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Waiting for a Sensible Solution on Cat Risk

I sometimes wonder if there isnt an insurance executive or two who ponders whether the industry struck a Faustian bargain when it agreed to partner in the Write-Your-Own program.

By Mark E. Ruquet | Updated on July 29, 2013

I sometimes wonder if there isn’t an insurance executive or two who ponders whether the industry struck a Faustian bargain when it agreed to partner in the Write-Your-Own program. Essentially, under WYO, private carriers use their paper to write and administer flood risk, but the government underwrites the exposure.

This relationship can make for awkward policy. For instance, in the wake of Superstorm Sandy—and I’m certain this is not much different elsewhere after a natural disaster—policyholders were upset with the slow pace of settlement or inadequate claims payment, or both. When it comes to accountability, insurers point to the Federal Emergency Management Agency, but policyholder’s see the insurers name on the policy and point the finger at them.

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