Lawyers representing U.S. homeowners and homebuilders who used drywall suspected of causing corrosion and possible health risks say they expect Chinese companies that made the wallboard to ignore hundreds of lawsuits filed against them in U.S. courts.
So, who’s going to be on the hook for any damages courts might award?
That’s the pivotal question for lawyers as they pursue about 300 lawsuits in U.S. District Court in New Orleans that allege a flood of defective Chinese drywall was sent into the United States after a string of hurricanes in 2004 and 2005. The material is known to decay, creating corrosive chemicals and fumes.
Among tactics lawyers are considering are suits against U.S. investment bankers who financed the Chinese companies, and seizing ships that brought the drywall to the United States.
This would not be the first time Chinese companies have ignored U.S. liability suits, said Russ Herman, a lead plaintiffs lawyer in the drywall litigation.
“They’ve done that with toxic edibles, with toys, with (blood thinner) heparin, milk, you name it,” Herman said.
Kerry Miller, lead lawyer for the defendants, agreed. He represents U.S. homebuilders, drywall installers, distributors and Knauf Plasterboard Tianjin Co., the only Chinese company that’s recognized the lawsuits so far. The defendants want Chinese manufacturers to respond in court because they, too, are seeking damages from the drywall makers.
Miller said Chinese companies are able to dodge service in U.S. courts.
Last week, U.S. District Judge Eldon Fallon found one Chinese company, Taishan Gypsum Co., in contempt of court for ignoring the suits.
The lawyers said Chinese companies are virtually insulated against liability in U.S. suits because suing them through international court is costly and time-consuming and civil judgments in U.S. courts are not enforced in China.
Jonathan C. Drimmer, a partner with Steptoe & Johnson LLP, a Washington, D.C., law firm that specializes in international litigation, said that historically plaintiffs’ lawyers have avoided suing foreign manufacturers. Lawyers “won’t pursue an action if they don’t see a pot of gold at the end of the rainbow,” Drimmer said.
“This is not a typical U.S. drug problem case, a U.S. environmental case, this is different. We’re all being forced to think outside the box,” Miller said. “It’s very difficult to resolve this complex situation when you only have a fraction of the parties in the court.”
Herman said plaintiffs’ lawyers were up to the challenge. “I think we can bust the dam in this case,” he said.
He said making that happen could involve attempts to obtain damage payments by seizing vessels that brought the drywall to the United States if they return to U.S. ports and even going after Wall Street investment banks with a share of ownership in the Chinese companies.
“We’ve got financial institutions in the United States that have substantial investments in these companies that caused these problems,” Herman said. He couldn’t say which U.S. financial institutions could be sued for damages.
Miller said lawyers are considering asking courts to seize vessels that delivered the drywall.
“It’s an interesting concept and if it can work to get the attention of these other Chinese companies, that’s what needs to be done,” he said. “Getting the missing parties to the table” was paramount, he said.
But seizing vessels — known as an “in rem” action, which often involves filing a lien against a vessel — and going after shareholders would hardly be easy, said Mark Ross, a Lafayette, Louisiana, lawyer who specializes in maritime law and civil litigation.
“My gut reaction is that that could be a bit of a stretch. In rem could be seen as a severe action, seizing a vessel, tying it up for a day,” Ross said.
“How do you go about identifying what vessels to seize?” Ross said. “How do you seize a vessel for merely transporting cargo, which they might have been required to take by law.”
A ship owner could sue if the seizure were deemed too aggressive, Ross said.
As for going after investors, Ross said that too was far-fetched. “Smart money says that’s not going to work. A shareholder? Probably not. I don’t know if that exposes them to liability.”
Still, Herman remains sanguine.
“You’re talking about billions of dollars” at stake, Herman said. “We’re going to find some ways to make them responsive.”
Source: AP
Tuesday, September 29, 2009
Friday, September 25, 2009
Will Wekiva Parkway’s first toll be $30,000 per septic tank?
Central Florida’s most fought-over environmental issue this decade – building an expressway across the Wekiva River – appeared Thursday to be at the brink of a major battle that could scuttle plans for the road.
The fight is about how best to stop pollution from seeping out of household septic tanks into the river.
About 60 top environmental regulators, water managers, real-estate experts and homeowners met for several hours to resolve an impasse over proposed new requirements on household septic tanks thought to be steadily poisoning the springs flowing into the Wekiva River.
During the past year, angry homeowners in three counties have become increasingly opposed to septic-tank rules, worrying primarily about cost.
“I want to be able to sell my home,” said Jack Hannahs, president of the Markham Woods Association, which has warned its members who live along Markham Woods Road in Seminole County they might have to replace their septic systems for as much as $30,000 when they put their homes up for sale. State officials say the systems would be substantially cheaper than that.
Cost figures are just one of the hotly disputed details that have several involved talking about lawsuits.
More than five years ago, many of those same representatives who met Thursday ironed out a long-delayed agreement – which became state law – that allows construction of a cross-river expressway called the Wekiva Parkway.
Road officials are working on plans, but currently there’s no money to build the segment of road that would complete a beltway around Orlando.
The deal came with a list of conditions demanded by defenders of the river. Among them, the state would have to buy costly parcels along the river for preservation, which has happened.
Also, the state would have to impose a rule requiring that as many as 50,000 homes in Orange, Lake and Seminole eventually get septic systems that don’t inject so much pollution into the aquifer that feeds Wekiwa Springs.
Recently, the Markham Woods Association hired former U.S. Rep. Tom Feeney, R-Oviedo, who lost his re-election bid last year, to lobby to stop the state Department of Health from proceeding with septic-tank rules.
State Sen. Lee Constantine, R- Altamonte Springs, who assembled the meeting and was an architect of the Wekiva River law five years ago, asked one of the many environmentalists involved what was in store for the expressway if opposition continued.
Charles Lee, Audubon of Florida advocacy director, said a legal fight is in the offing, with a long list of environmental groups taking part. “The likelihood that we will see a smooth implementation of the Wekiva Parkway without litigation begins to deteriorate, no question,” he said.
Environmental investigators already know that tiny but potent amounts of pollution – a form of nitrogen in particular – taint the Wekiva River and feed a choking growth of algae that drives out native plants and fish. But determining the source of that nitrogen has proved difficult.
David Tomasko, a senior scientist for environmental-consulting firm PBS&J, said sophisticated chemical analysis has found that nitrogen could be from lawn and citrus-grove fertilizers, rainwater runoff, treated sewage used for irrigation and from septic tanks.
State environmental officials concede that precisely identifying sources is years away. That feeds a growing anxiety that inaction regarding the Wekiva will result in disaster.
“I think it’s unacceptable ... that we take a position that we doing nothing until we understand every detail,” said Jerry Brooks, director of assessment and restoration at the state Department of Environmental Protection.
Constantine said a number of compromises can be made, including identifying septic systems that aren’t as costly. He plans to file a bill next year that would apply environmental protections to springs statewide, which, if passed, could provide more options for cleaner septic tanks that affect the Wekiva.
“We sat eyeball to eyeball and discussed possible solutions,” said Constantine, who was relieved the meeting didn’t erupt into a fight. “I can’t sit here and see this delayed another three to five years.”
Source: AP
The fight is about how best to stop pollution from seeping out of household septic tanks into the river.
About 60 top environmental regulators, water managers, real-estate experts and homeowners met for several hours to resolve an impasse over proposed new requirements on household septic tanks thought to be steadily poisoning the springs flowing into the Wekiva River.
During the past year, angry homeowners in three counties have become increasingly opposed to septic-tank rules, worrying primarily about cost.
“I want to be able to sell my home,” said Jack Hannahs, president of the Markham Woods Association, which has warned its members who live along Markham Woods Road in Seminole County they might have to replace their septic systems for as much as $30,000 when they put their homes up for sale. State officials say the systems would be substantially cheaper than that.
Cost figures are just one of the hotly disputed details that have several involved talking about lawsuits.
More than five years ago, many of those same representatives who met Thursday ironed out a long-delayed agreement – which became state law – that allows construction of a cross-river expressway called the Wekiva Parkway.
Road officials are working on plans, but currently there’s no money to build the segment of road that would complete a beltway around Orlando.
The deal came with a list of conditions demanded by defenders of the river. Among them, the state would have to buy costly parcels along the river for preservation, which has happened.
Also, the state would have to impose a rule requiring that as many as 50,000 homes in Orange, Lake and Seminole eventually get septic systems that don’t inject so much pollution into the aquifer that feeds Wekiwa Springs.
Recently, the Markham Woods Association hired former U.S. Rep. Tom Feeney, R-Oviedo, who lost his re-election bid last year, to lobby to stop the state Department of Health from proceeding with septic-tank rules.
State Sen. Lee Constantine, R- Altamonte Springs, who assembled the meeting and was an architect of the Wekiva River law five years ago, asked one of the many environmentalists involved what was in store for the expressway if opposition continued.
Charles Lee, Audubon of Florida advocacy director, said a legal fight is in the offing, with a long list of environmental groups taking part. “The likelihood that we will see a smooth implementation of the Wekiva Parkway without litigation begins to deteriorate, no question,” he said.
Environmental investigators already know that tiny but potent amounts of pollution – a form of nitrogen in particular – taint the Wekiva River and feed a choking growth of algae that drives out native plants and fish. But determining the source of that nitrogen has proved difficult.
David Tomasko, a senior scientist for environmental-consulting firm PBS&J, said sophisticated chemical analysis has found that nitrogen could be from lawn and citrus-grove fertilizers, rainwater runoff, treated sewage used for irrigation and from septic tanks.
State environmental officials concede that precisely identifying sources is years away. That feeds a growing anxiety that inaction regarding the Wekiva will result in disaster.
“I think it’s unacceptable ... that we take a position that we doing nothing until we understand every detail,” said Jerry Brooks, director of assessment and restoration at the state Department of Environmental Protection.
Constantine said a number of compromises can be made, including identifying septic systems that aren’t as costly. He plans to file a bill next year that would apply environmental protections to springs statewide, which, if passed, could provide more options for cleaner septic tanks that affect the Wekiva.
“We sat eyeball to eyeball and discussed possible solutions,” said Constantine, who was relieved the meeting didn’t erupt into a fight. “I can’t sit here and see this delayed another three to five years.”
Source: AP
Thursday, September 24, 2009
U.S. product safety agency pledges swift probe of Chinese drywall
Under fire for the pace of her agency’s investigation, the top U.S. consumer safety official is promising to move swiftly to investigate a flood of complaints about suspect drywall imported from China.
Homeowners, mostly in the Southeast region, say the drywall is making them sick and corroding wiring throughout their homes. Lawmakers from Florida, Louisiana and elsewhere have pressed Consumer Product Safety Commission Chairman Inez Tenenbaum for answers about the safety of the drywall.
Tenenbaum, who took over the agency in June, told lawmakers the investigation is “extremely complex, and there probably will not be a quick fix,” but she pledged to get to the bottom of the matter.
The release of results from CPSC testing of homes in southern states has been delayed several times and still is weeks away.
Homeowners blame the drywall for a “rotten egg” smell in their homes, health woes such as itchy eyes and skin, difficulty breathing, persistent coughing and bloody noses as well as corrosion of electrical wiring and home appliances.
Democratic Rep. Robert Wexler, one of several lawmakers who met with Tenenbaum on Wednesday, said he was satisfied that the CPSC chief understands the issue’s importance to affected residents.
“If we get these results and they’re valid, and they are then part of a long-term action plan to bring relief to homeowners, then I believe we will have accomplished something very important,” Wexler said in an interview.
This summer, the commission promised to release in September the initial results from indoor air testing of 50 homes; that deadline was then pushed to October. This week, the agency further delayed the release to early November.
In a terse letter to Tenenbaum on Tuesday, Democratic Sen. Mark Warner complained that the agency is moving too slowly.
“This is not acceptable,” Warner wrote. “My constituents have had their lives turned upside down by Chinese drywall: Most have moved out of their homes, and several are facing the prospect of having to foreclose on their homes.”
Since late last year, the agency has received more than 1,300 complaints from residents in 26 states and the District of Columbia, with the majority from Florida and Louisiana. The drywall was imported primarily between 2004 and 2008 when home construction was booming and supplies tight. The plasterboard from China also was used in homes rebuilt after the disastrous Hurricane Katrina in 2005.
The Environmental Protection Agency has conducted tests on a tiny sampling of Chinese-made drywall. It found sulfur and two organic compounds associated with acrylic paint, which were not found in the U.S.-manufactured samples that were tested.
The report did not draw any conclusions about health risks or whether the drywall could be damaging wiring in homes.
The EPA and Centers for Disease Control and Prevention is working with commission, which is leading the investigation.
Source: AP
Homeowners, mostly in the Southeast region, say the drywall is making them sick and corroding wiring throughout their homes. Lawmakers from Florida, Louisiana and elsewhere have pressed Consumer Product Safety Commission Chairman Inez Tenenbaum for answers about the safety of the drywall.
Tenenbaum, who took over the agency in June, told lawmakers the investigation is “extremely complex, and there probably will not be a quick fix,” but she pledged to get to the bottom of the matter.
The release of results from CPSC testing of homes in southern states has been delayed several times and still is weeks away.
Homeowners blame the drywall for a “rotten egg” smell in their homes, health woes such as itchy eyes and skin, difficulty breathing, persistent coughing and bloody noses as well as corrosion of electrical wiring and home appliances.
Democratic Rep. Robert Wexler, one of several lawmakers who met with Tenenbaum on Wednesday, said he was satisfied that the CPSC chief understands the issue’s importance to affected residents.
“If we get these results and they’re valid, and they are then part of a long-term action plan to bring relief to homeowners, then I believe we will have accomplished something very important,” Wexler said in an interview.
This summer, the commission promised to release in September the initial results from indoor air testing of 50 homes; that deadline was then pushed to October. This week, the agency further delayed the release to early November.
In a terse letter to Tenenbaum on Tuesday, Democratic Sen. Mark Warner complained that the agency is moving too slowly.
“This is not acceptable,” Warner wrote. “My constituents have had their lives turned upside down by Chinese drywall: Most have moved out of their homes, and several are facing the prospect of having to foreclose on their homes.”
Since late last year, the agency has received more than 1,300 complaints from residents in 26 states and the District of Columbia, with the majority from Florida and Louisiana. The drywall was imported primarily between 2004 and 2008 when home construction was booming and supplies tight. The plasterboard from China also was used in homes rebuilt after the disastrous Hurricane Katrina in 2005.
The Environmental Protection Agency has conducted tests on a tiny sampling of Chinese-made drywall. It found sulfur and two organic compounds associated with acrylic paint, which were not found in the U.S.-manufactured samples that were tested.
The report did not draw any conclusions about health risks or whether the drywall could be damaging wiring in homes.
The EPA and Centers for Disease Control and Prevention is working with commission, which is leading the investigation.
Source: AP
Wednesday, September 23, 2009
Tax break made in China
Hillsborough County homeowners with problematic drywall imported from China could get a big break on their property taxes.
But the county’s revenue fund will have to pay the price, up to $5 million by some estimates.
The Hillsborough County Property Appraiser’s Office is evaluating homes and offering to halve the estimated value in the worst cases. The value of the land would not be included in the deduction.
“We don’t want to make it even more difficult for people already burdened by this problem,” said Warren Weathers, who is with the property appraiser’s office. “We wanted to respond to this quickly.”
Homeowners have complained that the drywall emits a corrosive gas that damages appliances, gives off a rotten-egg stench and may cause health problems.
Many people struggling with the bad drywall can’t live in their homes, Weathers said. And even if they could sell them, he said, the value would be diminished by the drywall.
The potentially hefty cut in tax revenue comes at a bad time. Facing a $144 million budget deficit in the spring, Hillsborough County commissioners laid off hundreds of county employees and cut many services.
However, the commission does not have to approve the tax cut, Weathers said.
It is unclear how many homes could be eligible.
Weathers estimates as many as 2,500 homes could have the bad drywall, but that’s a “worst-case scenario.”
The drywall was used in as many as 100,000 homes across the nation during the housing boom, and most of it has been found in Florida.
An investigation is under way on the effects of the drywall. Complaints include dry eyes and respiratory problems.
Builders typically use domestic drywall, but a shortage during the housing boom led them to import the product from China. Most affected homes were built from 2004 through 2007.
Warren said 159 homeowners have registered for the tax break and many might be unaware of the opportunity.
Once a homeowner registers, a county property appraiser will inspect the home and seek documentation that proves the problem, such as a letter from the builder. There is no deadline to request the deduction, but Weathers recommends homeowners do so quickly.
Tax bills are sent out Nov. 1.
Some builders are replacing the drywall and appliances. They give an average price of $100,000 for a fix. That requires homeowners to move out for months while the work is done.
That’s not an option for many homeowners, though, because their builders have gone out of business.
Meanwhile, some homeowners are seeking legal action. Class-action lawsuits against builders and manufactures are pending.
The Hillsborough County Property Appraiser’s Office’s effort comes after an announcement in July that the Internal Revenue Service may give homeowners with drywall problems some relief on their tax returns.
The IRS is considering whether to allow homeowners to claim a casualty loss on their taxes if they have the drywall from China.
It is unclear exactly how much homeowners could claim on federal returns, but the IRS said similar tax breaks use the difference between the value of the house before and after the damage.
Hillsborough County homeowners can call the property appraiser’s office at (813) 272-6100 to inquire about the local deduction.
Copyright © 2009 Tampa Tribune, Fla.,
But the county’s revenue fund will have to pay the price, up to $5 million by some estimates.
The Hillsborough County Property Appraiser’s Office is evaluating homes and offering to halve the estimated value in the worst cases. The value of the land would not be included in the deduction.
“We don’t want to make it even more difficult for people already burdened by this problem,” said Warren Weathers, who is with the property appraiser’s office. “We wanted to respond to this quickly.”
Homeowners have complained that the drywall emits a corrosive gas that damages appliances, gives off a rotten-egg stench and may cause health problems.
Many people struggling with the bad drywall can’t live in their homes, Weathers said. And even if they could sell them, he said, the value would be diminished by the drywall.
The potentially hefty cut in tax revenue comes at a bad time. Facing a $144 million budget deficit in the spring, Hillsborough County commissioners laid off hundreds of county employees and cut many services.
However, the commission does not have to approve the tax cut, Weathers said.
It is unclear how many homes could be eligible.
Weathers estimates as many as 2,500 homes could have the bad drywall, but that’s a “worst-case scenario.”
The drywall was used in as many as 100,000 homes across the nation during the housing boom, and most of it has been found in Florida.
An investigation is under way on the effects of the drywall. Complaints include dry eyes and respiratory problems.
Builders typically use domestic drywall, but a shortage during the housing boom led them to import the product from China. Most affected homes were built from 2004 through 2007.
Warren said 159 homeowners have registered for the tax break and many might be unaware of the opportunity.
Once a homeowner registers, a county property appraiser will inspect the home and seek documentation that proves the problem, such as a letter from the builder. There is no deadline to request the deduction, but Weathers recommends homeowners do so quickly.
Tax bills are sent out Nov. 1.
Some builders are replacing the drywall and appliances. They give an average price of $100,000 for a fix. That requires homeowners to move out for months while the work is done.
That’s not an option for many homeowners, though, because their builders have gone out of business.
Meanwhile, some homeowners are seeking legal action. Class-action lawsuits against builders and manufactures are pending.
The Hillsborough County Property Appraiser’s Office’s effort comes after an announcement in July that the Internal Revenue Service may give homeowners with drywall problems some relief on their tax returns.
The IRS is considering whether to allow homeowners to claim a casualty loss on their taxes if they have the drywall from China.
It is unclear exactly how much homeowners could claim on federal returns, but the IRS said similar tax breaks use the difference between the value of the house before and after the damage.
Hillsborough County homeowners can call the property appraiser’s office at (813) 272-6100 to inquire about the local deduction.
Copyright © 2009 Tampa Tribune, Fla.,
Wednesday, September 16, 2009
McCarty: Private capacity there to absorb most State Farm policies
Despite difficult times for many insurers during the first half of 2009, there is ample capacity in the existing private market to take up the slack should State Farm Florida Insurance Co. follow through on plans to exit the state, Florida’s top insurance regulator told the governor and Cabinet Tuesday.
Speaking to the panel at the behest of Chief Financial Officer Alex Sink, the state’s insurance commissioner said capacity exists within 210 other private property insurers still doing business in Florida to absorb many policyholders affected by State Farm’s decision to get out.
“Most of the companies that expressed an interest in taking lots of State Farm business are … organically grown companies that have been doing business in Florida since the late 1990s,” McCarty said.
Gov. Charlie Crist and others have said that recent Florida law changes reduce the risk for private insurers. McCarty was asked to update the Cabinet on the number of new policies being written and whether that number is significant. Of the 21 companies that recently entered the Florida property insurance market, 15 reported underwriting losses for the first two quarters of 2009, giving fuel to those who say start-ups can’t solve the state’s insurance needs.
But McCarty said that the start-ups were never seen as the answer, and that the established marketplace is taking up some of the slack. About 30 established companies have approached OIR officials and State Farm about taking clients. McCarty also defended the new companies’ performance given the state’s economic picture and the start up costs typically incurred by new companies.
“Any start-up companies including insurance companies are going to have situations where those companies fail,” McCarty said.
McCarty defended the agency’s rejection of State Farm’s 47-percent rate hike request earlier this year, but said the agency would be willing to approve higher rates if the company did a better job making its case.
“Of course, we’d be better off if State Farm was here, even in a smaller presence,” McCarty told reporters later.
After the Cabinet meeting, Crist appeared less conciliatory toward State Farm.
“We’re talking about a company that charges the highest rates in the state, or certainly among them,” Crist said. “If that isn’t a company that has already left the state, I don’t know what is.”
Florida is not alone in facing property insurance challenges. Many coastal states are also wrangling with how to insure residents as private insurers mull whether to pull up stakes.
“This is a problem that we’re experiencing from Maine to Texas,” McCarty said. “Large companies are ‘managing their exposure.’ That’s a code word for they’re not writing on the coast. What we are seeing in Florida is endemic of what we’re seeing across the nation.”
Source: The News Service of Florida
Speaking to the panel at the behest of Chief Financial Officer Alex Sink, the state’s insurance commissioner said capacity exists within 210 other private property insurers still doing business in Florida to absorb many policyholders affected by State Farm’s decision to get out.
“Most of the companies that expressed an interest in taking lots of State Farm business are … organically grown companies that have been doing business in Florida since the late 1990s,” McCarty said.
Gov. Charlie Crist and others have said that recent Florida law changes reduce the risk for private insurers. McCarty was asked to update the Cabinet on the number of new policies being written and whether that number is significant. Of the 21 companies that recently entered the Florida property insurance market, 15 reported underwriting losses for the first two quarters of 2009, giving fuel to those who say start-ups can’t solve the state’s insurance needs.
But McCarty said that the start-ups were never seen as the answer, and that the established marketplace is taking up some of the slack. About 30 established companies have approached OIR officials and State Farm about taking clients. McCarty also defended the new companies’ performance given the state’s economic picture and the start up costs typically incurred by new companies.
“Any start-up companies including insurance companies are going to have situations where those companies fail,” McCarty said.
McCarty defended the agency’s rejection of State Farm’s 47-percent rate hike request earlier this year, but said the agency would be willing to approve higher rates if the company did a better job making its case.
“Of course, we’d be better off if State Farm was here, even in a smaller presence,” McCarty told reporters later.
After the Cabinet meeting, Crist appeared less conciliatory toward State Farm.
“We’re talking about a company that charges the highest rates in the state, or certainly among them,” Crist said. “If that isn’t a company that has already left the state, I don’t know what is.”
Florida is not alone in facing property insurance challenges. Many coastal states are also wrangling with how to insure residents as private insurers mull whether to pull up stakes.
“This is a problem that we’re experiencing from Maine to Texas,” McCarty said. “Large companies are ‘managing their exposure.’ That’s a code word for they’re not writing on the coast. What we are seeing in Florida is endemic of what we’re seeing across the nation.”
Source: The News Service of Florida
Friday, September 4, 2009
Builders face up to drywall liabilities
Publicly traded builders are being grilled by analysts about their liability in using defective Chinese drywall.
Miami-based Lennar Corp. has announced that it built about 400 homes between 2006 and 2007 using the foul-smelling, corrosive material. It has set aside $40 million to make repairs and expects to get about half that back in insurance.
Another Florida-based developer, WCI communities, which is set to emerge from Chapter 11 bankruptcy, will face an estimated 160 potential cases.
D.R. Horton Inc., Beazer Homes USA Inc., and Ryland Group Inc., all have announced very small numbers of affected homes.
Hovnanian Enterprises Inc. will report its third-quarter results on Wednesday and is expected to report some drywall exposure as well.
Source: The Wall Street Journal, Dawn Wotapka (09/02/2009)
© Copyright 2009 INFORMATION, INC. Bethesda, MD
Miami-based Lennar Corp. has announced that it built about 400 homes between 2006 and 2007 using the foul-smelling, corrosive material. It has set aside $40 million to make repairs and expects to get about half that back in insurance.
Another Florida-based developer, WCI communities, which is set to emerge from Chapter 11 bankruptcy, will face an estimated 160 potential cases.
D.R. Horton Inc., Beazer Homes USA Inc., and Ryland Group Inc., all have announced very small numbers of affected homes.
Hovnanian Enterprises Inc. will report its third-quarter results on Wednesday and is expected to report some drywall exposure as well.
Source: The Wall Street Journal, Dawn Wotapka (09/02/2009)
© Copyright 2009 INFORMATION, INC. Bethesda, MD
Wednesday, September 2, 2009
Legislature to reconsider property insurance deregulation
The biggest issue in property insurance in the coming year is again likely to be the possible de-regulation of rates, industry and legislative officials say.
A measure that failed last year would have allowed some particularly well capitalized insurance companies to raise rates without having to go before regulators. Part of the theory was, if someone wants to pay a little more for insurance from a big company because they know it will pay claims quickly without a hassle, that should be their right.
The bill, conceived as the state’s largest insurer, State Farm, contemplated leaving the state because regulators wouldn’t approve higher rates, passed the Legislature fairly easily in the spring, but Gov. Charlie Crist vetoed it.
The bill has already been filed again this year by last year’s sponsor, Rep. William Proctor, R-St. Augustine – though it’s still in bill drafting. Right now, it’s in the same form as last year’s legislation, but that could change, Proctor said recently. Among the possible changes is expanding the number of companies that would be able to raise rates without regulation under the law, Proctor said in a recent interview.
Rep. Pat Patterson, R-DeLand, who will chair the House Insurance, Business and Financial Affairs Committee in the coming session, said this week that rate regulation will likely again be the biggest issue before his committee this year. Patterson said he’s interested in Proctor’s idea of creating an optional unregulated homeowners insurance product, and said the bill would likely get a hearing in his committee.
“I’m very interested in seeing what he’s got; I really like his issue,” said Patterson, a longtime insurance agent. “It’s a very viable idea.”
Sam Miller, vice president of the Florida Insurance Council, said the rate regulation debate would be among the top three property insurance issues for the industry this year, along with mitigation discounts and the issue of independent claims adjusters encouraging homeowners to re-open old claims.
“That issue is not going away,” Miller said. “That will be back in one form or another. It could be the exact bill that comes back or it could be a package that looks at different ways to allow insurers to get the rates they need.”
Officials in the Office of Insurance Regulation, the chief opponent of the final de-regulation bill last year besides Crist, have declined to comment on the prospect of the legislation’s return this year.
The mitigation issue questions whether the state’s hurricane insurance discounts involve any type of fraud. Many in the industry believe that home inspectors who certify a property’s hurricane-resistant status are filling out the forms fraudulently. A bill that passed last year authorized a commission to look at the issue this year, and a report is due to lawmakers by Feb. 1, 2010.
Insurance industry officials also believe the discounts homeowners get for making hurricane improvements may be too high, and they may ask lawmakers to look at lowering them.
The third major property insurance issue the Legislature may look at this year involves public adjusters, which the industry has complained about for a couple years. Insurance companies are still getting claims five years after Florida’s monster hurricane season of 2004, and Miller said it didn’t used to be that way.
“After Hurricane Andrew (in 1992), all claims were filed in six to eight months,” Miller said. What’s different now is independent adjusters who aren’t employed by the companies are helping homeowners re-open claims, the industry says. “We believe that, in a lot of cases, they are the cause,” Miller said.
Last year’s Legislature authorized its auditing arm, the Office of Program, Policy and Government Analysis, to look at the issue. If the OPPAGA study finds a problem, as the industry believes it will, “the Legislature may want to look at that,” Miller said.
Patterson said his committee also may look at rates for Citizens Property Insurance, an always controversial topic because the legislatively-created company is the state’s largest insurer.
After the recent lifting of a freeze on rates – long sought by Republicans who say the company’s rates have been artificially low – Patterson said there’s also a concern that rates ought to stay the same or even go down for some customers in low-risk areas.
“That’ll get some blood boiling,” Patterson said.
Source: News Service of Florida
A measure that failed last year would have allowed some particularly well capitalized insurance companies to raise rates without having to go before regulators. Part of the theory was, if someone wants to pay a little more for insurance from a big company because they know it will pay claims quickly without a hassle, that should be their right.
The bill, conceived as the state’s largest insurer, State Farm, contemplated leaving the state because regulators wouldn’t approve higher rates, passed the Legislature fairly easily in the spring, but Gov. Charlie Crist vetoed it.
The bill has already been filed again this year by last year’s sponsor, Rep. William Proctor, R-St. Augustine – though it’s still in bill drafting. Right now, it’s in the same form as last year’s legislation, but that could change, Proctor said recently. Among the possible changes is expanding the number of companies that would be able to raise rates without regulation under the law, Proctor said in a recent interview.
Rep. Pat Patterson, R-DeLand, who will chair the House Insurance, Business and Financial Affairs Committee in the coming session, said this week that rate regulation will likely again be the biggest issue before his committee this year. Patterson said he’s interested in Proctor’s idea of creating an optional unregulated homeowners insurance product, and said the bill would likely get a hearing in his committee.
“I’m very interested in seeing what he’s got; I really like his issue,” said Patterson, a longtime insurance agent. “It’s a very viable idea.”
Sam Miller, vice president of the Florida Insurance Council, said the rate regulation debate would be among the top three property insurance issues for the industry this year, along with mitigation discounts and the issue of independent claims adjusters encouraging homeowners to re-open old claims.
“That issue is not going away,” Miller said. “That will be back in one form or another. It could be the exact bill that comes back or it could be a package that looks at different ways to allow insurers to get the rates they need.”
Officials in the Office of Insurance Regulation, the chief opponent of the final de-regulation bill last year besides Crist, have declined to comment on the prospect of the legislation’s return this year.
The mitigation issue questions whether the state’s hurricane insurance discounts involve any type of fraud. Many in the industry believe that home inspectors who certify a property’s hurricane-resistant status are filling out the forms fraudulently. A bill that passed last year authorized a commission to look at the issue this year, and a report is due to lawmakers by Feb. 1, 2010.
Insurance industry officials also believe the discounts homeowners get for making hurricane improvements may be too high, and they may ask lawmakers to look at lowering them.
The third major property insurance issue the Legislature may look at this year involves public adjusters, which the industry has complained about for a couple years. Insurance companies are still getting claims five years after Florida’s monster hurricane season of 2004, and Miller said it didn’t used to be that way.
“After Hurricane Andrew (in 1992), all claims were filed in six to eight months,” Miller said. What’s different now is independent adjusters who aren’t employed by the companies are helping homeowners re-open claims, the industry says. “We believe that, in a lot of cases, they are the cause,” Miller said.
Last year’s Legislature authorized its auditing arm, the Office of Program, Policy and Government Analysis, to look at the issue. If the OPPAGA study finds a problem, as the industry believes it will, “the Legislature may want to look at that,” Miller said.
Patterson said his committee also may look at rates for Citizens Property Insurance, an always controversial topic because the legislatively-created company is the state’s largest insurer.
After the recent lifting of a freeze on rates – long sought by Republicans who say the company’s rates have been artificially low – Patterson said there’s also a concern that rates ought to stay the same or even go down for some customers in low-risk areas.
“That’ll get some blood boiling,” Patterson said.
Source: News Service of Florida
Tuesday, September 1, 2009
Making the buy vs. rent decision
To determine whether it makes more sense to rent or buy in the current economic climate, experts encourage people to examine the price-to-rent ratio, or the average cost of purchasing a house divided by a year’s worth of rent payments.
The ratio reached 24.7 in 2005, according to Economy.com, meaning that individuals could spend 24.7 years in a rental for what it would cost to buy a house. The ratio has fallen to 17.4, and Economy.com notes that the historical average since 1986 is 16.5.
While some believe falling house prices make homeownership a better choice right now, an Economy.com analysis of the price-to-rent ratios in 54 metropolitan areas shows that renting is a better deal than homeownership in 21 cities. Some of the so-called “renter –friendly” cities are Portland, Ore., Baltimore, Raleigh, Charlotte, Salt Lake City, San Antonio, Trenton, Philadelphia, Honolulu, and Seattle.
Center for Economic and Policy Research Co-Director Dean Baker says the price-to-rent ratio should not be the only consideration. People weighing whether to rent or buy also should consider that renting makes more sense if they plan to move in a couple of years, and renting allows them to live in neighborhoods where homeownership might be too costly. Additionally, they do not have to perform maintenance tasks if they live in a rental.
Source: Time (08/31/09) Kiviat, Barbara
© Copyright 2009 INFORMATION, INC. Bethesda, MD
The ratio reached 24.7 in 2005, according to Economy.com, meaning that individuals could spend 24.7 years in a rental for what it would cost to buy a house. The ratio has fallen to 17.4, and Economy.com notes that the historical average since 1986 is 16.5.
While some believe falling house prices make homeownership a better choice right now, an Economy.com analysis of the price-to-rent ratios in 54 metropolitan areas shows that renting is a better deal than homeownership in 21 cities. Some of the so-called “renter –friendly” cities are Portland, Ore., Baltimore, Raleigh, Charlotte, Salt Lake City, San Antonio, Trenton, Philadelphia, Honolulu, and Seattle.
Center for Economic and Policy Research Co-Director Dean Baker says the price-to-rent ratio should not be the only consideration. People weighing whether to rent or buy also should consider that renting makes more sense if they plan to move in a couple of years, and renting allows them to live in neighborhoods where homeownership might be too costly. Additionally, they do not have to perform maintenance tasks if they live in a rental.
Source: Time (08/31/09) Kiviat, Barbara
© Copyright 2009 INFORMATION, INC. Bethesda, MD
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