Risk & Business

Image via Wikipedia According to a story in the National Underwriter, the National Association of Insurance Commissioners, NAIC , is considering forming a new rating agency, which would perform much of the same functions as the current 3 longstanding private agencies. The association states that this was being considered prior to the current situation, in which the 3 longstanding agencies responsible for issueing ratings are being criticized for failing to not properly assess companies that have run into trouble due to their sub prime mortgage investment exposures. I would think, with the current slow response in downgrading those companies that ran into trouble, coupled with the high ratings these companies enjoyed prior to the current financial mess, that a serious self audit by the rating agencies currently providing these ratings would be in order. The whole premise behind the existence of the rating agencies is to provide guidance to investors and clients alike when choosing

Image via Wikipedia A recent article in the Philadelphia Inquirer, link above, highlighted the fact that the National Flood Insurance Program is out of money. Congress has apparently been looking for ways to fix the program the past couple of years, but in the absence of a fix, recently voted to extend the program as is through March 6th of next year. The article went on to say that the program is currently $17.3 billion in debt to the U.S. Treasury, which doesn't include the bills coming due for Hurricanes Gustav, Hanna and Ike, assuming the rest of the hurricane season passes uneventfully. Once losses from the aforementioned hurricanes are added to the total, the total taxpayer bill is in excess of $20 billion. You might recall a previous post here dated September 3rd, 2008, discussing increasing federal involvement covering flood related hazards on the coasts. As described above, the more the government is involved, the more the U.S. taxpayer has to ante up to cover the ex