| Profax 2/8/2010 - 2/8/2010 | |
| DON’T CRY ‘WOLF’ TOO OFTEN! One year ago, the forecasters at Colorado State University predicted 14 named storms, seven named hurricanes and three major Atlantic hurricanes. The 2009 season ended with nine storms, three hurricanes in the Atlantic and NONE reaching the US. This year their prediction is for an above-average hurricane season with 11 storms predicted and five to become hurricanes. The problem is reaction by insurance companies and reinsurers if they use any of this info to set rates. If they trend or factor in hurricane predictions, the rates are flawed. Near-term predictions do not have sufficient credibility to be used for important insurance applications such as product pricing and establishing solvency standards. The NAIC’s “global warming” solvency survey is just as flawed and has an inherent uncertainty which should not be used in any solvency or rate making model—period. “PAY-GO” IS COMING BACK: Congress last Thursday revived the pay-as-you-go budget rules known as PAYGO. The rules only allow Congress to spend more or new dollars IF it saves a like amount elsewhere. The President has indicated he will sign the legislation. There is a long list of exceptions however. PAYGO will hurt Crop insurance in that the President and USDA leadership want to cut $8 billion over the next 10 years. The eight billion won’t save the USDA budget a single dime but will instead be slid over to food stamps and nutrition. PAYGO is a rule allowing budgeters and appropriators to play games using it as an excuse to deny certain budget increases or to shift funds to their favorite programs. In the end somebody losses and somebody gains. Crop insurance will have to live with PAYGO. AG NEWS IN FARM COUNTRY: Fertilizer costs for 2010 are expected to average $100 per acre for corn based on Illinois land. It will be a little less for ND farmers but still above the seven-year national average [2000-2007] of $68. The national animal ID program has been scrapped by the Obama administration due to stiff resistance from ranchers and farmers. Supporters say they will start over. Costs, market control, world-wide non-competitive issues and privacy were concerns of US producers. Speaking of animal ID, what state has more beef cows per square mile than any other state in the USA? Nebraska ranks first in the USA in live animal and meat export and number one in cattle harvest [7 million head per year]. Nebraska has the top three beef cow counties in the U.S. Makes sense—they have lots of corn, cattle, and feedlots. IT’S GETTING CRAZY FOLKS! If your area gets hit with a hail storm or a blizzard or maybe if you are in Oregon and the February monsoons cause a loss, your insurance company will have to disclose the “global warming” exposure to the SEC, investors and NAIC. Further if your banker lends you the money to make repairs, this has to be disclosed because of the possible “global warming” exposure to the loan. This is the latest “must do” from President Obama’s recently appointed SEC chairwoman Mary Schapairo. She says. . .”the agency took action in response to petitions from environmental and investor groups that wanted specific information of climate change as an important factor in the present and future business environment.” The NAIC [National Association of Insurance Commissioners] has already delved into the politically charged and scientifically challenged global warming issue as “risk” relates to insurance companies. Almost every weather-related loss could be attributed to “global warming” or the new phrase “climate change”. Does this mean every insurance company from local township mutual insurers to giants such as AIG need to disclose their “global warming” risks? Let’s see now. . . Lena Larson’s pumpkin patch could freeze tonight . . .would that be a “global warming” risk?! It’s crazy folks! IS IT COMING THIS WAY? Wisconsin is the latest state to pass a “text-banning bill” which the Governor plans to sign. Their bill has a $400 penalty for first offense and $800 for the second and subsequent offenses. Companion bills in six states completely ban the use of cell phones by anyone in the vehicle while it is moving. While the intent is well-meaning, enforcement and lenient judges waiving or reducing the fine is likely. There is a good chance that the North Dakota Legislature which convenes in 10 months will see similar proposals. SPECIAL L&H PRE-LICENSE CLASS: Executive Director Steve Becher will lead a two-day Life & Health pre-license training class in eastern North Dakota on February 22nd and 23rd. If you or someone in your agency needs the training for Life & Health licensing contact PIAND. |
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