Flood insurance is administered by FEMA (the Federal Emergency Management Agency) in the US and made available to the general public through a network of more than 50 insurance providers. Amy Roger felt helpless and powerless last week when water found its way into her house. Before she could react, the first floor of her Barre, Vermont, home had been inundated by six feet of water. Roger has lived in Vermont his entire life and is one of many locals helping to clean up after the record floods.
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Looking at the muck that now covered her house, Roger replied, “I don’t even know where to begin.”
Roger has been devastated by the catastrophic floods, much like many other Vermont homes. But this most recent natural calamity is making Americans realize how crucial flood insurance is.
People are dealing with scenarios where extreme weather events are getting more frequent, according to Mark Brown, a risk management instructor at St. John’s University in New York.
Because flood insurance is inherently risky, the federal government has funded all coverage policies since the 1960s. No private insurer in the US will cover the price by themselves.
Brown continued, “I think people really need a robust risk management plan.
The majority of National Flood Insurance Program (NFIP) plans only cover repairs up to $250,000 in value. Brown contends that many homeowners ought to think about supplemental insurance, particularly because climate change is making floods more frequent.
Events are occurring where people aren’t expecting them, he said. Many folks in Vermont didn’t consider devastating floods or Philadelphia’s automobiles getting washed away.
The insurance industry is likewise going through upheaval. Companies are leaving states where buying insurance is too expensive. Over a dozen insurance businesses in Louisiana have either filed for bankruptcy or left the market entirely in the last ten years.
“Climate change is hitting us hard,” Gregory Becker, a lecturer at the University of Maryland, said. There are more severe, intense rainstorms coming our way.
But not just homeowners are experiencing losses. During the severe rains of last week, crops on an estimated 7,000 acres of land in Vermont were submerged.
Secretary of Agriculture for Vermont, Anson Tablets, stated, “This happened just as they were heading to farmers’ markets, farm stands, and grocery outlets.”
For the benefit of the impacted farmers, Vermont has established an emergency fund. Drones are also being used to assess losses and give farmers who are attempting to prove their losses quick cash aid.
According to the data from the tablets, “We are really hoping that the money gets distributed quickly to the farmers, ensuring they receive the cash as soon as possible.”
The parts of Vermont that have been severely impacted by the floods are currently being inspected by FEMA. It could take many months to determine each homeowner’s level of assistance eligibility.
Experts highly advise more Americans to think to consider buying flood insurance in light of these recent occurrences. Extreme weather events are becoming more frequent as a result of climate change, so being ready for everything is crucial. After such calamities, having enough flood insurance can aid in the recovery process and offer much-needed financial security.
The New York Insurance regulators (for numerous policy versions) conducted enforcement action against insurance companies.
The New York insurance authorities have sent a notice to insurance providers warning them against selling several iterations of the same policy. It may lead to the sale of inferior versions of the same product to consumers who are minorities and those with lower incomes.
Adrian A. Harris, the superintendent of the New York Department of Financial Services, warned life insurance companies against discrimination in a letter. He claimed that many insurers have created multiple versions of products, with different rules and conditions depending on which insurer sells the product to the consumer in the individual market.
For instance, in response to requests from clients of a certain manufacturer, some insurers have developed a unique version of a product or added exclusive features. Producers who sell several versions may receive varying pay in some situations, while in others there may be little to no change. As part of their marketing strategy, several insurers have also offered various iterations of a product through various producers.
In his letter, the superintendent complained that “different versions are sold to consumers with similar life expectations, needs, goals, or personal or financial circumstances, resulting in different rules, conditions, benefits, fees, or premiums for similar-situated consumers across different markets.” “Consumers have no way of knowing if there are other versions of the product that are being presented and sold to other consumers with comparable requirements, goals, or situations, and which may be more inexpensive. Versions of the product that might better fit their needs. Due to these sales methods, people with similar circumstances are subject to unfair and illegal discrimination.
The insurance regulators demanded objectivity and openness.
According to Harris, insurance providers must assure fairness and transparency in their offerings, and it is illegal to discriminate against customers based on things like gender or ethnicity.
Harris also stated that life insurers are free to establish their proper underwriting standards, which may include varying underwriting for various products, as long as these variations are supported by factual and logical justifications, frequently relying on acknowledged insurance and actuarial principles, and are not illegal.
However, insurers contend that tailoring a policy to a customer’s unique circumstances is exactly what customers want and is frequently carried out without any bias or prejudice.
Through 75 life insurers, the life insurance business, which represents New York families, stated, “The life insurance industry provides financial security to New York families through a full spectrum of products designed to meet the unique needs of consumers.” There are various places to obtain goods that are catered to specific requirements and budgets, from Buffalo to Brooklyn.
In this day and age, where businesses may be reaching and using such data without customers’ authorization, New York’s action illustrates growing concerns among insurance regulators about the use of big data mining, internet searches, and social media exposures to obtain access to personal information.
A proposed law intended at imposing supervision and transparency requirements on insurers who utilize big data, racial profiling, and discriminatory insurance practices was first introduced by Colorado. Officials there said they want to make sure that insurers are not unfairly affecting consumers when they buy insurance by using their social media habits, credit ratings, and other non-traditional customer data.
Jason Lafemina, director of big data and artificial intelligence policy at the Colorado Division of Insurance, issued a statement in which he warned that “the extensive use of non-traditional factors in complex algorithm models, which policyholders can use, can lead to unintended consequences, i.e., discriminatory practices against protected classes.”
Similar alerts about the use of artificial intelligence, discriminatory insurance practices, and the potential for racial profiling have also been released by the insurance departments of Connecticut and California.
The American Academy of Actuaries asserted that certain protected characteristics, such as gender and disability status, which are taken into account as primary risk factors in underwriting, are frequently taken into account by insurers and urged regulators to specify the circumstances in which doing so would be improper or discriminatory.
According to research that was written up in the New York Law Journal, “In the life insurance field, the current focus is on the use of external consumer data to supplement traditional underwriting.” “External consumer data doesn’t have a clear definition, but it may contain things like credit scores, social media usage patterns, location information, shopping preferences, homeownership, educational attainment, occupation, citizenship status, and court records. Data can be used in algorithms for pricing or risk rating in automated decision-making systems.
Ellen M. D. Dan, John M. Laphenan, and Mallory W. Adele are the authors of the analysis and work for the Sidley Austin law firm. They claimed that even if there is no doubt that AI may increase productivity and provide advantages for both AI insurers and clients, businesses must be ready to defend the usage of fresh data and underwriting algorithms.
Insurance companies need to be prepared to explain how sophisticated algorithm models work and to make fiduciary decisions easily transparent, they wrote. The ability to demonstrate security safeguards against security breaches of policyholders’ health data and other sensitive personal information is another requirement for insurers.