Lessons from California wildfires
As insurers, policyholders and restoration contractors clean up from the deadly wildfires, a look back at the disaster provides some interesting lessons for future planning. In San Diego County, where insurers have known that nearly 60 percent of the homes were located in the three highest-risk categories for fire, the risk became a horrible reality.Wildfires destroyed 3600 homes, killing 22 people and scorching more than 740,000 acres last fall.

No centralized fire agency
San Diego County is served by 50 fire agencies including small volunteer fire companies, the U.S. Forest Service and city departments. Many communities have opposed consolidation, voting down proposals and the associated tax hikes required to improve fire protection. However, they may feel more supportive because of problems created by the lack of coordination. Missed communications and outdated laws kept some resources from being used at the critical early stages of some fires. State rules prohibiting helicopters from flying at night grounded a vital backup as the most deadly fire was first sighted. Other regulations requiring the government to exhaust all civilian resources before calling in support from the military created red tape and delays. San Diego's one helicopter was sent to fires in another location.

Criticism for the federal government
State officials blame the federal government for ignoring California's request for emergency funding to clear away trees killed by a bark beetle infestation. The governor had asked FEMA for $430 million to remove the hazard last spring -that request rejected just before the wildfires hit. Homeland Security chief Tom Ridge said Congress had already agreed to provide $43 million for the project and the amount seemed appropriate.

Homeowners' frustration
Recovery and the claims process was delayed in many cases because homeowners left their homes without taking their insurance policies and had not idea of their coverage or even the company covering them. State officials advised them to call their mortgage companies because the policy is often listed on the loan. Meanwhile, homeowners anxious to get back into their homes have created pressure on local governments who want to strengthen building codes to lessen the possibility of fire damage. Some communities are debating a requirement that all homes be built with fire-retardant materials - an upgrade to current codes that require fire-resistant roofing for all homes statewide.

On a positive note
Many insurance companies waived their deductibles for homeowners whose loss was beyond their policy limits. Should the claims make an insurance company insolvent, California's insurance guaranty program will protect policyholders.

Financial outlook good
Based on preliminary estimates, 2003 could be the first profitable year for insurers since 1978. According to Robert Hartwig of the Insurance Information Institute, the first half of 2003 showed dramatic improvement in underwriting performance.

Projections show underwriting losses could fall from a record $52 billion in 2001 to just $4 billion to $6 billion in 2003-a decline of roughly 95 percent. The industry could exceed $400 billion in net premiums written for the first time in its history. By 2006 property/casualty insurance will likely pass the half trillion dollar mark in terms of net premiums written.

That's good news for an industry that has been in the red recently. Since 1990, homeowners insurers have paid out $1.17 in losses and expenses for every $1 they earned in premiums. In 2002 alone, homeowners insurers paid out $3.5 billion more in losses than they received in premiums.

Theft costs homebuyers
A survey from the National Association of Homebuilders indicates that contractors are reluctant to report thefts to their insurers because of already high rates. Instead, they pass the costs along to buyers when lumber, appliances or other valuable construction materials disappear. The survey lists workers as the prime suspects for the thefts. The NAHB estimates that thefts add as much as 2 percent to the cost of home construction.

Texas adopts insurance scoring rules
Texas insurers are welcoming new rules that they say will bring stability and fiscally sound policies to the insurance market in the Longhorn state. The rules on credit scoring follow an insurance reform law passed by the legislature that limits the use of credit history in setting rates. The rules on credit-based insurance scoring adopted by the Texas Department of Insurance outline the requirements of the disclosure statement insurers must use in notifying consumers when information about their credit is used for setting rates or underwriting. Industry spokesman Donald Hanson of NAII praised the rules as based on "principles of risk-based pricing and fairness."

The rules allow insurers to have differences in rates so long as those rates are based on sound actuarial principles and are supported by data filed with the insurance department. The new regulations also allow territorial differences in rates for coverage so long as those rates are the result of higher exposure and data is filed to validate those differences. That provision gives insurers flexibility to charge different rates for urban and rural areas as well as for coastal and inland residents.

UNC systems tackles mold problem
Despite tight budgets, the UNC university system is asking the legislature for $30 million in emergency funding to remove toxic mold at two public universities, NC Central University and UNC Pembroke. The mold at NCCU closed two residence halls and infested several other campus buildings.

New mold detectors
Specially trained dogs are the latest weapons in the battle against toxic mold. The Florida Canine Academy invests 1,000 hours of training for togs to teach them to sniff out toxic molds. Because dogs have such sensitive olfactory systems, they can pick up parts of mold per million as opposed to the humans' abilities to detect parts per thousand. The academy charges about $12,500 per dog.