As the region continues to recover from and prepare for severe weather, the insurance industry is confronting its own storm of scrutiny to make homeowners’ insurance more comprehensive across the nation.
Last month, the U.S. Government Accountability Office issued a report to address how uninsured losses impact homeowners and can result in added costs to the government due to blight, reduced tax revenue, and bailouts.
As a leading center for insurance scholarship the Rutgers Center for Risk and Responsibility tackled this same issue on a national and global scale last year during its “Fragmented Risk Symposium” held at Rutgers Law–Camden. Top scholars and industry experts addressed solutions to this complex problem in the papers presented during the conference, which have now been published in the Rutgers Journal of Law and Public Policy.
According to Rutgers Law Distinguished Professor Jay Feinman, who, with Rutgers Law colleagues Adam Scales and Rick Swedloff, serves as the center’s core faculty, the symposium and the research it generated present a strong starting place for improving the effectiveness of insurance, the insurance market, and insurance regulation as it relates to bundling and fragmenting risk.
The papers included in this issue explore this especially timely aspect of insurance law through its impact on coverage for natural disasters such as hurricanes as Don Horstein of the University of North Carolina discusses and through an international perspective, as represented by an article by James Davey of Cardiff University in Wales.
Feinman writes in the issue’s introduction of the paradoxes of insurance, using the most widely used homeowner’s insurance policy as an example: “…[t]hey would be surprised to learn that it covers damage to their personal property ‘while it is anywhere in the world,’ medical expenses to visitors to the home or other persons injured ‘by the activities of the insured’ even in the absence of the homeowners’ legal liability to the visitors or other persons, and the homeowners’ liability for personal injury for accidents unrelated to the home at all. On the other hand, many homeowners are surprised to learn that much catastrophic damage to their home – precisely what they intended to insure against – is not covered by the policy.”
But catastrophic damage to homes and businesses is what has happened and continues to occur as severe weather in the United States persists.
“Homeowners and businesses are discovering the conflicts and gaps produced by the fragmenting of risk among property insurance, flood insurance, and business insurance – and imposing risk on them when losses are not covered at all,” adds Feinman.
“Insurance is the great protector of the financial security of the American middle class, but only when it works.”
The Rutgers Journal of Law and Public Policy issue also features articles by Harold Weston, who explores a la carte coverage; Michael Childress and Daniel Loucks on what insurers don’t tell the insured; James Davey on what’s "real" in a reasonable policyholder; and Jeffrey Stempel on the profit and protection yielded by bundling risk.