Monthly Archives: May 2009

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Toxic Walls are Talking

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The news is in — Chinese drywall has been confirmed to contain vast differences from U.S. manufactured drywall. The Environmental Protection Agency ran the tests, which found the following elements that do not appear in U.S. drywall:

  • Sulfur
  • Strontium (at levels 10 times as high as in U.S. drywall)
  • Two other organic compounds usually found in acrylic paint

U.S. Senator Bill Nelson (D-Fla) reported on the findings today, stating, “We’ve got the what, and now we need the why and how do we fix it? In the end, I think all this stuff is going to have to be ripped out.”

Nelson’s office said the EPA has determined more tests are needed, including air sampling in affected houses, to determine whether the drywall is the cause of corroded wiring and appliances and the alleged health problems.

The drywall was used mostly in the Southeast, with a the highest concentration used in Florida residences.

The Florida Department of Health has recorded 379 complaints from homeowners as of May 19. Residents with the Chinese-made drywall have had health problems that include bronchitis, dizziness, headaches, fatigue, and irritated eyes. Many affected houses have a rotten-egg-like smell, metal is turning black, and appliances are failing.

A Senate subcommittee hearing was held today to discuss the current threat and future consequence of toxic Chinese drywall. In attendance were state Senators from various Southeastern states, the Senate Subcommittee on Consumer Protection, Product Safety and Insurance and the U.S. Consumer Product Safety Commission.

A growing product liability crisis over the drywall may include up to 35,000 homes in several states, with Florida being among the hardest hit. Several senators said federal money will be needed to deal with the problem.

How will the residents of these homes afford alternative housing, their primary mortgage payment and, in some cases, complete drywall removal? Stay tuned.

Chasing the Tornado Mystery

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 A group of more than 80 scientists will travel the Great Plains over the next shutterstock_tornadofew weeks in hopes of catching a tornado (or two) in action. They’re not just out for a cheap and dangerous thrill, however. They’re risking their lives trying to save lives in the future.

The convoy of scientists, named VORTEX2, hope to find out what causes the killer twisters and how to give people earlier and more accurate warnings.

Tornado warnings average 13 minutes of lead time, and those come with a 70% false alarm rate, according to VORTEX2 planning documents. The researchers want to know whether warning times can be more accurate and whether warnings could be issued a half-hour or more before the storm strikes.

The funnels of death have wreaked havoc throughout the Midwest over the last several years — especially last year — racking up insurance losses and, worse, close to 60 lives. The Super Tuesday tornado outbreak on Feb. 5 and 6, 2008 spawned 82 tornadoes, killing 57 people and causing $955 million in claims, according to A.M. Best. According to the Insurance Information Institute, 2008 had an unheard-of 1,390 official torndoes.

2008 was not only the worst year for catastrophe losses from tornadoes and related weather events, but it also was the second worst year for the number of tornadoes. 2008 catastrophe losses from tornadoes and related events as reported by ISO/PCS totaled $10.5 billion from 29 events.

The 35-day research project was coordinated by the National Severe Storms Laboratory in Norman, Okla. and continues through June 13.

End of War Means End of Travel Risk?

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The 26-year war in Sri Lanka has come to a bloody end today when the Tamil Tiger rebel chief Vellupillai Prabhakaran and the entire rebel leadership were killed. Though a long road still lay ahead for the country, there is already talk about Sri Lanka tourism getting a boost from the end of fighting. An area that was once considered a travel risk may soon be considered a tourist destination.

While it is still too early to predict the future course of events in Sri Lanka, the possibility of a lasting peace opens up the prospect of the great swathes of pristine sandy beaches in the north and east of the country becoming new tourist hotspots. Resorts that are likely to become holiday favourites include Nilaveli, just north of Trincomalee, and, further south, Kalkudah and Passekudah. Arugam Bay is set to attract the surfing crowd while Trincomalee itself, described by Admiral Nelson as the finest harbour in the world, could become a major new tourist hub. 

Currently, the Foreign Office advises against all travel to the country since the fighting is still fresh and remaining pockets of Tamil Tiger fighters still pose a threat. Though the country has been liberated, thousands of civilians have been killed and some are claiming that war crimes have been committed. 

The EU ministers called for an independent inquiry into alleged war crimes committed not just by the Tamil Tigers, who have long been on the EU’s list of banned terrorist groups, but also by the government.

To add to the problems, aid workers, including the Red Cross, have reported troubles in getting humanitarian aid to the region. So while the beautiful Asian country of Sri Lanka may one day become a haven for exotic beach seekers, the war-torn country has a long road of recovery ahead.


Life Insurers Receive Bailout

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shutterstock_stimulate-economyIt was announced today that the following life insurers will receive bailout funds from the Troubled Asset Relief Program (TARP):

  • Allstate                                                                   
  • Ameriprise Financial                                     
  • Hartford Financial Services Group Inc.
  • Lincoln National Corp.
  • Prinicpal Financial
  • Prudential Financial

According to Treasury Department spokesman Andrew Williams, those life insurers met the requirements for the Capital Purchase Program because of their bank holding company status.

Investors have been increasingly worried about the health of life insurers, which have been hit hard by worries about capital requirements and growing losses. A number of insurers that are also bank holding companies or thrifts have been eligible for funds from TARP since last fall. Last year, the Office of Thrift Supervision approved applications from Hartford and Lincoln to become bank holding companies, because of their planned bank purchases.

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The bailout money is badly needed as insurers have seen their cash eroded by declining market value of securities they hold.

A number of insurers could use the money because they’ve suffered losses in the financial markets.

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The companies invest the premiums they collect and use the proceeds to pay out claims.

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Investment losses have led ratings firms to downgrade some insurance companies, making it more difficult for the insurance companies to borrow money and attract capital.

Also, because numerous companies provide retirement annuities, which gaurantee payments to retirees, a cash infusion is needed to hold the public’s confidence in these companies and the market in general.

The insurance sector got a boost this morning when news of the planned bailout sent shares skyrocketing for the insurance companies involved, but, unfortunately, not for the market as a whole.