Louisiana Department of Insurance
Volume 11, Issue 5
May 2011

Commissioner Jim Donelon
Theodore "Ted" Haik, Jr., Chair
Jeff Albright, Vice Chair

Raymond J. Aleman, Sr.
Lee Ann Alexander
Paul Buffone
Sheriff Greg Champagne
Representative Page Cortez
Manuel DePascual
Nick Gautreaux
Michael Guy
Chris Haik
Lance "Wes" Hataway
LTC John A. LeBlanc
Senator Eric LaFleur
Ann Metrailer
Robert Moorman
Senator Dan "Blade" Morrish
Carrie Pena
Stephen Schrempp
Earl Taylor

Terrell B. Moss, Director

David Evans,
Supervisor/Research Analyst

Katie Walsh, Administrative Assist./Research Analyst

If you no longer wish to receive this newsletter please send an email to the following address with "REMOVE" in the subject line.

Flood Watch: Eye on the Mississippi

Louisiana citizens remain on high alert as we carefully watch the waters and levees of the Mississippi River.  The river crested in Baton Rouge on May 18, at 44.8 feet above sea level, and will fluctuate an inch or two for some time.  The waters of the Mississippi reached an all-time high in the city in 1927, when they rose to a record 47.3 feet. The river crested in Vicksburg on May 19 at 57.1 feet above sea level exceeding the all-time high in 1927 of 56.2 feet.

Due to flood waters and the opening of the Bonnet Carre and Morganza Spillways, at least 21 parishes in LA have declared emergency status and could potentially be affected by the Mississippi River and backwater flooding.  It is important for policyholders to know that flood damage is not covered in a standard homeowners, renters or business insurance policy.  The Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) ensures communities across the country have access to affordable flood insurance.  A flood policy typically will not take effect until 30 days after purchasing the policy.   Separate flood coverage needs to be purchased to cover the building and the contents.   It is also important to note that flood insurance policies do not cover loss of use or additional living expenses if individuals are forced to evacuate or relocate.
Unfortunately, only about 29 percent of Louisiana households have flood insurance.  Statistics show that only 40 percent of the victims in the Hurricane Katrina floods had flood insurance coverage.

Commissioner Jim Donelon and the staff of the Louisiana Department of Insurance (LDI) are working to educate the public and clear up any misinformation about property and flood insurance.   At a recent press conference, the Commissioner offered the following tips on how to prepare for floodwaters:

1. Develop a family emergency plan.

  • Create a safety kit with drinking water, canned food, first aid, blankets, a radio, and a flashlight.
  • Post emergency telephone numbers by the phone and teach your children how to dial 911.
  • Plan and practice a flood evacuation route with your family. Know safe routes from home, work, and school that are on higher ground.
  • Ask an out-of-state relative or friend to be your emergency family contact.
  • Have a plan to protect your pets.

2. Safeguard your possessions.
Create a personal flood file containing information about all your possessions and keep it in a secure place, such as a safe deposit box or waterproof container. This file should have:

  • A copy of your insurance policies with your agent’s contact information.
  • Conduct a household inventory: For insurance purposes, be sure to keep a written and visual (i.e., videotaped or photographed) record of all major household items and valuables, even those stored in basements, attics or garages. Create files that include serial numbers and store receipts for major appliances and electronics. Have jewelry and artwork appraised. These documents are critically important when filing insurance claims. There are a variety of home inventory tools available to assist you including smart phone applications.
  • Copies of all other critical documents, including finance records or receipts of major purchases.

3. Prepare your house.

  • Clear debris from gutters and downspouts.
  • Anchor any fuel tanks.
  • Raise your electrical components (switches, sockets, circuit breakers, and wiring) at least 12 inches above your home's projected flood elevation.
  • Place the furnace, water heater, washer, and dryer on cement blocks at least 12 inches above the projected flood elevation.
  • Move furniture, valuables, and important documents to a safe place.
If your property floods,
Commissioner Donelon offers the following tips:

1. Contact your insurance agent or insurance company right away. Have your policy or policy number handy at all times.

2. Give your phone numbers and addresses where you can be reached day or night.

3. When your insurance company adjuster contacts you, ask for identification. Do not permit an adjuster to inspect your property without proper I.D. Remember that unscrupulous repair men often try to take advantage of people who have suffered storm losses.

4. Protect your property from further damage. Take photos of your damaged property and make whatever reasonable temporary repairs are needed. Especially: cover broken windows and holes in the roof or walls. Keep a record of these repairs for possible reimbursement by your insurance company.

5. Remember: NFIP has an arrangement with private insurance companies to sell and service flood insurance policies, but the NFIP has its limits. You can get up to $250,000 for your house and $100,000 for what’s inside it. If you need more coverage, you can purchase excess flood insurance through private insurers. Check with your agent or insurance company for more information.

6. If you do not have flood insurance, there are other possibilities for reimbursement. Check other policies for all opportunities for recovery.
(Examples: Loss of food by spoilage due to electrical outages, or damage from power surges related to storms may be covered by your homeowners policy. Damage to your motor vehicle may be covered under comprehensive coverage on your auto policy. Some falling tree damage may be covered under homeowners policies as well.)

7. Do not pay money, make any deposits for repairs, or sign any contracts for repairs until you have been instructed to do so by your adjuster and you have called the Better Business Bureau in your area to check out the people who are to do the work.

Record Number of Tornadoes Hit Southeast

As of May 14, there have been 1,064 tornadoes reported in the U.S. in 2011. At least 804 of these are confirmed, a record number due in large part to several extremely large tornadoes reported last month.  According to reports, the bulk of the damage occurred in Alabama, Tennessee and Mississippi.  In Alabama alone, more than 13,000 homes were destroyed and will surpass the record set by Hurricane Ivan in 2004 to become the state’s costliest disaster ever.  According to several catastrophic risk modeling agencies, the recent tornado outbreaks are estimated to have caused anywhere from $2 billion to $6 billion across the Southeast.
While tornadoes and high winds have caused the majority of the damage, floodwaters, hail, and wildfires have also been contributing to property damage across the South.  Fires in Texas have caused nearly $100 million in property damage, having scorched more than 1.6 million acres of land and at least 250 buildings.

LPCIC Meeting

Risk Management Solutions (RMS) is a leader in catastrophic risk modeling - from earthquakes and hurricanes to terrorism and infectious diseases. At a recent meeting of the Louisiana Property and Casualty Insurance Commission (LPCIC), several representatives from RMS made a presentation to commission members on RMS’s most recent hurricane model. Insurers use hurricane models to help them determine the amount of risk their policy portfolio represents and the amount of capital, reinsurance, and premium necessary to meet their hurricane exposure.

Mr. Joel Taylor, RMS Senior Analyst- Mitigation and Regulatory Affairs spoke about catastrophe models and outlined key changes to the U.S. Hurricane Model 11 (RiskLink 11).  Three drivers for updating the previous model included improved data, computing power and validation.  Mr. Taylor explained how these three factors resulted in the model projecting a greater expectation of loss further inland because of a better understanding of how hurricanes deteriorate over different types of terrain.  Loss change expectations and potential rate impact on Louisiana were also covered in the presentation.  Joining Mr. Taylor were Ms. Kay Cleary, Director of Mitigation and Regulatory Affairs, and Mr. Reid Edwards, Senior Director of Global Government Affairs.

RMS has not yet filed its new model for use in Louisiana.

Regulators Convene for Washington Forum in D.C.

NAIC Officers

Image Source: NAIC (National Association of Insurance Commissioners)

Left to right: NAIC Vice President and Louisiana Insurance Commissioner James J. Donelon; NAIC President and Iowa Insurance Commissioner Susan E. Voss; NAIC President-Elect and Florida Insurance Commissioner Kevin McCarty; NAIC Secretary-Treasurer-Elect and North Dakota Insurance Commissioner Adam Hamm.

NAIC officers and members met with members of Congress and Administration officials during a May 25 forum in Washington, D.C. Regulators discussed health care and financial reform with federal officials.

Please Note: The Louisiana Property and Casualty Insurance Commission (LPCIC) released the 2010-2011 Annual Report to the Legislature on April 19th.�Copies of the report were distributed to the governor, members of the legislature and LPCIC members (which includes the commissioner of insurance). An electronic copy of the report can be found on the Louisiana Department of Insurance web site, www.ldi.la.gov , under the LPCIC link.