6 minute read
NAMIC Wants the National Flood Insurance Program Reformed »
The National Association of Mutual Insurance Companies (NAMIC) is just one of many insurance groups concerned about what’s going on with the National Flood Insurance Program (NFIP).
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As usual, it starts with reauthorization and then works its way toward pricing and risk.
NAMIC senior vice president, Jimi Grande explained the problem to the House Financial Services Subcommittee. Congress has been extending the NFIP authorization a few months at a time for several years; since the end of 2017 the NFIP has been reauthorized 19 times.
Some of those extensions have been at the last minute and for just a few weeks!
In the meantime, the private flood market has customized coverage and simplified the claims process for both high and low-risk clients. The NFIP hasn’t come close to doing anything like that. “Lawmakers must recommit themselves to passing long-term legislation needed to reform the NFIP into a financially stable program that can help millions of Americans who are facing growing flood risks,” Grande said.
He and NAMIC want a reduction in subsidies and how coverages are priced and base them on actual risk. Grande did note that the NFIP reforming Risk Rating 2.0 has done some.
Just not enough. “The NFIP cannot survive on its own if the rates for flood insurance aren’t in line with expected losses,” Grande said. “Matching rates to risk is the only way to make the NFIP viable, but we can ease that transition for policyholders by moving rates gradually. We must make sure every homeowner understands what their actual flood risk is otherwise we are creating a false sense of security that inevitably leads to greater losses.”
Grande said it’s important for a program that bleeds money to get it aligned with private markets. Yet, once again, the NFIP is temporarily authorized and it expires at the end of September of this year.
“Congress has been kicking the can down the road when it comes to the NFIP for way too long,” Grande said. “Ultimately, they can choose to adopt common-sense reforms and have a stable and secure NFIP as part of a vibrant and competitive flood insurance marketplace.”
Source: Insurance Business America
The Five Highest Paid Broker CEOs
1.
Daniel Glaser Marsh & McLennon
Salary: $1,500,000 Stock awards: $6,528,663 Option awards: $6,240,006 Non-equity incentive: $7,000,000 Other: $241,034
Total: $21,519,703 Change: Up 9%
2.
Gregory Case Aon
Salary: $1,500,000 Stock awards: $15,262,436 Non-equity incentive: $2,437,500 Other: $668,448
Total: $19,868,384 Change: Down 2.1%
3.
J. Patrick Gallagher, Jr. Arthur J. Gallagher
Salary: $1,300,000 Stock awards: $3,692,473 Non-equity incentive: $5,200,000 Change in pension: $19,063 Other: $1,871,043
Total: $13,882,255 Change: Up 24.2%
4.
5. J. Powell Brown Brown & Brown
Salary: $1,000,000 Bonus: $1,020,000 Stock awards: $2,940,017 Non-equity incentive: $3,980,000 Other: $261,018
Total: $9,201,035 Change: Up 26.8%
Carl Hess Willis Towers Watson
Salary: $766,667 Share awards: $1,167,419 Non-equity incentive: $2,443,875 Change in pension: $209,050 Other: $241,474
Total: $4,828,485 Change: Up 22.5%
The Five Highest Paid Insurance Company EXECS
1. Evan Greenberg Chubb
Salary: $1,400,000 Bonus: $7,500,000 Stock awards: $10,125,007 Option awards: $2,996,944 Other: $1,159,233
Total: $23,181,184 14% rise from 2021
2. Peter Zaffino AIG
Salary: $1,482,693 Stock awards: $9,379,956 Option awards: $2,874,994 Nonequity incentive: $8,000,000 Other: $167,577
Total: $21,905,220 Down 9% from 2021
3.
4. Alan Schnitzer Travelers
Salary: $1,300,000 Stock awards: $6,900,051 Option awards: $4,598,852 Nonequity incentive: $6,500,000 Change in pension: $471,951 Other: $82,843
Total: $19,853,697 4.5% positive change from 2021
Ajit Jail Berkshire Hathaway
Salary: $16,000,000 Bonus: $3,000,000 Other: $14,500
Total: $19,014,500 Not measurable
5. David Long Liberty Mutual
Salary: $1,450,000 Bonus: $4,712,500 Appreciation units: $9,571,283 Restricted units: $2,392,739 Other: $327,815
Total: $18,454,337 Up 3.3% from 2021
Sources: Business Insurance 1 Business Insurance 2
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PROPERTY CASUALTY PROFIT & LOSS IN 2021
Every year Verisk and the American Property Casualty Insurance Association (APCIA) release a report on the state of the insurance industry’s finances. That report was just released and finds net income rose from $60.3 billion to $61.9 billion.
It’s not a big increase and the jump has been impacted by an underwriting loss of $3.8 billion. That loss offsets the $5.2 billion underwriting gain from 2020.
Robert Gordon of the APCIA said premium growth increased 7.4% to $685 billion but the 11.1% increase in loss adjustment expenses (LLAE) offset those gains.
“Insurers’ combined ratio increased to 99.6 (from 98.6), and investment yields dropped to their lowest level since at least 1960,” Gordon in a statement that accompanied the report.
Policyholder surplus rose $122.5 billion because of $110 billion in investment gains. That pushed the policyholder surplus close to $1 trillion for the first time in history. However, Verisk’s Neil Spector said some of those gains may have been lost because of troubles in the bond and equity markets earlier this year. “This capital cushion bolsters insurers’ ability to respond to future claims as well as looming uncertainties in capital markets, global political risks and record inflation,” Spector said.
Gordon agrees, “While the industry balance sheet is strong enough to meet the commitments to insureds, it is facing emerging challenges from the significant and increasing impact of catastrophic weather events, cyber risk and significant price and social inflation/ lawsuit abuse,” he said.
Here are the details starting with net written premiums for all four quarters of 2021:
Quarter 1 4.9% Quarter 2 10.3% Quarter 3 12..8% Quarter 4 8.9%
$3.8 billion net underwriting loss in 2021 The 2020 net underwriting was a gain of $5.2 billion
Net income after taxes 2021 — $61.9 billion Net income after taxes in 2020 — $60.3 billion
In 2021 net written premium growth — 9.2% Net written premium growth 2020 — 2.6%
Combined ratio 99.6 in 2021 2020's combined ration was 98.6%
Industry surplus in 2021 — $1,032.5 billion Up from $910.1 billion at the end of 2020 Up from September of 2021 when it was $974.8 billion
Investment yield — 2.6% Down from investment yield in 2020 — 2.7%
Total capital gains in 2021 — $109.2 billion 2020 total capital gains — $49.8 billion
