The Climate Prediction Center predicted moderate chances that a tropical depression or a storm will form in the Caribbean during the last week of May.

Even if no storm develops, the prediction signals that the Atlantic is becoming primed for tropical activity as June 1, the official start of the six-month hurricane season, nears.

“It’s something to pay attention to. It might be a little earlier than normal,” said Eric Blake, a specialist with the National Hurricane Center.

While the two-week tropical hazard forecasts by the Climate Prediction Center are not very accurate now, meteorologists there are working with the National Hurricane Center to improve them. Within a few years, the two agencies plan to start making a joint two-week forecast, with the hurricane center taking the lead on the first week and the climate center handling the second, said Blake, who gave a presentation about the project at the Governor’s Hurricane Conference here on Tuesday.

He said the hurricane center began working with the climate center on the two-week outlook shortly after the busy 2005 hurricane season.

“The challenge has really been eliminating the false alarms,” Blake said.

The two-week outlook mostly relies on thunderstorm activity around the global tropics to predict where chances are increased for a tropical storm or depression to form. Clusters of thunderstorms occasionally move around the globe in a weather pattern called the Madden-Julian Oscillation or MJO. When the thunderstorms are over the Caribbean and Africa, the chances for tropical storms to develop in the Atlantic increase, Blake said.

But because weather is so variable, forecasts that extend beyond a week tend to have a large margin of error. The five-day forecast for tropical activity, however, is getting much better.

Blake said the hurricane center will experiment this year, in-house, with predicting the formation of tropical storms five days in advance. If the forecasts pan out, weather buffs, fishermen, shipping businesses, emergency planners and those in the oil and gas extraction industries could benefit from those forecasts beginning next year.

By Kate Spinner

It said the 2012 forecast numbers were slightly below the adjusted long-term average for 1950-2011 of 12 tropical storms, seven hurricanes and three intense hurricanes.

The hurricane season in the Atlantic, Caribbean and Gulf of Mexico runs from June 1 through Nov. 30.

“After very active tropical seasons in 2010 and 2011, we expect fewer storms to develop this hurricane season,” said Todd Crawford, Weather Services International’s chief meteorologist.

WSI’s outlook for the season is in line with one issued earlier this month by the respected team of forecasters at Colorado State University.

As with Colorado State, Crawford said calls for a milder 2012 season were based on two factors. Hurricanes thrive on warm water and the Atlantic Ocean has cooled this year, he said.

He said there may also be a trend toward development of an El Nino effect this summer, fueling hopes for a “notable reduction” in tropical storm activity.

El Nino is a warming of sea surface temperatures in the tropical Pacific that occurs every four to 12 years and has far-ranging effects around the globe.

The weather phenomenon creates wind shear that makes it harder for nascent storms to develop into hurricanes in the Atlantic-Caribbean basin, but it also can produce drought and crop failure in parts of South Asia and unseasonably wet conditions in western coastal areas of South America.

“There is still uncertainty regarding the development of El Nino, which will impact future (forecast) updates. If the chances of El Nino development increase, our forecast numbers will likely go down even further in future updates,” Crawford said.

STAY ON ALERT, COMMUNITIES URGED

He said there was no particularly strong landfall signal — signs that storms could affect land — for 2012 so far. But residents of vulnerable Gulf coast communities, and energy and oil producers in the U.S. Gulf oil patch, should be wary.

“For 2012, our landfall model predicts slightly below-normal probabilities of landfall from Florida and up the East Coast, with slightly above-normal probabilities in the Gulf,” Crawford said.

Colorado State University forecasters, in their outlook issued on April 4, predicted 10 tropical storms in the 2012 Atlantic hurricane season, with four strengthening into hurricanes.

Of those, they said two would become major hurricanes with sustained winds reaching Category 3 or greater status on the Saffir-Simpson intensity scale and powerful enough to cause devastating damage.

The 2011 Atlantic hurricane season saw a total of 19 named or tropical storms of which seven became hurricanes, including three major hurricanes.

Irene was the lone hurricane to hit the United States in 2011, but it was first one to do so since Hurricane Ike struck southeast Texas in 2008. Irene was also the most significant tropical cyclone to strike the Northeast since Hurricane Bob in 1991, according to U.S. government forecasters.

(Reporting By Tom Brown; Editing by Cynthia Osterman)

For now the program remains in business with repeated short-term extensions, though in 2010 it was allowed to lapse for a few weeks. The Federal Emergency Management Agency is warning of serious consequences if that happens again.

“A lapse in the NFIP has a rippling effect. Property owners are unable to complete their mortgage transactions,” said Dave Miller, associate administrator of the Federal Insurance and Mitigation Administration, the FEMA division that runs the flood program, in an interview on Wednesday.

Federal law requires that homes in designated flood-risk areas have flood insurance before a mortgage can be completed. Because the NFIP is effectively the only flood insurance available in the United States, a lapse in the program means home sales can not close in designated flood areas.

Miller cited estimates from the National Association of Realtors that as many as 1,300 real estate closings a day could be affected by a lapse in the program.

According to informal guidance issued by the Federal Reserve in early 2010, during a lapse period lenders can still make loans on properties that are required to have flood insurance, even if that insurance is not available. Companies that administer flood policies on FEMA’s behalf have said they doubt many lenders would take that advice and proceed with loans.

For now the debate appears to be focused on whether to move ahead with reform legislation pending in the U.S. Senate or to simply reauthorize the existing program.

FEMA Administrator Craig Fugate, in an April 17 letter to congressional leaders, asked for a two-year reauthorization.

An insurance industry coalition called SmarterSafer.org condemned that request last week, saying it ignored bipartisan support for actual reform.

“The current NFIP is broken and, without real reform, our communities will be far less safe, our environment will be threatened, and the program will remain billions of dollars in debt to U.S. taxpayers,” the group said in a statement.

Other industry groups are reportedly pressing for reform action as well, hoping the Senate will vote on a pending bill to restructure the program after the U.S. House of Representatives overwhelming passed one last year.

“I see it all over the board, it’s uncertain right now where it’s going to go,” FEMA’s Miller said, adding that he was optimistic – an optimism tempered by the fact that he only recently joined the program and is well aware of its difficult history getting extended.

As of Feb. 29, the NFIP had 5.59 million policies in force nationwide, with a total insured value of $1.267 trillion. Those policies would remain in force even if the authorization for the program lapsed.

By Ben Berkowitz
From 2006 to 2010, the NFIP paid out $6.21 billion in losses, according to statistics on the program website.

In this era of unpredictable weather patterns, Lazzari’s case is not unique. Insurance companies are raising rates, cutting coverage, balking at some payouts and generally shifting more expense and liability to homeowners, according to reports from the industry and its critics.

“Insurance companies have significantly and methodically decreased their financial responsibility for weather catastrophes like hurricanes, tornadoes and floods in recent years,” the Consumer Federation of America said in a statement after studying industry data.

The industry concedes that it is trying to avoid getting trounced by those same punishing weather patterns.

“Last year (2011) was an extraordinary year for natural disasters,” said Michael Barry of the Insurance Information Institute (III), an industry trade group. “Insurers have taken a step back to assess whether or not they can absorb severe losses.”

STATES LEFT IN THE COLD

Some insurance companies have pulled out of weather-challenged states — meaning they will not write new homeowners policies and may not renew contracts with current policyholders.

In the wake of Hurricane Irene last summer, for example, Allstate informed some 45,000 North Carolina policyholders that it would not renew contracts that were not bundled with auto insurance.

After a spate of tornadoes last April caused $11 billion of property damage in Alabama, Alfa Mutual Group announced it would not renew 73,000 Alabama property insurance policies.

“The increased frequency and severity of storms over the last decade have highlighted the need for Alfa to review its overall property portfolio,” Alfa President Jerry Newby said in a statement.

Florida, where insurers have been dropping coverage since Hurricane Andrew in 1992, is a good example of where this can lead. With an annual average of $1,460 per home, homeowners’ premiums there are second-highest in the country (Texas, at $1,511, is first), according to the most recent data available, a 2010 report from the Insurance Information Institute.

“Florida’s off the charts when it comes to pricing,” said Mike McCartin, an Ashton, Maryland, independent insurance agent.

The state has stepped in to cover some 1.5 million properties via its publicly funded Citizens Property and Insurance Corp. as insurers drop more and more homes.

“You simply have major private insurers that are unwilling to write policies in Florida,” said Robin Westcott, the state’s insurance consumer advocate.

“It’s just a tough market to be in,” said Phil Supple, a spokesman for State Farm, which was once Florida’s largest property insurer. It stopped writing new homeowners’ policies there in 2007.

CHERRY-PICKING OF CUSTOMERS

Even though companies are not abandoning states at will, many opt to drop coverage on individual homes or customers that may seem prone to file claims. Insurers generally work on three-year contracts with homeowners, Barry said. At the end of those contracts, insurers can decide to raise rates or not renew.

When frozen pipes caused flooding in Phil Berger’s Ijamsville, Maryland, home last year, he got a $6,000 check from Allstate for the damages — and a policy review. Berger said an Allstate contractor told him to make $100,000 in repairs to his home at his expense or he would lose his coverage. He refused, and instead found a less expensive policy with a company that required only one smaller repair before covering the home.

“You just need to be on your toes at all times,” Berger said.

Allstate declined to comment on Berger’s case, but sent an email response to general questions about the company’s non-renewal policies.

“Allstate responsibly manages its risk by opting to not renew policies as warranted,” company representative Kevin Smith wrote. “These actions are carefully considered, and help ensure Allstate’s continued ability to provide a wide variety of insurance products to consumers at a competitive rate, while remaining financially strong in every community we serve.”

PAYING MORE FOR LESS

Even homeowners that renew every year may find new limits buried in their policies. The Consumer Federation report said insurance companies have “sharply hollowed out the catastrophe coverage offered to consumers” by raising deductibles, capping replacement costs, and — significant for folks in the path of tornadoes and hurricanes — removing coverage for wind damage if another non-covered event (usually a flood) also occurs.

Industry groups say this misstates the facts.

“The (CFA) could not be more wrong,” said Dr. Robert P. Hartwig, president of the Insurance Information Institute. “Cities such as Tuscaloosa, Birmingham and others are being rebuilt today because of private insurance companies paying losses — not from ‘hollowed out coverage’ policies.” Insurers have paid “literally billions” of dollars to “hundreds of thousands of claimants” affected by natural disasters, he said.

Hartwig also defended the practice by some insurance companies of leaving certain states or regions.

“If you tell an insurance company that they can’t raise rates despite nine hurricanes in two years, obviously insurers are going to have to reduce exposure,” he said.

But homeowners’ insurance premiums have been rising. They have increased an average 6.33 percent annually between 2002 and 2009, according to the National Association of Insurance Commissioners (NAIC). This year, insurers have asked for rate increases of 18 percent or more in 11 states, according to the Consumer Federation.

Robert Hunter, the author of the consumer report, has questioned whether limit-laden policies are worth the rising costs. But mortgage lenders require homeowners insurance, and anyone who has observed a devastating house fire or storm is unlikely to be willing to go without coverage.

COMPARISON SHOPPING

So how can consumers, who have little choice but to keep their coverage, do as Berger suggests and keep on their toes?

Hunter tells homeowners to shop carefully. “Go on your state’s insurance policy website and look for houses similar to yours to compare prices,” he said.

The NAIC provides a map to all state insurance regulatory offices on its website, and provides information about consumer insurance complaints.

Hunter also recommends checking comparison websites such as insuranceproviders.com— or insweb.com — for companies with favorable consumer reviews for in your state.

Another step is to get a professional agent to help, said Jim Donelon, Louisiana’s insurance commissioner and president-elect of the NAIC.

“I recommend you talk to as many people as you can. Get an independent agent — someone who’s not attached to a specific company — and get in touch with captive agents but know that captive agents can only represent their company.”

The agents can check to make sure no important coverage — like wind — has been carved out of the policy.

Compare what the agents offer with what you can find online, said Randy Moses, South Dakota’s insurance commissioner.

Even after getting coverage, consumers may find they need extra help. Lazzari needed both an independent broker and a public adjuster to resolve her case. Her insurer, Norfolk & Dedham Insurance, not only initially refused to pay for most of her home repairs, but also planned to drop her as a customer, she said.

Francis T. Hegarty Jr., president and CEO of Norfolk & Dedham Group, confirmed her version of events, but said it was not unusual for claims such as Lazzari’s to take time to resolve.

Lazzari contacted an independent broker who worked with Norfolk & Dedham to successfully complete her home repairs. But the broker said switching insurers would increase her payments 185 percent. That’s when Lazzari contacted the Massachusetts Division of Insurance to find a public adjuster, who eventually persuaded Norfolk & Dedham to keep her on its rolls.

“We were eventually able to work things out with Ms. Lazzari,” said Hegarty. “In these kinds of cases with independent adjusters, the claims tend to get strung out and tend to take longer to resolve than they would otherwise. But cases like this case are pretty common and, all in all, we’re pleased with how things turned out with her.”

By Matt Stroud

The forecasters issued an initial announcement a few weeks ago, but this is the first forecast where they have issued a prediction for the number of tropical events.

“We have witnessed cooling of the tropical Atlantic during this past winter, and there is a fairly high likelihood that an El Nino event will develop this summer,” says Klotzbach in a statement. “Typically, El Nino is associated with stronger vertical shear across the tropical Atlantic, creating conditions less conducive for storm formation.”

In its April forecast, the team is predicting that of the 10 named storms, four will become hurricanes and two of those will be major hurricanes.

A major hurricane is a category 3, 4 or 5 on the Saffir-Simpson scale with sustained winds of 111 mph and higher.

The hurricane season runs from June 1 through Nov. 30.

The team says there is a 42 percent chance that at least one major hurricane will strike the U.S. coastline; 24 percent chance that a major hurricane will make landfall on the U.S. East coast; 24 percent chance a major hurricane will make landfall on the Gulf Coast from Florida Panhandle to Brownsville, and a 34 percent chance a major hurricane will track into the Caribbean.

Gray says that despite the below-average forecast this year, the Atlantic Basin hurricane activity remains in a highly active multiple decade period that has been going on since 1995 and is expected to continue for the next 10-15 years.

The team says it plans to issue updates to its forecast on June 1 and Aug. 3.

By Mark E. Ruquet, PropertyCasualty360.com

The forecast team of Philip Klotzbach and William Gray released its early hurricane season forecast for 2012, saying that it is dispensing with the usual numerical forecast for the number of storms. Instead, Klotzbach and Gray issued their forecast in terms of the probabilities “of the key factors influencing the hurricane season.”

The reason for the change, they say, is the difficulty forecasters have in determining whether an El Niño will occur in the Pacific, which impacts the Atlantic hurricane season.

The team says there is a 45 percent chance that climate conditions that have persisted since 1995 will continue along with no El Niño development in the Pacific. These conditions include warmer water temperatures in the tropical Atlantic and reduced vertical wind shear—conducive conditions for hurricane formation.

Should that be the case, hurricane activity would be 140 percent of the average season, which would be characterized as 12 to 15 named storms, seven to nine hurricanes and up to four major hurricanes (Category 3, 4 or 5 with sustained winds of 111 mph and greater), the forecasters say.

The team says there is a 30 percent chance that Atlantic wind circulation remains unchanged and a significant El Niño occurs, which would reduce the tropical-cyclone season to approximately 75 percent of the average season. That would be 8 to 11 named storms, three to five hurricanes and one or two major hurricanes.

There is a 15 percent chance that current Atlantic wind conditions could become unusually strong, and no El Niño occurs, which would lead tropical-cyclone activity of up to 180 percent of average hurricane season—about 14 to 17 storms, 9 to 11 hurricanes and four to five major hurricanes.

And the forecasters say there is a 10 percent chance that current Atlantic wind conditions weaken and a significant El Niño develops, which would reduce the tropical-cyclone activity to 40 percent of the average season—five to seven storms, two to three hurricanes and possibly one major hurricane.

For 2011, the CSU forecast team had predicted that the hurricane season would be well above average. In June the team called for 16 named storms, nine hurricanes and five major hurricanes. The season produced 19 named storms, seven hurricanes and three major hurricanes.

By Mark E. Ruquet, PropertyCasualty360.com

These are among the extreme schemers elected to the Insurance Fraud Hall of Shame sponsored by the Coalition Against Insurance Fraud.

The Hall of Shame annually dishonors the year’s most brazen, vicious or plain klutzy convicted insurance criminals. The Hall of Shame helps brand insurance fraud as a socially offensive crime by detailing true-life cases, and the damage caused by these masters of disaster.

Witness the No-Class of 2011:

Executed scheme. Dogged by debt, William Craig Miller burned down his fancy Scarsdale, Ariz. house for an insurance payday. Miller then executed two witnesses in their home. He also gunned down three kids in the home to keep them quiet. Some were shot at point plank, including a 10-year-old boy. Miller received the death penalty.

Daffy diamond heist. Financially strapped diamond merchants Atul Shah & Haveer Kankariya staged a dopey $9-million diamond heist for insurance money. They hired two thugs to dress as Hassidic Jews in beards and black-brimmed hats, then pretend to rob their Manhattan business. But the merchants’ own security cameras recorded them removing the diamonds themselves. The merchants both received up to four years in prison.

Policing fraud. Los Angeles cop Jeff Stenroos said a man shot him in his protective vest. Hundreds of police were diverted to hunt for the phantom shooter. Thousands of kids were locked in their schools for hours without food, water or toilets. Traffic was snarled. Stenroos had faked a painful injury to score paid time off via his workers comp policy. He received four years in jail.

Explosive con. Stuck with a decaying home they couldn’t sell Victor & Olga Barriere hired Thomas Trucios to burn down the Long Beach, Calif. place. But Trucios was an amateur who used too much gasoline. The toxic brew exploded. Flames engulfed Trucios, blew up the house and carved large cracks in the sidewalk. Trucios died from third-degree burns. Victor received 14 years and Olga six years.

Stormy scheme. Lori Sergiacomi was popular Providence, R.I. deejay called “Tanya Cruise,” Sergiacomi had two corrupt politicos bang up her home roof, pool and interior to look like storm damage so insurance would pay for her home remodeling. A crooked adjuster helped grease the claim. But just her luck, one politico spilled the entire scheme while being wiretapped in yet another corruption con. Sergiacomi received four months in a halfway house. Her cronies received varied sentences.

Cow parts & mannequins. Jean Crump and Faye Shilling took out life insurance on Jim Davis, a fake person they invented. “Davis” later died of a heart attack, the Los Angeles duo said. Crump and Shilling staged his funeral, with fake mourners and a burial. Then they dug up the empty coffin when the life insurer got nosey. They filled it with the mannequin and cow parts to fool workers lugging the box to the crematorium to erase the evidence. Crump awaits sentencing, and Shilling received two years in federal prison.

Bad medicine. Armen Karazianis headed an Armenian-American gang that bilked Medicare out of $163 million in one of the largest Medicare scams ever by one criminal gang. The Los Angeles-area man set up 118 fake medical clinics in 25 states, and stole the identities of doctors and Medicare beneficiaries. Karazianis also recruited Medicare patients for bogus treatments, and staged crashes for false injury claims. Karazianis received three years in federal prison.

Blind to honesty. Kevin Pushia was a Baltimore pastor who befriended a blind, developmentally disabled man named Lemuel Wallace. Pushia secretly took out $1.4 million of life insurance on Wallace, then had him shot in a park bathroom. Pushia even stole $50,000 from his own church to pay the hitmen. He also tellingly scrawled “L.W. project completed” in his datebook. Pushia earned life in prison.

Fake FBI agent. Bridget Buckner told her employer that her child and husband died suddenly just months apart, the Chicago woman said. She collected $25,000 in life coverage. Her husband was an FBI agent shot in his lung while on duty, she said. Poor guy died awaiting surgery. But the fraud investigator himself was a retired FBI agent who would’ve heard about the death. Buckner’s innocent hubby wasn’t an agent, and her daughter had died several years prior. A spooked Buckner disappeared but was hauled back for a 10-year jail term.

The 81 fatalities occurred in 33 states, one U.S. territory, and one overseas U.S. military facility, according to the United States Fire Administration (USFA).

Texas experienced the highest number of fatalities (seven). North Carolina experienced six firefighter deaths and was the only other state with five or more firefighter fatalities.

Heart attacks were responsible for the deaths of 48 firefighters (59 percent) in 2011, nearly the same proportion of firefighter deaths from heart attack or stroke (60 percent) in 2010.

Ten on-duty firefighters died in association with wildland fires, the lowest number of annual firefighter deaths associated with wildland fires since 1996.

Fifty-four percent of all firefighter fatalities occurred while performing emergency duties. Only three firefighters were killed in vehicle collisions.

The North Carolina Farm Bureau Insurance Co. announced it will implement a statewide average 6 percent increase in premiums on the 380,000 homeowners it insures around the state.

Although homeowners’ rates are capped by the state, the insurer said the increases will come in the form of eliminated policyholder discounts and credits. The insurer is seeking to implement similar changes on its mobile home and farm properties policies.

In January, the insurer imposed new underwriting guidelines that require homeowners to purchase an auto policy in order to maintain their coverage. It also decided to non-renew homeowners who had filed a claim on their property in the last five years.

Farm Bureau Executive Vice President Steve Carroll said the moves reflect a steep rise in its reinsurance premiums following last year storms, which resulted in over $50 million in claims. As a result of those losses and changes in the reinsurance market, he said the insurer’s reinsurance costs jumped from $75 billion in 2011 to $150 million this year.

The Raleigh, N.C.-based Farm Bureau is the state’s third largest homeowner insurer, representing 13.9 percent of the market.

One segment of the market Farm Bureau is looking to substantially withdraw from is its dwelling policies. Dwelling policies are generally limited to insuring physical damage on rental and investment properties that not occupied by an owner.

In 2011, the North Carolina Rate Bureau filed for a 30.6 percent rate increase for these policies, which was denied by Insurance Commissioner Wayne Goodwin. Goodwin ordered a 7.3 percent rate deduction. Goodwin’s decision is currently under appeal.

As a result, the insurer will exclude wind coverage on 15,000 dwelling and property policyholders in coastal areas, effective June 1. It also plans to eliminate 43,000 properties in the western region of the state unless the owner has an auto policy. The company will also stop offering any new dwelling policies in non-coastal regions, effect April 1.

By Michael Adams

Lead has been banned in paint since 1978 because of its toxicity at low levels, but it still shows up in small amounts in some of the best-selling lipstick brands.

The Campaign for Safe Cosmetics, which did an analysis of a study of lead in lipstick conducted by the U.S. Food and Drug Administration, wants consumers to know that most of the 400 different lipsticks tested were positive for the substance.

“Recognizing that there is no safe level of lead exposure, we need to be protecting women and children from all levels of exposure,” said Stacy Malkan, co-founder of the campaign — a non-profit coalition of environmental- and cancer-prevention groups.

Malkan’s group wants the FDA to set a limit for how much lead lipstick can contain and to study whether there are any dangers to having the substance applied to human lips, particularly the lips of children and pregnant women. “We know that ingestion of lipstick happens. It gets into our bodies,” she said, noting that lead accumulates in people.

The group said that five of the nine lipstick brands with the most lead are sold by L’Oreal, the world’s largest cosmetics maker.

L’Oreal’s “Color Sensational” Pink Petal had the most lead of any lipstick tested at 7.19 parts per million. By comparison, children’s products sold in the U.S. are forbidden to have more than 100 parts per million of lead.

“The FDA’s independent study, which will be published in the May/June 2012 issue of the Journal of Cosmetic Science, confirms that lipsticks pose no safety concerns for the millions of women who use them daily,” L’Oreal said in a statement sent to Reuters. “The lead levels detected by the FDA in the study are also within the limits recommended by global public health authorities for cosmetics, including lipstick.”

The FDA, for its part, agreed there is no cause for alarm.

“The FDA did not find high levels of lead in lipstick,” FDA spokeswoman Tamara Ward said. “We developed and tested a method for measuring lead in lipstick and did not find levels that would raise health concerns.”

Still, Malkan said the government should take some more steps to ensure the safety of those who use lipstick. An advisory committee to the U.S. Centers for Disease Control and Prevention has taken a position that there is no safe level of lead for children. So, why asked Malkan should it be OK for their to be lead in lipstick? And, in particular, for certain brands to have more than others?

“There are no safety standards,” Malkan said.

So, if you’re still lead conscious, consider how you’ll handle your lips and those you’ll be sharing them with this Valentine’s Day.

By Mitch Lipka | February 14, 2012