Apr 2, 2013|
Spud talks to Insurance Commissioner Jim Donelon about what's behind rising flood insurance rates
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Automatically Generated Transcript (may not be 100% accurate)
Anyway. -- -- now that able school day has passed plus. Talk about. There's a bump please tell me that this illegal joke but I think. It's. It's it's the real deal you flood insurance is gonna go up or may not happen for a couple of years -- gonna be pretty and I've heard stories that the I'm. Talking and I you know I talked to a lot of people about a lot of different things and some person says one thing you know become try to piece together some stuff and -- and I'm burden. Bad -- that homeowners and policies are gonna grow up homeowners insurance is gonna go big time actually mine did. Mine -- the homeowners a company that I was with last year. Almost doubled. MIA my mortgage company you know I'm still shopping around for other insurance -- mortgage company paid that insurance rate. Then they sent me a big build a fairly escrow Sami I was back and forth between my agent. And my mortgage company and then finally got to sit around and figure all out and you know and and but I mean I was able to find other insurance I -- and so I have deep the the hurricane deductible and like like just about everybody else does too but my mug the home owners and -- last year like almost double -- went up like 80%. 75% 80% -- open there so went back and found somebody else and so now I'm back down to a more reasonable figure but from what I understand there are going to be going up anyway. My home mom my in my flood -- and I was on the phone my brother this morning it's open Baton Rouge. And first off he -- flood insurance even that flood insurance we Groban -- Allison and a flood insurance through rate we're in 2000 we live -- -- house. He lives in Baton Rouge and -- flood insurance and what he told me when he paid for his homeowner's insurance are like man. That's like a third of what I pay. You know Andy's got roughly the same size house has got a bigger piece of property but -- that much farther away from the coast you know. And I don't know I mean how they -- on this past that Jim Dahlan is gonna call in and when he does we'll go straight to him only done for about a half an hour. So he got questions for and start texting amount 87870. But that's what will be talking about -- -- want to. A web site. Called home insurance dot com and they have a piece of part of an one of their one of their links mayors called. Rates. Rates in your state. And I'm looking up at you know all fifty states a couple of by three of them don't have any and every variants there's and don't want to. I don't Jim I'm gonna use -- you know just trying to I'm John Taylor bounced around by a story about Mya my my homeowners went up. With a company -- was that and so in in shopping around for another one my mortgage company paid the other one. And it's a huge bill for the escrow made it took me it took me a couple of weeks. And it certainly jumping from one to the other and a -- to eat about a grand. You know but at least I'm back down to reasonable rate but from what I understand homeowners rates are going up we spoke yesterday on this show about. Flood insurance but that's kind and that really in your purview possessed of federal thing right. Right pitch it's called the insurance I tell folks so wish they'd change that called the National Flood Insurance Program and to actually have FEMA program. And and I will tell you this it's it's critical to our State's economy. We we would be. -- like a beached whale that we didn't tell. The national flood insurance programs so. For all of its challenges independent and requirements and and rate increases. That that came with the reauthorization. Like our delegation I would have voted for it distasteful though it is. And I'm hearing stories though about it it may go up -- 0210 to 20000. Dollars a year for certain areas which would basically go. I mean if if -- -- make a decent women I'm in your comments probably in the middle class -- farming way im not rich. But if somebody hit me what -- 101000 dollar a year flood insurance. I just have to go here Diego here have a piece of property you know -- -- I'm -- go up in up around Saint Francis Spellman rent. -- and -- that and that certainly can happen it can't happen to a person. In their current resident. And the and the reason for that is bella unlike the old to build the old law. That expired. A year to a bill and in congress could never get together and on a long term reauthorization if you remember they kept. Kicking the can down the road chancellor extending it for a month -- two months and and it would expire in -- sale would have to be canceled and held them until. It has been re authorize submit reauthorize it for a ninety day east or whatever. And then finally primarily honestly at the urging of the -- of the national. Realtors association and the American Bankers Association and they forced the two sides to sit down and hammer out this long term five year reauthorization. The old law before they started -- -- -- before -- -- even through the temporary extensions. Had a 10% per year cap. On existing policies and renewal that law has a 20%. Per year cap. On existing primary residence. Policy which now -- if your house gets. Destroyed did you go to rebuild it. You gotta rebuild to the new requirements or if you if you buy a new home do you have to meet you have to pay the actuarial. Rapes and commercial properties are subject to 25% cap instead of twenty all of those. Issues were negotiated out. 38 states are -- the -- Into the program twelve states Louisiana more than any other art net beneficiaries. Of the program and -- super storm sandy. This past Paul. The program since the conception in the sixties was eighteen billion dollars in the red will be collected in Louisiana. For flood insurance losses from the Rita and Katrina in 200515. Billion over an eighteen billion. Now new York New Jersey. Felt the -- build super storms Cindy and they have apparently because they have -- authorize another. Ten billion -- lending of borrowing authority for FEMA to keep the program going. Now the debt will go to 28 billion with another ten billion being paid to New Jersey and New York. Insured. For flood. Victims of some storms Cindy that that will make it 28 billion in the -- and as I sit in a media interview this morning. It will never be -- And I don't think anyone in congress expected to pay off that debt. Because even if it if they get the rates to actuarial sound which. With this 20% per year cap. Although in five -- -- pure premium would double and with these commercial and second residence and all that. Changes dramatic changes that are part of this that they get the -- actuarial. So now the soundness. In the private sector will come back in and take that business away from the federal government. There's no question about that so they're never going to be profitable enough to pay off that that there -- 28 billion in debt that they don't have. Now but they also I mean if you look at the rest of the country and in their point a finger us about all the billions of dolls we got an in. In this flood insurance but guess what. A third of the power of the general generation comes from this column in -- on horse and -- that never getting involved in a similar discussions -- -- -- never. Extortion that talk about highway funds. Where he met -- here into the highway because -- the national highway federal highway -- Funding system. You know we don't get all those. But we we did get oh summit held although most of its local. With the unity long expansion. But but would you go up to note congested corridors of the northeast and UC tunnels and bridges that that were. Come primarily financed by the federal government through through the interstate system. And I come come up against the clock and only judge brown have announced on -- just a couple away I got people sending text messages and a wanna talk about homeowners rates what does Arnold got what are homeowners rates doing. You know and I mean should you go shop. Frankly every year start shopping every year to see if you can constantly jumper on the gets a better deal and and I know you can do some of that shopping on the on the website. That in your office so we're talking about that -- del DI da de LA does state that what does that -- -- I thought oh god go belly LD guy in Louisiana -- ministers of the I don't know they dug up all right. 26 Sony seven as the number I got a whole bunch a text questions for Doug Jim O'Donnell and commissioner of insurance. You'll stick around coming right back after you get a cup of coffee -- talk. I was on the phone -- got somebody coming in at 3 o'clock am trying to arrange for that Jim -- miss my guess. Insurance commissioner for a great state of Louisiana and we're talking about homeowners insurance rates of oil -- we'll talk more about a hedge or -- Billy no and yes run yesterday trying to figure out how to deal at all Wisconsin. Here's a good quest actually I had this question myself Jim I wanted to ask how much federal money is spent on winter storm damages by FEMA. Because I know like tip of the Dakotas -- trying to hold it against them but I mean they get bigger and under 3040 feet of snow and every year and it it costs a chunk of money to dig that stuff up every is so what are they spend and do they -- like snow insurance. No idea. I -- it and you know you'd you'd have to. I don't know who to go to do. I don't know I don't really gonna -- instead of who's -- getting. Well and when he first got that gig is over -- he's coming on us that the questions and he runs pretty much the so you know you you could you could certainly end don't ask don't want to know -- you know -- -- it's -- -- Let's say. How can your home insurance go up because of the aging your roof when you have a metal roof for the 130 -- 150 mile an hour wind -- What what do you do your home to get your home as low as possible on some of these insurance rates and is it worth the money that you spent you know. Do you -- or retrofit. Not just your roof that's just a horrid old a viewer bill -- But but you build or retrofitted to meet the new statewide building code. Passed by the legislature in special session right after the week video. And -- and in Katrina event in 2005. With that new statewide building code which most of the urban areas like Jefferson like club Orleans Saint Bernard already had. Building codes in Malaysia but they had to upgrade and to meet if they weren't already had. The new statewide standards that law that building statewide building go to our first ever. -- parishes. Didn't have been building code. Came -- a requirement that every company writing property insurance in this state file they. Discount that they would give to anyone who built -- retrofitted. To meet that new state statewide building code. And on on a typical property homeowner's property insurance policy in the metro area. Doing so. Get gets about a 20% rate -- floor below for a property owner who builds or retrofitted to that standard. Now there are people out there who frankly. Don't have the money like I just spent 4200 lower 4200 blocks from my homeowner's insurance for a year almost five. For my flaw and and me begin in the my car insurance even -- a driver. But I -- I if I wanted to build a retrofit. I'll have to spend thousands of dollars to knock a couple of hundred bucks off of my homeowner's insurance I mean I think a lot of people nervous about their ago. I'll just pay the homeowner's insurance until star and trash is my house and only using insurance money to build up to these new standards is that affecting your rates -- and is that affecting everybody else's race. Well. Is it affecting ever what it's what affecting your rate. The fact that like you talk about people try to retrofit up to a certain area together you know together a break on your homeowner's insurance Ameen. I hit it would console some people 1012. To address how that but usually it is that a acting as the -- as the fact that you know I'm gonna wait. Until a storm trashes my house still use the insurance money to build it up to that code standard. Well yeah I mean in that you're not due to get the discount if you're not in compliance with the new statewide building go up. Anything -- news since 2006. Meets that that that standard and and then -- yeah there's there's -- of cost benefit analysis that each property owner would have to do. To determine whether there building depending on how much of great it would would require. Well would cost down the state also made. They up to 5000 dollar tax. Poem. Deduction I think it is available. And the cost of such retrofit. If if -- Louisiana property owner Al wants to do that that that is they do adoption especially deduction for that was which passed. In order to assist folks with. We're not trying to upgrade that property but yes there is a cost to it and then there is a benefit to it and you have to make that analysis says stoop. Whether it's worth your time. And then expensed. Two to do that as to whether -- you know there's a cost everybody for those who don't do it. Actually the cost of wind and -- coverage. Is based is driven by models and exposure. Each company has to future wind and -- against the cost of wire. His group and by. The loss experience. That companies have on -- conditions on the parish by parachute goes by zip code basis yeah. When I got people asking about. Flight rules and things like this tunnel roof inspector be hired to inspect the roof for possible hail damaged things you know and and. That's a lot of the answer to that is yes it's not a -- inspector it's a public adjuster. Call you company out they will send their adjuster route if you are not satisfied with what. That inspector that adjuster. -- as -- damages or didn't know that you don't have damaged then you can -- -- consolidate public adjuster who Kim couldn't. It with expertise. Can refute what that adjuster but the company's search. -- one last constant out. I've been there -- rumors that that homeowners insurance is gonna start spike in itself to not as bad as flood insurance but they're going to be starting to go up and go up considerably in the next couple years to mean I know. I hit it to me is it's all rumors I haven't heard any poker fans won't piece of evidence when I mean. Here's here's what I know. Over the past four years the average homeowner's insurance rate increase in Louisiana has been -- and -- half percent. If you took state farm and Allstate out of that now they have. Between the two level 40% of our market share. If you took those two out the rest of the market the average was two and a half percent. But because state form -- -- took -- present and -- stable and -- took 11%. During those four years. They drove the rate that average increase up from two and a half percent to four and a half percent but the other 60% of the market. There -- average rating -- -- two and a half percent. That's been stable. I I wish you were decreasing but but it's not what it has been stable. That really does speak to which he talked about the war in that in shopping around I did the same thing you did. And as we speak I'm saving 400 dollars a month on my home -- -- for having moved from. The major national ensure that I had been with for years and through Katrina. 21 of the new companies doing business and our stake as to the future what I'm hearing like Q. Is that. All insurance it's cyclical and it really is worker's comp engine crisis in the eighties it's the most competitive. Decreasing. Cost fumble product in the insurance world in our state these states. That property insurance says hit the bottom of a soft market and we'll sort trending upward. And -- I don't know that I haven't seen that yet. -- hope it's not true of course but it is cyclical and that's what the -- latest information word of -- Rumor. If you will it is indicating. You know 11 of the things that. That drives that is the cost of reinsurance and international product. That's subject to losses in Japan and and all around the world so we we are affected. By those experiences well beyond our borders and certainly beyond our control. Today outside India that was -- scores from an amount of time but the biggest -- go shop around no doubt every year. Actual dollar and opry -- -- no thank you particularly with you to. Our Dave Cohen is NN newsroom he's gonna bring us some today and then we'll get to a bunch of text messages and calls about your insurance -- open up the phones for our next subject. Here in the big eight semi WW. Farley and Jim O'Donnell and on for half an hour I've fallen and yesterday I was trying to get him man -- nuggets -- on yesterday. But unfortunately they can only be on exactly the same time which means it would have been two people trying to live it wouldn't work -- -- joined us today. Talking among homeowners insurance and investment piece of advice that he can give is go shopping and don't do what I did don't wait -- the last minute. You know a lot of insurance guy like the cup the mortgage company and I have pays out of the escrow account thirty days before the insurance expires. Even though -- column is that don't do that and shopping around. But still that's that's anyway and that's the book and -- them. So that's the best piece of advice he's got a few I'm looking at this site called homeowner's insurance. Where it is at the moment -- Home insurance dot com. And -- only their called rates in your state. And it's and from just touch on the state how you know when they go up they go down. This is the largest rate decreases over the last year seven point 1% and you Tom. The average premium and you -- is 409 finals. I'm assuming that that's yearly. The average rate in Louisiana's 12186. Dollars which is right about what my brother up in Baton Rouge is paying. I'm -- over 4200. How women in metric Texas the average premium is eleven point so 11100 by almost 12100 books. There rate has gone. Down. One point 8% Idaho has gone up three -- over 3% -- gone up almost 3%. Ours is pretty much stayed the same. Arkansas' 14100 is the average premium ours is fifteen -- announcement. We're gonna click. Did go up all of a sudden. Point 8% and went up. So now the average premium is 1540 did not just say they -- supreme totals fourteen something a move to two other states a comeback announced 1540. Virginia's average premium is 698 dollars Montana's average premium 926000. Is a NASA were buried under all this snow. You know. What is this New Jersey averaged 800 dollars. A year in men in their insurance astounding. 1166. In Florida I mean we're more than Florida astounding. Anyway here we go spun how much do incompetent shows companies think people can and will pay. See what -- talk about that with a flood insurance if enough people. Are going to be hit by this huge rate increase. Because his attacks me. Here's a tax about about flood insurance can deal with an 80% increase. 80% increase would be welcomed in some neighborhoods in saint Charles -- they're talking about a 1000%. Eight increase. 1000% increase on your on your flood insurance. If enough people are just -- are gonna say I can't afford to flood insurance which means I can't afford my home. Because of a bank -- -- I mean you're gonna have to negotiate at a bank one way or another because unlike from in my mortgage. They demand that I have flood insurance -- mine my insulin chances. Is up fourteen 450 about 460 year something like that. And I mean if it went up. A 1000%. Are couldn't afford it I couldn't pay I couldn't pay 101000 dollars a year. In. In flood insurance and -- that's never flooded as a matter fact. So I don't think I could and I'm just wondering how many people would would would go to their mortgage companies their banks and just go here here's the -- So now you -- nothing. Now you own a piece of property that even you can't -- I can't sell it because nobody else to pay 101000 dollars a year in flood insurance. So unless some. You know incredibly rich person comes buys up the entire area and turns it into. I don't know. The big marina. They're going to be stuck -- a bunch of properties in which case -- the banks in the mortgage companies would have to start negotiating with the government about. About that. And yet the government's broke so where's the money gonna come from anyway. After Katrina. My wind and hail insurance went up to 2900. A year not including homeowner's or flood. My foot is 400 a year in the current flood maps on. 2900. And wind and hail and. And that doesn't include you know just regular vote homeowners in fire. My thing is all across the board but I got a 2%. Hurricane deductible. -- be spent and what five almost gotten close to six grand will be my deductible of must -- my house is damaged and are in -- hurricane. Okay. Current flood -- on because I'm in a flood zone X the year ago. Famous new flood -- puts me in a high risk flood zone AT my family has lived in this neighborhood for almost a hundred years. It has never flooded with any of the major storms. I don't know anyone that will be able to afford the increases from flood insurance everyone is talking about losing their homes. Slidell floods 3500 a year on a house that floated once during Katrina homes built in the 1892. Sounds like a land grab somebody say Inspiron eleven part of July homeowners insurance what Allstate to K a year with a hurricane deductible. 101000 dollar home insurer for to a 101000 dollar home in short for two underneath -- -- -- -- and say -- Tex. I understand the last two words were done. Spun how much you can move. All these houses are older than a hundred years old even when you rebuild your house insurance ask how old home this. Field with a home more you -- and my my home stood sixty years old I think -- fine. Here's old I think I'm not I'm not quite sure I think it was built in the early fifties. So don't put it what sixty some years old. Who moved into that neighborhood when they got out of when they got out of flow of our World War II when we got on the surface. So. Better flood protection would lower rates in saint Charles parish yet on that was the argument going on guess I had yesterday. He's trying to build a -- he's trying to get the FEMA to use vote the the river levees as part of -- of -- Season in plaque commends us considerably farther down -- river but he's trying to get the get -- to use. River levees -- regular Mississippi River levees as they a break. To reduce the size of the search. The streets flooded homeowners is through the roof homes can't sell there you go. I don't know mourners who gets a point where you just wanna build a home that frankly. You know if you everything that you own that's worth something -- fit in the -- a pick up in and of in a trailer that you can poll. And your home is -- made out of paper. And every time a storm comes just leave and you come back and build another you know 5000 dollar home. And just. Live in a 5000 dollar home and and -- all your stuff and view trailer in your truck and and go a hundred miles up the river inning -- down. I don't know how much more of this can we take in what the heck can we do about it beyond me -- Yeah Maine I'm in the same -- press yell and again I'm talking to my brother who lives what 75 miles up the highway in Baton Rouge. And he pays. About a third of what I do he doesn't have flood insurance doesn't have to have flood insurance because it is a batterers. And his homeowner's insurance is about a third one mine isn't as thousands of serving sizes mind. You tell me I guess is just where you live to six Sony 7866889. 087 years are told from finding somebody ain't so anymore you text messages and called next hour. We are going to be speaking to doctor -- -- by the way that is operating opinion poll be dealing with his son. Information gonna talk about -- your -- been diagnosed with AD -- ADHD. Got a big article here from the New York Times. ADB in eighty HD really on the rise. Or are we just sitting on over diagnosis of the problems are we seeing doctors. Prescribing medications. Just because. Some doctors are thinking it's over diagnosed so we'll get your calls and comments when we speak to doctor -- drone. He's professor and had a child psychiatry and don't you Health Sciences Center school of medicine who drama at the top. Of the 2 o'clock -- in the meantime back mourns bush on the -- seven native Libya. Tomorrow. On the -- show us. Matthew person of -- a person often associates an accountant. And finally have my taxes of -- lands a quagmire that we -- like. Between my wife and I we have about. Thirty. Or 31 W twos and 1099. Because of that mean that you every turn into reformer someone -- a different ones so anyway. But he'll be on tomorrow or today actually is is that tax freedom day from the toy association also -- But tomorrow he'll be joining me at 2 o'clock to take your calls and comments about. Taxes the fifteenth is coming up. Because of all the indecision in congress -- people relate to get in particular things there's a theory out there that frankly you should. Should everybody should should. You know do way. -- he comment an extension. And some voice and an email about that always you know how about an expert come on and talk about why the rich people do extensions under extensions because I got two inch thick during a taxes and dynamic and give it all done in time. But he'll join me tomorrow. And offer some some free advice on a sports show a -- -- so Matthew person -- person -- & Associates will be joining me and then Yasser Arafat went to six only seventy. 866889087. Is a tool for on the people that work means our cost of living increase. Here's another one -- pedestrian I was considered eight eat my rates more than doubled after Katrina several of us use a private surveyor an hour zones were changed to next. Flood wasn't required where's our refund. There in the nether land where everybody -- refunds are Janet's and metric played and Janet what's up. Which of and to -- I just opened its out of the -- and in my car -- was -- -- to do that. Her right side. Yet topic today is one that -- -- The -- for quite some time -- two years ago my insurance homeowners insurance company. The good -- people you. To increase my insurance 14100. Dollar eight year. Now I don't know Jim O'Donnell and can't say anything -- 2% increase. We ended -- almost a 47%. Increase. They average than the average of those know what he said was they they went upload. Oh what a boom boom that 40%. Or more or -- between state farm and Allstate they own 40% of the market. The average was four and a half percent if you take those guys that -- down to 2%. But that's the that's the average so you obviously were on the high end to help members are not that -- Right and the opinion I called the insurance commissioner called -- because I thought this unbelievable that he would allow a company to do this. And I was told I -- -- as we have that provocative to do best. And imports in this day and age you can't change companies are readily I don't know what company he would into insurance with. What I feel certain he'd get some kind of special. I don't know why I I -- I mean. Mean personally I am no good at doing stuff on the Internet a very badly on doing her on the phone I need to do stuff face to face this year I didn't. I waited so long. Normally I go see my insurance agent. At the beginning or middle of December roughly. Because and and I met and I did not figure well I'll do it all on line a -- and an M one thing or another happens and I didn't take care of in the next thing you know. My my mortgage company paid. And that's what they did to me they raised my homeowner's insurance from like 4445. To like seven before and paid it and they wanted me to pay to hold your bank. So I will fire them get a refund find somebody else so you know frankly I think that's what. I'm gonna go back to go see in my agent's face to face every year and going what's the best -- out there let's go with -- -- I have absolutely no more loyalty. To any insurance company out there period. But the one I'm with this year -- forgive me the best price next year or we'll fly you know coming. And everything you -- And they've won the entire -- -- satellite insurance with them I have. -- -- -- A lot well they. They do that across. Well let's hope you know increase in India still you. You need to shop around every year Disney to shop we need to give up they don't have any any. If they don't have any in you all Leo there's no reason you have all the of them Augusta -- -- o'clock thanks for the call Genpact Ramones butcher of the list.