Property Insurance in US **

Fire Insurance as a forerunner of the insurance industry. Property insurance has a long history, over 200 years of history in America. The early fire marks of Benjamin Franklin's time can still be seen on some Philadelphia buildings as well as in other older American cities. Subscribers paid fire fighting companies in advance for fire protection and in exchange would receive a fire mark to attach to their building. The payments for the fire marks supported the fire fighting companies. Volunteer fire departments were also common in the US, and some fire insurers contributed money to these departments and awarded bonuses to the first fire engine arriving at the scene of a fire.

Following the terrorist attacks of 11 September 2001, a jury deliberated insurance payouts for the destruction of the World Trade Center. Leaseholder Larry A. Silverstein sought more than $7 billion dollars in insurance money; he argued two attacks had occurred at the WTC. Its insurers – including Chubb Corp. and Swiss Reinsurance Co. – claimed the “coordinated” attack counted as a single event. In December 2004, the federal jury decided in Silverstein’s favor.

Attack on the World Trade Center
source : http://en.wikipedia.org/wiki/File:UA_Flight_175_hits_WTC_south_tower_9-11.jpeg

In May 2007, New York Gov. Eliot Spitzer announced more than $4.5 billion would be made available to rebuild the 16-acre (65,000 m²) WTC complex as part of a major insurance claims settlement.

Post-Hurricane Katrina property insurance claims

New Orleans in the aftermath of Hurricane Katrina

Often the question arises, whether the damage due to catastrophe like tornado damage to an Illinois home would be considered an "Act of God" for insurance purposes and will be replaced. And how about the Hurricane Katrina?

In the wake of Hurricane Katrina, several thousand homeowners filed lawsuits against their insurance companies accusing their insurers of bad faith and failing to properly and promptly adjust their claims. Insurance companies changed their pricing policies after Katrina, with most policyholders in New Orleans seeing their property insurance premiums double after the storm, and deductibles increase by two, or even three, fold. The losses from Katrina severely impacted both the affordability and coverage amounts provided by property insurance, even in regions that were not impacted by the hurricane.

Florida Consumer Choice Act

On June 24, 2009, Fla. Gov. Charlie Crist vetoed the Consumer Choice Act (H.B. 1171). The bill would have trumped state regulation, and allowed Florida's biggest insurance companies to establish their own rates. State Farm Florida expressed its disappointment with Crist's veto of the bill the company said "would have given consumers more options in their choice of a property insurer. It would have attracted more capital to the property insurance market in Florida."State Farm had proposed a 47.1% property insurance rate increase for Florida policyholders. As a result of Crist's move, State Farm plans to drop coverage for more than 700,000 homeowners by 2011.

Ted Corless, who has represented large insurance carriers like Nationwide, remarked on State Farm's pullout from Florida to an Orlando television news station:

"I think that homeowners are really going to have to look out for themselves," Corless said.

Five days following Crist's veto of the Consumer Choice Act, Corless defended property insurance deregulation on WFLA's AM Tampa Bay, when he pointed out, "If the blue-chip insurance companies wanted to price themselves out of the market, then they'll go out of business."

“The governor says he’s protecting the consumers’ choice but, in reality, he’s making it for them,” Corless added. “In a free market, all companies would be available to property owners and if a homeowner doesn’t like the price, he or she moves on. This veto limits those options and ties the hands of the blue-chip companies.

In 2006, the average Florida annual insurance premium was $1,386 for an home owner, one of the highest in the country.

References :
1. ^ Adjusting Today The Replacement Cost Claim
2. ^ Levine, Greg. "Silverstein: WTC Leaseholder May Collect Up To $4.6B" Forbes
       6 Dec. 2004 http://www.forbes.com/2004/12/06/1206autofacescan06.html
3. ^ Bagli, Charles. "Insurers agree to pay billions at Ground Zero." New York
       Times 24 May 2007 http://www.nytimes.com/2007/05/24/nyregion/24insure.html?ei=5124&en=2e2ed8e5e6afab5f&ex=1337745600&partner=permalink&exprod=permalink&pagewanted=print
4. ^ Fox News 11 July 2006 First Hurricane Katrina Homeowner's Insurance
       Lawsuit Begins
5. ^ http://en.wikipedia.org/wiki/