With the landfalls of Hurricane Fiona on Puerto Rico and Hurricane Ian on Florida, questions about insurance coverage came to mind. Well, at least my mind.
Ok, I admit it, too many things bring insurance issues to my risk “oppress-ed brain” -- to paraphrase The Bard.
But that is neither here nor there!
As a result of Ian, Floridians filed more than 500,000 private sector insurance claims as of this writing.
History suggests that disappointment will follow. Insureds often hold coverage expectations beyond anything proffered by the business of insurance; especially when it comes to water damage.
In the United States, insurance policies still reflect categories of risk and loss developed in the 19th Century under the “American System” of property insurance. The system limited insurers to underwriting one line of insurance, such as fire insurance. A confederation of regional cartels consisting of stock (publicly traded) fire insurance companies defended the “monoline” American System.
That system did a poor job covering storm losses and providing the counter-cyclical injection of capital to restart local economies. Nevertheless, the political power of regional cartels maintained the American System until the mid-20th Century.
The Long Island Express
Which brings me to the topic of this entry of Savage Tales of Genuine Risk: The massive hurricane which decimated parts of Long Island and Southern New England in 1938.
The story of that Great Hurricane (we did not name storms in those days) is not just appealing to those who take a morbid interest in stories of destruction and death. (You know who you are.) The Great Hurricane of 1938 remains noteworthy because its destructive gales invited the winds of change in the business of insurance and its regulation.
The story goes as follows.
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