Archive for May, 2010

Red River Flood Protection Plan to Stay on Original Course

May 28th, 2010 by admin | Comments Off | Filed in flood insurance

According to some verified reports, group studying the Red River diversion project in the Fargo, ND and Moorhead, MN area has decided to stay with its original plan, despite that fact that it may not offer the level of flood protection initially claimed.

Comprised of officials from both sides of the river, the Metro Flood Study Work Group had voted three months ago to endorse a 35,000 cubic feet-per-second channel on the North Dakota side of the river. Originally, that $1.46 billion project was expected to provide flood protection to a 500-year flood level, but more recent estimates from the U.S. Army Corps of Engineers show different data, with the possibility of higher river levels.

Aaron Snyder, the Corps project manager, explained to the group that a larger diversion study could take up to two months, and would “pretty much guarantee” that the group would miss the December deadline for Congress, but added that it may be possible to increase the scale of the project after Washington has granted its approval. “Right now, it’s important to move forward. There’s options to go bigger later,” Snyder said.

The last two springs have seen areas residents fighting massive floods, including 2009′s record-setting crest which damaged hundreds of homes and forced thousands of people to evacuate. Last summer, Fargo, ND voters indicated their support of the flood protection project, by voting for a half-cent sales tax increase, to offset the local share of the project’s cost. The preliminary estimates had the federal government paying $886 million, which left the other $626 million the responsibility of local authorities.

The corps is under an extremely tight timetable because Congress is expected to approve a major water projects bill – the first since 2002 – next year.

The corps is under a tight timetable because Congress is expected to approve a major water projects bill next year, the first since 2002.

“We want to stay on task and stay on time,” said Kevin Mahoney, Fargo’s deputy mayor.

Snyder said that the group had planned a discussion of the feasibility study and environmental impact statement on the North Dakota project, but the report was been delayed a week. The report in question will outline the project’s scope. Using current estimates, the plan as it stands now would provide flood protection “in excess of 100 years,” he explained. City and county leaders, however, are adamant about wanting 500-year protection.

“Things can always change,” Snyder said. “The U.S. Congress can always authorize something different as we move forward.”

It is not known if this project will impact flood insurance requirements for communities along the river.

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NHC Begins Tracking First Storm of the Season – Before Hurricane Season Officially Starts

May 26th, 2010 by admin | Comments Off | Filed in flood insurance

The official beginning of the 2010 Atlantic season is still a week away, but according to Reuters the The U.S. National Hurricane Center has already begun tracking the first low pressure system of the year, reminding commodities and energy traders to be prepared for the hurricane season, which begins June 1 and ends November 30.

On Sunday, the NHC started tracking the non-tropical low which was then about 475 miles southwest of Bermuda. By Monday morning the storm was producing disorganized rain showers and thunderstorms over a large portion of the southwestern Atlantic Ocean.

According to storm trackers, the system has a medium chance (30%) of becoming a subtropical cyclone in the next 48 hours, as it moves north-northwest toward the Gulf of Mexico, and away from Florida, at a slow pace.

The official 2010 hurricane season forecast will be released by NOAA (the U.S. National Oceanic and Atmospheric Administration) on Thursday. This forecast is watched by the energy and commodity markets for signs of any potential disruptions to oil and gas installations in the Gulf of Mexico, due to weather during hurricane season.

Even though the official forecast has not yet been made public, many meteorologists are predicting that this year will bring an “unusually destructive” hurricane season, which could significantly impact efforts to clean up BP’s oil spill in the Gulf of Mexico.

State officials in Florida, Louisiana, and Texas are urging home- and business owners in coastal areas to confirm that adequate flood insurance and hurricane protections are in force before anything happens.

Some meteorologists have already predicted conditions are ripe for an unusually destructive hurricane season, which could also disrupt efforts to clean up BP’s oil spill in the Gulf of Mexico.

Commodities traders also watch for storms that could damage agriculture crops such as citrus and cotton in Florida and other states along the coast to Texas.

In addition, the path of a storm can affect pricing of insurance-linked securities, which transfer insurance risks associated with natural disasters to capital markets investors.

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FEMA Discounts Flood Insurance for Homeowners Affected by Remapping

May 24th, 2010 by | Comments Off | Filed in flood insurance, insurance news

Homeowners across the United States who are concerned that they may be required to purchase flood insurance due to a recent push to redraw floodplain maps can relax a little; they’re being offered the mandatory coverage at a deep discount for two years.

Senator Dick Durbin of Illinois said recently that the Federal Emergency Management Agency(FEMA)’s decision to offer lower rates on properties affected by changes to the flood maps significantly reduces the financial impact to property owners in southwestern Illinois and other affected regions, at least for now.

FEMA has agreed that up to two years’ eligibility for the National Flood Insurance Program’s lowest-priced option, the Preferred Risk Policy, will be offered to small businesses and homeowners on any land that falls into the newly designated special flood hazard areas. Once the redrawn maps take effect – either this fall or early next year – those rates will be available.

The savings provided by the special rates are not insignificant. The yearly premium for a homeowner under the preferred risk program is around $300, as opposed to the $1,200 – $1,500 premium they might pay otherwise, said Les Sterman, an administrator of a flood-protection district that includes three Illinois counties near St. Louis.

Sterman said that the lower premiums, “… are quite reasonable, and everyone in the area should buy insurance at those rates. It’s considerable relief to a point, obviously.” He also warned that larger companies will still have to shop the open market for their coverage, at a price he estimates to be about $30 million/year in his region.

In a statement to the press, Senator Durbin said that FEMA’s decision was “…only a temporary solution…” ensuring that homeowners “…will at least be financially protected at an affordable price in the event of a flood.” He said that the long-term solution is “… to bring the levees into a good state of repair.”

For the last six years, FEMA has been working on modernizing their maps, including digitizing levee locations in order for crisis handlers to have instant, electronic access to information about man-made hazards. In the aftermath of 2005′s Hurricane Katrina – and the resultant sharp criticism of FEMA and the Army Corps of Engineers with regard to the levees in New Orleans – the organization grew bolder, offering a lesson about getting serious in fixing the levees.

Currently, FEMA is assessing whether levees can handle a baseline 100-year flood – that’s an inundation so large that there’s only a 1 percent chance of such a flood in any given year. This scenario is FEMA’s threshold for classifying an area as “high risk.”

The agency’s effort has caused angst in many of the country’s levee-protected areas, including Sterman’s district, where there are 64 miles of post WWII levees that were built to weather a 500-year flood – one with a .02 percent likelihood of happening in any given year.

The Army Corps of Engineers, however, believes the Mississippi River defenses in Illinois require hundreds of millions of dollars in repairs and fixes in order to meet FEMA’s standards before the new maps are released and show the levees to be functionally useless, and that’s money and time the agencies in charge of levee management simply don’t have, and such a downgrade would force those homeowners in the region who have federally-backed mortgages to buy flood insurance, even if they’ve never been flooded before.

FEMA’s authority to require the insurance comes from the 42-year-old National Flood Insurance Program that Congress enacted as a result of the public’s inability to get privately backed insurance for flood losses.

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Texas Uninsured Rate Highest in Nation; Employers Feeling the Financial Pain.

May 21st, 2010 by admin | Comments Off | Filed in health insurance, insurance facts

Health Leaders InterStudy, a Nashville, Tenn.-based provider of managed care market intelligence, is reporting that Dallas, Texas area employers are having to pay higher premiums in order to provide health insurance coverage for their employees, because the region has such a high number of uninsured people.

The high uninsured rate in the Dallas region, according to the Dallas Market Overview, is causing the amount of uncompensated care in local hospitals to dramatically increase, which, in turn, makes hospitals pressure health plans for higher reimbursements in order to help them balance some of the losses that are tied to such care. Continuing the cycle, those increased reimbursements make health insurance premiums cost more for everyone else.

How high is the uninsured rate in the Dallas area? Well, as of July, 2009, it was 24 percent. Per data fro the U.S. Census, this makes Texas the nation’s leader in the percentage of uninsured residents, which totals 25 percent.

Throughout the region, efforts to reduce medical costs are emerging. These solutions include the creation of patient-centered medical homes, wellness programs, and a regional health-information exchange.

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Temp Agency Exec Charged with Insurance Flood

May 19th, 2010 by | Comments Off | Filed in insurance specialists

One of the top executives of a temporary employment agency has been accused of scamming the New York State insurance Fund out of $25 million in workers’ compensation insurance premiums.

On Monday, Eric Goldstein pleaded not guilty to charges which included insurance fraud.

Prosecutors in Manhattan say Goldstein’s company, GT Systems, ran fifty temporary employment agencies. They also said that Goldstein had skipped out on the insurance premiums due to the state fund for years, while having employees make fake insurance certificates.

Goldstein, age 61, is also accused of under-reporting his payroll and mis-classifying his employees’ occupations, in order to reduce the workers’ compensation insurance rates he was charged.

Gerald Shargel, attorney for the defense, says that his client plans to fight the charges.

When representatives of the press attempted to contact GT Systems or its successor companies, calls were not returned.

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Missouri: Lions and Tigers and Bears – and Fees!

May 17th, 2010 by | Comments Off | Filed in insurance news, insurance specialists

Lawmakers in the state of Missouri have approved new regulations, including the imposition of fees and an insurance requirement, for people who raise wild animals such as lions, tigers, and bears.

Legislation sent to the governor will require a permit – which could cost up to $2,500 – for any resident of the “Show Me” State who possesses, breeds, or transports large carnivores. This permit requirement will go into effect in 2012.

In addition, the same group of people will be required to carry at least $250,000 of liability insurance.

Another section of the same bill raises by ten times the fees charged to companies selling pesticides in Missouri. Supporters of that increase say it could generate $1.6 million which would go to the state’s Agriculture Department, and bring the state’s fees in line with those charged by neighboring states.

The agriculture bill is SB795.

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Hurricane Scale Revamped for 2010

May 14th, 2010 by admin | Comments Off | Filed in insurance specialists

The commonly-recognized five-category rating system that describes the strength of a hurricane, and estimates the havoc its winds could cause has been updated for the 2010 storm season, which begins in the Atlantic on June 1.

The system, more properly known as the Saffir-Simpson Hurricane Wind Scale no longer includes estimates for storm surge or inland flooding due to rainfall. The scale was changed in order to ease confusion over storm surge and flooding predictions that didn’t match real-life situations, said Chris Landsea, science operations officer at the National Hurricane Center, and leader of the team that made the change.

The new scale still classifies hurricanes by their maximum sustained wind speeds beginning with Category 1 (74 mph), and ascending to Category 5 (155 mph or greater). Any storm rated at Category 3 or above is considered a major hurricane.

More importantly, the scale also tells people how strong a storm it will take in order to knock down fences, trees, power lines, or even entire buildings. The damage descriptions to homes, shopping centers and industrial buildings have been updated as well, reflecting a greater amount of coastal development.

Landsea explained, “In coastal areas of Florida, there are a lot more high-rises where the windows are susceptible to damage. That broken glass wasn’t covered at all in the old one.”

According to the report in The Insurance Journal:

In a Category 1 hurricane, shingle or metal roof coverings could peel off mobile homes, stone chimneys can topple and large tree branches will snap.
By Category 3, most mobile homes, fences and unprotected windows face certain destruction, and people should expect to go without electricity or running water for days after the storm passes.
A Category 4 storm will cause severe structural damage even to well-built homes.
Category 5 damage is catastrophic: total roof failure, blown-out windows throughout high-rises, neighborhoods isolated by fallen trees and power poles, water shortages and other widespread suffering.

In Florida and the Carolinas, however, the damage described may be less severe, because those states have the best building codes in the country, according to Landsea.

The revised Saffir-Simpson scale eliminates references to flooding, storm surge, or the amount of seawater pushed by a hurricane’s winds, and, according to Florida’s state meteorologist Amy Godsey, this simplified version of the scale also shows that forecasters have a better understanding of how storm surge works. She said the problem with the previous version of the scale was that it was extremely inconsistent with regard to storm surge.

2004′s Hurricane Charley, for example, made landfall in southwestern Florida with Category 4 winds, but brought the storm surge of a much weaker storm. 2008′s Hurricane Ike, however, made landfall just outside Galveston, Texas as a Category 2 storm, but brought a storm surge of 15 to 20 feet – a range generally associated with old-scale Category 4 or 5 storms.

Landsea said that if Ike had made landfall in Daytona Beach, Florida, its storm surge would have been only around eight feet, because the deep offshore waters of the Atlantic coast produce smaller surges than the shallower Gulf of Mexico.

Explained Landsea, “It’s like the difference between having a plate full of water and a bowl full of water. Put a fan next to them, and the water will be pushed off the plate, but the water will just swirl around in the bowl.”

Landsea says the number of variables in a storm – the size, and speed, the depth of water along the coast, and the topography of the place where it makes landfall – all combine to make the development of a separate storm surge scale impractical.

Instead, storm surge and flooding forecasts will remain in hurricane advisories and statements issued by the National Hurricane Center and local National Weather Service offices. In addition, the hurricane center is considering adding storm surge warnings to its existing list of watches and warnings. Sometimes, places outside the cone of a hurricane warning can still be vulnerable to storm surge, said Bill Read, hurricane center director. No decision on such warnings will be made for another two or three years.

The revision to the Saffir-Simpson scale took more than a year. Five wind engineers submitted updated descriptions of wind damage, and a draft was released for public comment last year, making this the first update to the scale since the removal of barometric pressure readings about ten years ago, said Landsea. Storms intensify as pressure drops, so those readings once helped forecasters assign a Saffir-Simpson category.

“Back in the ’70s it was easy to measure the pressure but difficult to measure the winds. Nowadays we have much better aircraft that fly into the winds and can measure them,” Landsea said.

Herbert Saffir, a Miami-area structural engineer, created a scale for the damage an approaching hurricane could bring, in 1969. The five-category scale was subsequently expanded to include storm surge and flooding in the early 1970s by Robert Simpson, then director of the hurricane center.

Before the Saffir-Simpson scale, hurricanes were simply described as major or minor.

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