[ ] How should we interpret the difference in coverage between Demotech and Traditional Insurers? (Is it lower value houses or partial coverage?)
[ ] Who do you want to get on the phone?
[ ] Which figure jumps out?
[ ] What figure(s) are missing?
[ ] How Risky is this for Lenders?
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“The lenders need to play a role,” said Robert Gordon, a senior vice president at industry body the American Property Casualty Insurance Association. He says the lenders can be on the hook for decades while insurers can raise rates every six to 12 months.
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[ ] Why is the following in a footnote?
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At origination, lenders can try a number of strategies to manage their counterparty risk exposure. For example, they could limit which insurers borrowers can use as a condition of the mortgage; alter the terms of the mortgage (i.e. rate, downpayment) for borrowers that choose to buy from lower quality insurers; or completely pull-back from mortgage origination in high risk areas, where access to insurance is more valuable.
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[ ] How does this impact the estimation?
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We argue that the structure of the program limits this concern. Insurers can choose which policies to assume from Citizens, and they are unlikely to choose worse quality homeowners that cannot make insurance payments; if anything, they are likely to choose higher quality borrowers.
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