NAR: Government Affairs: NAR Addressing the Insurance Problem
Property Casualty Insurance
What is NAR Doing to Address the Problem?
The NAR leadership appointed an Insurance Task Force to address the growing problem of consumers who can't find or afford adequate property and casualty insurance. The task force includes 16 individuals from all parts of the country and is comprised of practitioners from all lines of real estate practice.
As a first order of business and in order to provide an objective base for deliberations, the group commissioned outside research into the causes and implications of the current insurance crisis and agreed that educational efforts directed at both the membership and their clients was a top priority to help ease the transition through what is currently a difficult market.
With the help of experts from other real estate, insurance, lending, and regulatory organizations, and companies that share these concerns, the task force has discussed and debated the scope of the problem, what approaches state insurance regulators or REALTOR® state associations have taken to deal with the problem, and what role the federal government should play.
Among the topics discussed have been: What factors have had the biggest impact on creating the current situation? What state legislative/regulatory approaches are being taken and which are proving to be effective? Is there a role for the federal government in solving this problem? What impact does tort reform have on this issue and how must reform measures be framed to be effective? Can alternative insurance products and/or policies be developed that would limit the likelihood of this happening again?
To date, the group has identified a number of possible recommendations that fall within the following four categories: support for state association legislative and regulatory insurance dealings, federal legislative initiatives, possible alternative insurance products, and REALTOR® education measures.
Since insurance is regulated at the state level, state REALTOR® associations have been the first to address the insurance problem and legislative or regulatory reactions. For this reason, NAR is focusing on serving as an informational and strategy clearing house for its state and local associations. Possible approaches could include the establishment of a program to provide state associations with access to consultants with insurance expertise to support state lobbying efforts, online databases of on-going legislative and/or regulatory approaches being considered in the 50 states, white papers covering insurance topics, etc.
NAR staff have also identified a number of possible federal legislative initiatives – insurance score disclosure requirements, timely corrections to erroneous credit or claims information databases, tort reform, amendments to federal statutes which will allow risk retention groups to be used for property insurance purposes – that could help to bring transparency to the insurance underwriting process and increase the range of insurance alternatives. The Task Force is considering recommendations that would advance some of these federal initiatives.
A third thrust of the Task Force’s efforts have been directed at looking at the relief that alternative insurance structures might provide from the current and future hard insurance markets. Self-insurance, captives, risk purchasing/retention pools, and reinsurance markets are some of the alternative structures that have been used by other industries to manage risk. The question that the Task Force has asked of itself and outside experts is whether or not these vehicles could help the real estate industry better deal with hard insurance markets and whether or not there is a role that NAR could play to make these vehicles more accessible to the NAR member and their clients.
The fourth facet of the Task Force’s attention has been directed at what NAR can do to educate its membership about the current insurance market situation and help the membership educate their clients so that transactions proceed smoothly. Already, two educational websites have been developed on Realtor.org to make the membership aware of the problem and what they need to know to keep their transactions moving smoothly. A consumer brochure for REALTORS® to make available to their clients or potential clients is also available in print-ready format on Realtor.org.
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