Time to check your insurance policies

With Hurricanes to the left and right of us, maybe a review of your home owner’s insurance policy makes sense. You may find out that at today’s real estate values, you are under-insured. If you are like me, the last time you visited the insurance subject was during the Katrina/Sandy hurricanes. Since then, houses in some areas have appreciated by more than 30%. If so, a devastating event such as the widespread destruction recently caused by Harvey in Texas and Irma in Florida could really decimate what is probably your most valuable asset. Given the fact that hurricanes seem to be sprouting up all over the place, if you have been spared thus far doesn’t mean that you will miss the next one. The sad facts are that according to a real estate data company (Core Logic), over half of all homeowner insurance policies have a payout that is less than the cost of rebuilding a home in the event of a catastrophic loss. Remember, too, that for most homeowners, the insurance policies you have purchased automatically low-ball the replacement cost values of your home. As far as the insurance industry is concerned, it is your responsibility to make sure you have the appropriate amount of protection. And as a starter, did you know that most home owner’s insurance offers limited coverage for hurricane and tropical storm damage? If you want something like hurricane coverage, it often comes with its own high deductible.  In some coastal areas, you may need to purchase separate windstorm coverage. “It is important to know,” says Michelle V. Orlando, President of Cross Surety, Inc,...

New NK missile lands with a dud on Wall Street

The North Korean boy who cried wolf is alive and well, but seems to have less and less impact on financial markets. Kim Jong Un’s minions launched another missile over Japan last night and the markets simply yawned. Geo-politics are always a risk for the financial markets. For one thing, they are by definition unpredictable. Rarely do the antagonists worry about the economic and financial ramifications of their moves. As such, markets react quickly, but usually the impact only lasts for a short period of time. It seems that even our tweet-happy president is learning that, in this case, Kim Jong Un, the boy in the wolf’s mask, has a bark that is far worse than his bite. Have you noticed that none of those missiles hit anything? That is not by accident. Unlike the majority of Americans, I do not think Kim is either a madmen or stupid. Far from it. I believe he is a calculating despot whose single-minded purpose is to attain a seat at the table among the world’s nuclear power brokers. His missile tests are intended to do just that. He needs to demonstrate to the world that not only does he have the capability to manufacture nuclear bombs, but also the ability to deliver them in a consistent manner. His scientists and military, aided and abetted by technology from other nations, will continue firing missiles into the sea and testing nuclear devices underground until the world is convinced that he can do it. Only then, with a seat at the table as an equal, will Kim be willing to negotiate. While North Korea...

The price tag of disaster

Over the past four weeks, just two hurricanes have cost the country upwards of $300 billion. This has easily surpassed the 2005 hurricane cost of $200 billion, which included Katrina, Wilma and Rita combined. The cumulative cost of weather continues to escalate and with good reason. Before you leap to the conclusion that global warming is the culprit, let me lay out some facts. Coastal storms are no more (or less) frequent an event now than they have been throughout our history. So what gives? The answer lies in population growth and demographics within our own society. A few years ago, a study funded by the National Oceanic and Atmospheric Administration, found that although hurricane intensity varied decade to decade, there has not been a spike in either the number or intensity of hurricanes, nor is there any evidence that global warming is the culprit. The study pinned the blame for the elevated level of property damage and deaths on the growing concentration of people and property in coastal hurricane areas. Today, well over 55% of the nation’s population lives in roughly 673 coastal counties. That’s over a 30% increase since 1980. The Southeast had the largest rate of change, with a 58% increase during that time. The Pacific region and the Northeast are also seeing the same phenomena. At this point, over half of us are crowded together on only 17% of America’s land mass (excluding Alaska). As a result, some catastrophe modeling companies predict that losses due to coastal storms will double every decade or so due to this trend. Where there are people, there is also...

Markets brace for the weekend

Usually, the weekend is a time when traders try to relax, reduce stress, and prepare for the coming week’s markets. This weekend will be an exception to that rule. Just about everyone is focused on the latest news of Hurricane Irma’s landfall in southern Florida tomorrow and into Sunday. Over in Southeast Asia, analysts are also expecting North Korea to fire off yet another missile. Exactly where and when is up in the air. As if that were not enough, an earthquake and Hurricane Jose both hit Mexico simultaneously last night causing quite a lot of damage. Investors have no idea what economic impact these natural disasters will have on the North American economy. As for Kim Jong Un, there is always the possibility that an “accident” could happen, setting off World War III. So it is not surprising that the stock market has gone nowhere this week. About the best you can say was that the averages were mixed. The only good news seemed to be that the debt limit was passed as part of a bill that provided the first flood relief money to beleaguered Houston. That surprised many, since the deal was forged by President Trump and the Democratic leadership. Facing a protracted battle within his own party, Trump reached across the aisle for the first time in his presidency. The results were surprisingly quick and altogether positive. Of course, the rank and file within the Republican Party were at first surprised, and then angry, since they were gearing up for a protracted struggle within their own party. The various GOP splinter groups were planning on...

America, the battered

Extreme weather and other climate disasters appear to be occurring far more frequently than we would like. The loss of life and economic damage also seem to be increasing. But does the data support those opinions, and if it does, what price do we pay for all of these perfect storms? Long-time readers may recall my columns of four and five years ago, where I examined the price tag the world (and the U.S.) pays for weather-related disasters. Given the fact that we are between hurricanes (Harvey has departed Texas, while Irma bears down on Florida); it may be a good time to educate new readers on the economic cost; not to mention the loss of life. In 2016, the U.S. suffered twice the amount of weather-related economic damage versus the prior year, according to the National Oceanic and Atmospheric Administration (NOAA). Weather and climate were responsible for 297 deaths and $53.5 billion in damage in 2016. Fifteen of these events cost at least $1 billion and covered 38 states. In 2015, the costs were $21.5 billion. If you look back even further, over the past six years, there were at least 66 extreme weather events in the U.S. with a price tag of $1billion or more. Weather-related events caused 1,628 fatalities and $297.6 billion in economic losses throughout 44 states. And now let’s see what has happened so far in 2017. As of July 7, there have been 9 weather events of $1 billion or more across the country, which caused 57 people’s lives. And then came Harvey. Estimates so far put the price tag at $190 billion...