In his Blueprint for a Modernized Financial Regulatory Structure, Treasury Secretary Henry Paulson calls for sweeping reform to the current financial regulatory system including insurance.  The proposal calls for a three headed regulatory structure that would be answerable to the Federal Reserve under it’s role as regulator of market stability. 

It would shift control of insurance regulation, now under the jurisdiction of states, to the federal level.  Insurance regulation as it now stands is highly inefficient due to the lack of uniformity across state lines.

Our financial system is much more interconnected structure these days, with the distinction between commercial banking, securities and insurance sectors now blurred.  State level insurance regulation leaves a glaring weakness for federal oversight of the financial marketplace.

A dual federal and state regulatory system would be established that would allow insurance companies the choice of being regulated at the national level under the optional federal charter(OFC).  The proposal calls for the creation of the Office of National Insurance(ONI) that would help facilitate regulatory cooperation and consistency between state and federal regulatory structures.

The National Association of Insurance Commissioners(NAIC), a coalition of state insurance regulators, have already spoken out against the proposed changes that would supplant their current regulatory powers.  Insurance companies on the other hand have come out in full support of the proposal as they have been criticizing state level regulation for years and have been seeking this type of reform for some time.

The facts are that flood damage can happen no matter what state you live in.  Even in the highest risk areas, only a small percentage of homeowners purchase flood coverage.  Many Americans have left themselves wide open to heavy losses with little to no recourse.

It’s estimated that about 30% of Americans still mistakenly believe that flooding is covered under their regular homeowner’s policy.  Heavy rains in the Midwest have brought flood insurance back into the spotlight.

Since insurance companies don’t typically offer this kind of coverage the government has had to step in and become the “insurer of last resort”.  In 1968, Congress established the National Flood Insurance Program(NFIP) which is under the direction of the Federal Emergency Management Agency(FEMA).

The program offers flood coverage to residents in communities that follow FEMA guidelines for floodplain management and damage mitigation.  Annual premiums are normally in the $400-$500 range for a median priced home.  While regular insurance carriers don’t offer the coverage itself many of them have entered into agreements with the program to accept payments for the flood coverage and maybe able to offer you some advice.

The program is often criticized because it encourages people to build and reside in flood prone areas.  Nonetheless if you live in these areas currently, you should take advantage of it.

Since it’s a federal run program, premiums are artificially low.  If private companies were to offer flood insurance, rates would be much higher.

As you grow older, the cost of insurance, especially for life and health can grow increasingly burdensome once you pass the age of 50.  Life insurance can be planned for more easily than for health insurance but even it can have it’s own problems.

For those that choose the term life option when they are younger as opposed to whole life, when your initial policy expires, the cost to renew can be prohibitive.  It may make more sense to switch to whole life at this point rather than taking out another term life policy.  One would also expect to be more financially secure the older you get so that you may not need as high a principal value for your policy.

Health insurance can be a large problem for Americans between the ages 50 and 65 years before you become eligible for Medicare.  Companies are also now able to reduce or eliminate some healthcare benefits for employees once they become eligible for Medicare so even after age 65 it’s no walk in the park.

After you pass the age of 50 and you are between jobs, it is imperative that you make the full use of your Cobra options because once you go 63 days without renewing your policy, insurance companies can legally turn you down or refuse to cover your pre-existing conditions.

Make sure also to use any tax related benefits that are open to you.  It may make more sense to switch to a high deductible policy and fund a Health Savings Account which can save you up to 30% for what you put into it.  You are also able to deduct all medical costs that exceed 7.5% of your annual gross income.

The fact of the matter is, you will more than likely have to make some sort of sacrifice in order to keep costs down.