RISMEDIA, May 19, 2010—while nothing in life is constant and certain territories are more disaster-prone than others, the debate continues as to whether it’s time natural disasters become a national issue. In this month’s Power Broker Roundtable, industry leaders Mark Sosso, Steve Rodgers and David Lutton discuss whether now is the time to come up with a plan that protects everyone equally.
Steve Brown, Special Liaison for Large Firm Relations, NAR
Mark Sosso, Co-owner, Prudential Palms Realty, Sarasota, Florida
Steve Rodgers, President, Windermere Exclusive Properties, San Diego, California
David Lutton, President, Charles Reinhart Co. Realtors, Ann Arbor, Michigan
Steve Brown: If there is one thing I’ve learned, it’s that nothing in life is constant. People die. Earthquakes happen. So do floods, fires and hurricanes. We buy property casualty insurance to protect our homes in the event catastrophe strikes—unless, of course, that insurance is not available or the premiums are more than we can bear. And in our industry, there is some apathy, if not outright disagreement, on who should bear financial responsibility when natural disasters strike. So this month, we ask, should we work to equalize the property/casualty insurance playing field no matter where we live?
Mark Sosso: As you might expect, Steve, this issue is a tough one in Florida. The fact is, when we’ve had no hurricanes for a while, coverage is more available and affordable. After a disaster, we may have to rely for a time on state-offered coverage—and of course, premiums are high. It simply goes with the territory.
Steve Rodgers: To some extent, that’s true in California, where brushfires and earthquakes are a way of life. In general, coverage is pretty widely available, although new restrictions crop up all the time and premiums can be all over the board.
Dave Lutton: I have to say, the insurance issue is not one of the things I worry about. Our premiums are pretty consistently in the normal range, obviously, because we’re not in disaster-prone territory.
SB: Still, let’s consider the fact that if disaster happens, no matter where, we all still pay the price. After Hurricane Katrina, for instance, the federal government stepped in and paid for the cleanup with $26 billion in taxpayer money. Can we afford to wait and respond after the fact again, with more taxpayer dollars, or is it time to come up with a more proactive plan that protects everyone equally?
MS: Well, if we can come up with a comprehensive national solution, it will probably cost less in the long run. I know there are several bills floating around Congress designed to address the issue, and my mother, Helen Sosso, our company’s CEO, has been pretty heavily involved with NAR’s Insurance Task Force in an effort to sort through the proposals.
SR: Personally, I’m not convinced that a federal solution is the right one. Plus, I think there’s been some tension in some quarters about whether homeowners and taxpayers in more stable areas should shoulder the burden for everyone.
DL: And that may be a legitimate concern.
MS: On the other hand, we’re in this together on the underlying issue. Real estate is the linchpin of economic recovery all around the country. People can’t get mortgages unless they can get property and casualty insurance—and as an industry, we can’t sell houses unless it’s available and affordable everywhere.
SB: Maybe it’s time that natural disasters become a national issue. At the very least, it behooves us to know the crux of the bills floating around Congress—and, as usual, NAR is a good place to start. NAR recognizes the challenge and has created an Insurance Task Force to help assess the situation and explore solutions.
In fact, Immediate Past President Charles McMillan recently spoke on the topic at a hearing in Washington. You can get a copy of his speech online and other details about the Task Force at www.REALTOR.org and search for “Insurance Task Force.”
The Power Broker Roundtable is brought to you by the National Association of REALTORS® and Steve Brown, NAR’s Special Liaison for Large Firm Relations. Watch for this column each month, where we address broker issues, concerns and milestones.