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Democrats and Republicans, who have agreed on little this year, have found common ground on plans to give private insurers greater access to the $5 billion flood insurance program and to offer more buyouts for homeowners in areas likely to be repeatedly submerged.

“Flood insurance seems to be one of those few areas where Democrats and Republicans see the same problems and, in a lot of instances, see the same solutions,” Rob Moore, a senior policy analyst with the National Resources Defense Council, said in an interview.

At issue is the National Flood Insurance Program, which is $25 billion in debt. Congress has until the end of September to reauthorize the federal program. If it doesn’t act the real estate market along coasts and rivers will come to a halt, because homeowners need that insurance to qualify for federally-backed mortgages. In the wake of Hurricane Sandy the program paid out $8.4 billion to help cover the costs of rebuilding.

Last Thursday, Republican Congressman Sean Duffy of Wisconsin, chairman of the subcommittee that oversees the program, released draft legislation to overhaul it. Those changes overlap heavily with change House Democrats are seeking, according to a document from the Democrats on the House Financial Services Subcommittee on Housing & Insurance obtained by Bloomberg.

The bipartisan agreement among the House lawmakers covers a range of topics, including expanding the role of private flood insurers, getting the federal program to buy more reinsurance on the private market, and making it easier for homeowners that keep getting flooded to move somewhere else.

“This shows an incredible amount of work,” Roy Wright, the deputy associate administrator at FEMA who oversees the National Flood Insurance Program, said in an interview. He said the odds are good of Democrats and Republicans eventually reaching a deal.

The process has a long way to go before these changes would become law. Even if the House agrees on these reforms, the Senate and President Donald Trump must agree as well. And, as happened in the last flood insurance overhaul, changes may end up being rescinded after they become law if they cause premiums to skyrocket.

And some areas of disagreement remain among the House lawmakers.

In the draft legislation released Thursday, Republicans propose ejecting from the program homeowners who keep getting flooded but don’t want to sell their houses. Democrats wouldn’t eject them. And Republicans would impose fewer conditions on private insurers who want to sell flood insurance.

Still the main areas of agreement between the parties is large. The “draft incorporates ideas from both Republicans and Democrats,” Mark Bednar, Duffy’s spokesman, said in an email.

Under these plans, insurers and reinsurers would see an increase in their potential market. The federal flood insurance program takes in about $3.5 billion in revenue each year, and covers about $1 trillion in risk. While private insurers can partner with the program, signing people up in return for a share of their premiums, few private insurers sell their own policies. The program recently bought reinsurance for the first time.

Expanding the space for private insurers could benefit Marsh & McLennan Cos. and Aon Plc, the largest insurance brokers by revenue in the U.S., according to data compiled by Bloomberg. Swiss Re AG, Munich Re and Transatlantic Reinsurance Co. have signed reinsurance agreements with the Federal Emergency Management Agency, which runs the program.

The changes could also reshape coastal neighborhoods. Both parties say they support more voluntary buyouts of homes that repeatedly flood. Under that approach, the federal government uses money that comes in through flood insurance policies to purchase high-risk homes, then demolishes them. Expanding those buyouts could shrink neighborhoods along the Atlantic and Gulf Coasts, in such places as New Jersey, Virginia, Florida and Louisiana.

Both parties also want the federal government to shield poorer households from rising flood insurance premiums, by offering vouchers or other subsidies based on people’s incomes. They would increase the amount of money available to protect homes from flooding, such as moving buildings onto stilts.

“A fair amount of this will be part of the final legislation,” Larry Larson, senior policy adviser for the Association of State Floodplain Managers, said by email after the Republican draft was released. Still, “it has a long way to go yet.”

Lead by example, so goes an old adage.

Especially in driving, as a new study has found that teenage drivers, who are most susceptible to car crash fatalities, take their cue from their parents when it comes to driving behaviour.

The Chicago Tribune reports that a joint study by Students against Destructive Decisions (SADD) and Liberty Mutual found that parents set a pretty bad example for teens to follow, particularly with regard to using their cell phone.

“Parents are not great role models,” Gene Beresin, SADD senior adviser, said in the Tribune report. “As a matter of fact, they’re pretty poor role models for teenage driving.”

Specifically, the study noted that distracted driving now accounts for one in four car crashes.

The study surveyed 2,500 teens and 1,000 parents. Among others, it found that 55% of parents use apps while driving and 62% say they use their phone to take calls while behind the wheel.

Thirty three per cent of teens have asked their parents to put a stop to such behavior, the study also found.

The risky behavior also extends to parents calling their teens even if they know that the youngster is behind the wheel: 50% said they were guilty of calling their teens, while one third expect a response before their teenager reaches their destination.

“The good news is this sets the stage for a conversation between parents and teenagers,” Beresin observed.

The report outlines some suggestions to prevent fatal teen car crashes. Among them:
 

• Do not let your teen drive when they are tired. Encourage them to call you to pick them up or call a cab to ride home because the survey found that 10% of teens have admitted to falling asleep behind the wheel due to tiredness
• Program navigation and music apps prior to a trip. These are the two most commonly used apps by teens and have often been a source of distraction. “Program a playlist ahead of time. If the phone is within reach and you hear or see a notification, you’re going to be very tempted to either look down or pick it up. And the bottom line is you don’t need to,” Beresin emphasized.
• Set a distinctive ring and text tone for emergencies so your teen can ignore their phone when the call is not urgent

In its second seasonal tropical forecast for the North Atlantic basin for the 2017 season, IBM’s The Weather Co. said it now expects a total of 14 named storms, seven hurricanes, and three major hurricanes, a slight increase in activity from its forecast in April.

In April, the firm predicted 12 named storms, seven hurricanes, and three major hurricanes

The new numbers include Tropical Storm Arlene, which formed in April.

The current forecast numbers are more than the long-term 1950-2016 normals of 12/7/3 but slightly fewer than the recent “active period” (1995-2016) normals of 15/8/3.

According to Dr. Todd Crawford, chief meteorologist at The Weather Co., there could be more increases in the numbers ahead.

“There has been a clear trend over the past month towards warmer North Atlantic ocean temperatures and a less bullish view on El Nino development/magnitude, both of which favor a more active 2017 Atlantic tropical season than originally thought,” Crawford said. “Dynamical model forecasts are also more aggressive this month relative to last. The big North Atlantic blocking in May has favored continued increases in Atlantic water temperatures, which suggests that we may need to move our numbers up a bit more in our June update.”

The National Oceanic and Atmospheric Administration (NOAA) and the National Weather Service are scheduled to announce their initial outlook for the 2017 Atlantic hurricane season this Thursday.

Four automakers agreed to a $553 million settlement to address class-action economic loss claims covering owners of nearly 16 million recalled vehicles with potentially defective Takata airbag inflators, court documents filed on Thursday showed.

Toyota Motor Corp.’s share of the settlement costs is $278.5 million, followed by BMW AG at $131 million, Mazda Motor Co. at $76 million and Subaru Corp. at $68 million.

While the settlement does not mean an end to legal headaches faced by Takata Corp or its car maker clients, the resolution could help the embattled Japanese air bag maker’s efforts to search for a financial sponsor by removing one litigation uncertainty.

Shares of Takata, which was not named as a plaintiff in the case, jumped 20 percent in Tokyo on Friday. Takata has been searching for more than a year to find a financial sponsor to pay for costs to replace its inflators which are at the center of the auto industry’s biggest-ever recall.

U.S. auto components maker Key Safety Systems (KSS) and private equity fund Bain Capital are trying to strike a rescue deal worth around 200 billion yen with Takata’s steering committee and its automaker customers.

The settlement highlights the knock-on effect of the recalls, which began around 2008 and covers around 100 million inflators around the world used in vehicles made by 19 automakers.

Takata’s inflators can explode with excessive force and unleash metal shrapnel inside cars and trucks, and are blamed for at least 16 deaths and more than 180 injuries worldwide.

“This is a settlement between us and our customers,” said a Tokyo-based spokeswoman for Mazda.

Lawsuits against Honda Motor Co., Ford Motor Co. and Nissan Motor Co. have not been settled, lawyers said.

Takata declined to comment on the settlement.

The four automakers that settled said in a joint statement they agreed to the deal “given the size, scope and severity of the Takata recall,” but did not admit fault or liability. The automakers said the settlements, if approved by a Florida judge, will be overseen by a court-appointed administrator.

The settlement includes an outreach program to contact owners; compensation for economic losses including out-of-pocket expenses; a possible residual distribution payment of up to $500; rental cars for some owners; and a customer support program for repairs and adjustments, including an extended warranty.

In January, Takata agreed to plead guilty to U.S. charges of criminal wrongdoing and to pay $1 billion to resolve a federal investigation into its inflators. The majority of the air bag-related fatalities and injuries have occurred in the United States.

Automakers have recalled 46 million Takata air bag inflators in 29 million U.S. vehicles. By 2019, automakers will recall 64 million to 69 million U.S. inflators in 42 million vehicles, regulators said in December. Most inflators have not been fixed.

Florida businesses shouldn’t expect relief for workers’ compensation rates, this year at least. The Florida Legislature failed to pass legislation this session addressing 2016 decisions by the Florida Supreme Court that sent the state’s workers’ comp system into disarray and led to a rate increase of 14.5 percent.

After much back and forth between the House and Senate over their respective bills, it came down to attorney fees, which the industry says are to blame for the majority of the rate increase.

Lawmakers sought to reform the state’s workers’ comp system through two bills – House Bill 7085 and Senate Bill 1582 – in response to decisions by the Florida Supreme Court that found aspects of the Florida Workers’ Comp Act unconstitutional.

[Lawmakers also failed to pass other closely-watched insurance reforms addressing insurance claims (assignment of benefits) abuse. Watch for Insurance Journal’s upcoming report on the AOB legislation.]

Debate over the Senate and House bill went on throughout the final legislative day on Friday with the House, in an attempt to lure the Senate to its side, passing an amendment capping attorney fees at $180 an hour on approval by a judge of compensation claims. The Senate version of the bill capped attorney fees at $250 an hour versus the House’s previous $150 an hour cap. On Friday, the Senate voted not to lower the cap in its bill to $200 an hour, but the House still tried later to compromise with the $180 cap.

Another key difference in the Senate version was a provision moving Florida to a loss-cost system. Rep. Danny Burgess, who sponsored the House bill, told House members “the jury’s still out” on whether a loss cost system leads to a premium reduction, based on data from states that had switched to this model.

Burgess said he hoped the Senate would agree to the attorney fee compromise so lawmakers could get “something across the finish line.”

“The bill, as it stands today is on the end of the rope,” he told House members Friday. “[We are] trying to provide substantial reform to address rising rates from recent court decisions…We have to solve this problem before us. Every small business in the state of Florida is watching us now.”

The Florida Supreme Court’s decisions that caused the upheaval came in two cases – Castellanos v. Next Door Company and Westphal v. City of St. Petersburg. The biggest cost driver behind the 14.5 percent rate increase, according to the National Council on Compensation Insurance (NCCI), was Castellanos. That decision found the state’s mandatory attorneys’ fee schedule for workers’ compensation cases eliminated the right of a claimant to get a reasonable attorney’s fee — a “critical feature” of the workers’ compensation law. The impact of the Castellanos decision equaled 10.1 percent of the 14.5 rate increase, while Westphal accounted for 2.2 percent.

Burgess said the House version could offer up to a 5 percent reduction in rates and the Senate’s version would offer only about a 1 percent reduction.

The insurance industry supported the House version, agreeing that attorney fees are the main cost driver behind rate increases. The Property Casualty Insurers Association of America (PCI) said the bill would have addressed “decisions by the Florida Supreme Court rulings that could cause workers compensation rates to increase by 14.5 percent in the state, costing Florida job creators more than $1.5 billion.”

But ultimately, the two branches couldn’t reach an agreement before time ran out for lawmakers on Friday night.

Florida businesses now have the rate increase to contend with and the possibility of additional rate increases next year. An actuary from the National Council on Compensation Insurance (NCCI) told the Florida House at a hearing last month that it is reasonable to expect that there would be continued pressure on rates without legislative reform.

The Florida Chamber of Commerce called lawmakers’ failure to enact reform a “failed fix to Florida’s broken workers’ comp system” and said it was a missed opportunity by lawmakers to make Florida more competitive.

(Bloomberg) -- State Farm Mutual Automobile Insurance Co., the largest U.S. home and auto insurer, plans to shut 11 U.S. facilities, displacing about 4,200 workers, after a $7 billion annual underwriting loss last year on auto policies.

The insurer will exit Parsippany, New Jersey, and Petaluma, California, in 2018 and the other locations by 2021, the Bloomington, Illinois-based company said Thursday in a statement on its website. The work will move to the headquarters and offices in cities including Atlanta, Dallas and Phoenix. The company said employees in affected facilities will have opportunities at other State Farm locations.

State Farm, Allstate Corp., Hartford Financial Services Group Inc. and Warren Buffett’s Berkshire Hathaway Inc. are among companies that have been burned in recent years by higher claims expenses from car crashes as more drivers are distracted by electronic devices. Higher repair costs have also hurt in an era when drivers are logging more miles behind the wheel. Companies have been charging more for coverage and looking for ways to reduce costs.

Chief Executive Officer Michael Tipsord is working to improve results at the insurer after being named in 2015 to replace Ed Rust, who led the policyholder-owned company for three decades. Net income dropped to $400 million last year from $6.2 billion in 2015, hurt by the auto insurance results. The company posted better returns on businesses including residential coverage, banking and mutual funds. State Farm has almost 70,000 employees.

This morning. House and Senate committees debated and passed bills that repeal Florida’s no fault auto insurance law.

House Bill 1063 by Rep. Erin Grall passed the Commerce Committee, its last committee of reference, by a vote of 22–5. It’s now headed to the floor so the full House of Representatives can debate and vote on the proposal. Senate Bill 1766 by Senator Tom Lee passed its first committee of reference, Banking and Insurance, by a vote of 8–1. 

The bills are very different at this point, BUT procedurally two steps closer to passage.

The House bill:

• Repeals PIP and replaces it with mandatory bodily injury with 25/50 limits.
• Effective January 1, 2018.

The Senate bill:

• Repeals PIP, effective January 1, 2018.
• Mandates medical payments coverage of $5,000.
• Mandates bodily injury coverage with 20/40 limits, beginning January 1, 2018.
• Mandates bodily injury coverage with 25/50 limits, beginning January 1, 2020.
• Mandates bodily injury coverage with 30/60 limits, beginning January 1, 2022.
• Retains the $10,000 financial responsibility requirement for property damage.

It’s still very difficult to predict whether or not PIP repeal passes this year, but the idea certainly has a lot more traction than in previous years.

Florida drivers are among the most dangerous menaces on the road, ranking second worst in the nation for being distracted while behind the wheel, according to a study of driving habits.

Florida’s score was 49th, ahead of only Louisiana in a state-by-state analysis which indicated that 92 percent of U.S. drivers with cell phones use them while moving in a car.

“Those are shocking numbers proving we have a lot of careless and complacent drivers out there,” said Ryan Ruffing, director of communications for EverQuote, which collected the data. “Traffic fatalities have increased the past two years and phone use is a primary reason.”

Florida’s notoriously bad drivers ranked 39th in overall driving safety, while up in Montana’s wide open spaces, drivers ranked No. 1. By region, Midwesterners are the safest drivers, confirming their reputation as the nicest Americans, while edgy Northeasterners negotiating the roads of their dense cities are the least safe. Southern drivers use their phones the most, on 41 percent of all trips.

On the other end of the spectrum from phone-addicted Floridians are Vermonters, who rank as the nation’s least distracted drivers. They live in the second least-populous state.

It’s never a good time to text, talk, type, tweet, surf, chat, check Facebook or take selfies in the car, but especially not during April, which is Distracted Driving Awareness Month. It’s also the spring session of the Florida Legislature, where lawmakers are considering bills that would toughen phone use penalties.

Florida is one of only four states that does not make texting while driving a primary offense, which means that police cannot cite drivers for texting unless they stop them for another infraction, such as speeding. Texting has been a secondary offense in Florida since 2013.

One bill that would toughen penalties is sponsored by state Sen. Rene Garcia, R-Hialeah, and has received heavy lobbying from Miami high school junior Mark Merwitzer, who is particularly concerned about his distracted teen peers. The American Automobile Association recommends a ban on wireless devices for all drivers under age 18.

It’s no coincidence that states with strict laws — such as Vermont — have the lowest distracted driving rates, Ruffing said.

“It seems clear that law enforcement is effective because there is a correlation between the prohibition of phone use and safer driving,” Ruffing said.

If you think you can text or check emails and still maintain control of your car, you are wrong. Each day in the U.S., eight people are killed and 1,161 are injured in crashes that involved a distracted driver, according to the federal Centers for Disease Control and Prevention.

If you think using your phone does not impair cognitive function, you are wrong again. If texting distracts you for five seconds at 55 mph, you are essentially driving the entire length of a football field with your eyes closed, according to the National Highway Transportation Safety Administration. Phone use causes a lingering diversion or “latency effect” for 27 seconds after you’ve stopped texting or talking, according to research by the American Automobile Association, which cautions that “distracted driving is deadly behavior, and hands-free does not mean brain-free.” AAA found that 60 percent of teen crashes are caused by distracted driving.

“Our horrible traffic, the awful accidents you see everywhere — so much of it is due to texting,” said Carmen Caldwell, who has lived in South Florida for 50 years. She is executive director of Citizens’ Crime Watch of Miami-Dade County and forbids her staff members from texting on the road. “It can take me an hour to drive the four miles from work in Doral to home in Hialeah. My brother lives in Idaho and he thinks I’m kidding. Today I was behind a fool in a Mercedes on the Palmetto driving with the left hand and texting with the right.

“Part of our issue here is that we have a lot of drivers from a lot of other countries.”

Ruffing said 96 percent of drivers believe they are safe drivers, but 56 percent of them admitted to phone use, creating an “awareness gap.”

“It only takes a second to cause a wreck and it’s frightening that people think they have it under control,” Caldwell said. “Police officers should be able to stop someone for texting the same way they can stop you for not wearing your seatbelt.”

One way to prevent distracted driving is to pressure the driver to stop using the phone, according to research commissioned by AT&T that revealed 57 percent of people will not text if a friend or passenger asks them not to do it. AT&T has launched two campaigns to encourage drivers to change what many admit is a compulsion. Take the pledge at www.itcanwait.com. Or load the free AT&T DriveMode app to break the texting habit.

“Our goal with the It Can Wait public awareness campaign and #TagYourHalf is to help save lives,” said AT&T spokesperson Kelly Layne Starling. “And now more than ever, we’re calling on the public, law enforcement, educators, retailers, corporations, consumer safety groups and more to join the movement to help raise awareness of the dangers of smartphone use behind the wheel.”

EverQuote collected data on 2.7 million trips and 230 million miles driven with its EverDrive app that encourages safe driving and improved driving skills by scoring drivers on phone use, speeding, risky acceleration, hard braking and hard turns.

You are a driver for a transportation network company and then the unfortunate happens. Someone sideswipes your vehicle. In the chaotic moments after the accident, a question about your personal auto insurance coverage arises. Are you fully covered for ridesharing?

Perhaps not, GEICO warns.

“If you are driving for a rideshare company with a personal auto insurance policy, you might be taking a huge risk,” said Othello Powell, GEICO director of commercial lines. “Most personal auto policies were never designed to protect you or your vehicle for commercial purposes.”

A typical personal auto policy contains coverage gaps and limitations for ridesharing and package delivery. If an accident does happen with drivers’ personal auto policies, they have to provide their insurance carriers with specific details, including the phase of the ride they were in, said GEICO in a statement.

For example: Was the app on or off? Was the vehicle carrying any passengers or packages? Depending on the answers, drivers may not have the coverage they thought they had, GEICO said.

Colorado State University hurricane researchers are predicting a slightly below-average Atlantic hurricane season in 2017, citing the potential development of El Niño as well as recent anomalous cooling in the tropical Atlantic as primary factors.

The CSU Tropical Meteorology Project team is predicting 11 named storms during the Atlantic hurricane season, which runs from June 1 to November 30. Of those, researchers expect four to become hurricanes and two to reach major hurricane strength (Saffir/Simpson category 3-4-5) with sustained winds of 111 miles per hour or greater.

The team bases its forecasts on 60 years of historical data that include Atlantic sea surface temperatures, sea level pressures, vertical wind shear levels (the change in wind direction and speed with height in the atmosphere), El Niño (warming of waters in the central and eastern tropical Pacific), and other factors.

So far, the 2017 hurricane season is exhibiting characteristics similar to 1957, 1965, 1972, 1976, and 2002. “The years 1957, 1965, 1976 and 2002 had slightly below-average hurricane activity, while 1972 was a well below-average season,” said Phil Klotzbach, research scientist in the Department of Atmospheric Science and lead author of the report.

The team predicts that 2017 hurricane activity will be about 85 percent of the average season. By comparison, 2016’s hurricane activity was about 135 percent of the average season.

Recently, the Tropical Meteorology Project team expanded to include Michael Bell, associate professor in the Department of Atmospheric Science. William Gray launched the report in 1984 and continued to be an author on them until his death last year.

Landfall Probability

The report also includes the probability of major hurricanes making landfall:

• 42 percent for the entire U.S. coastline (average for the last century is 52 percent)
• 24 percent for the U.S. East Coast including the Florida peninsula (average for the last century is 31 percent)
• 24 percent for the Gulf Coast from the Florida panhandle westward to Brownsville (average for the last century is 30 percent)
• 34 percent for the Caribbean (average for the last century is 42 percent)

The forecast team also tracks the likelihood of tropical storm-force, hurricane-force and major hurricane-force winds occurring at specific locations along the coastal United States, the Caribbean and Central America through its Landfall Probability website. The site provides information for all coastal states as well as 11 regions and 205 individual counties along the U.S. coastline from Brownsville, Texas, to Eastport, Maine. Landfall probabilities for regions and counties are adjusted based on the current climate and its projected effects on the upcoming hurricane season.