source of insurance information. To access the current I.I.I. press clips, click here.
For an I.I.I. Blog search, click here.
