The Consumer Federation of America (CFA) and the property/casualty insurance industry are clashing. Late last week, the CFA released a report titled “The Insurance Industry’s Incredible Disappearing Weather Catastrophe Risk.” The report accuses the P/C insurance industry of “overcapitalizing” and making no effort to cover the risks of floods and terrorism. The CFA is urging state and federal insurance regulators to take action and prevent insurers from imposing any more costly rate hikes.
Insurers have a different perspective. As a whole, the industry is decrying the report. They are arguing that they have taken on a record amount of risk last year will be continue doing so for the foreseeable future. This is due mostly to the destruction prone 2011, where insurers saw major losses as the result of catastrophes all over the world. Some insurers have reported deterioration of underwriting, but this is due to the fact that last year’s disasters have caused significant financial damage, forcing these insurers to take action in order to stay solvent.
The CFA has also called upon Congress to take action on the troubled National Flood Insurance Program. The program is due to expire at the end of May this year and is currently billions in debt. The consumer advocacy group wants to see the problems with the federal program repaired for the sake of the taxpayers it is meant to provide coverage to.
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