Who would have thought that Louisiana would be more sensible than Florida when it comes to management of the insurance market? From an AP story at nola.com:
Louisiana should put policies in the state-run “insurer of last resort” up for private bid in an effort to get government out of the insurance business, a state Senate panel decided on Wednesday.[.]
“The time is now,” said Cain, R-Dry Creek. “It’s a proven fact that business can run it better than the state.”
And on the pro-regulation side, we have, this blurb in the same article:
Over industry objections, the panel also approved a bill that would require insurance companies to use 100 years of hurricane data rather than five as they determine their rates.
The major cat model vendors, as you recall, have been working on augmenting their model output with estimations of expected losses given shorter-term trends in tropical activity, including giving consideration to where we are in the tropical weather cycle.
Given that some reinsurers have been asking for the five-year outputs when negotiating treaty rates, this measure could create some unwelcome disconnects in cat coverage ratemaking.
However, I think that the consumer advocates do have a valid concern with their fear that insurers will simply use whichever estimate gets them the higher cat load when filing rates. Rather than forcing insurers to look only at the longer-term outputs, I think it would be better to require consistency over time, to avoid the “whichever gets me more rate” phenomenon.