Newsletters - Past Issues

Fire Insurance and the markets- Update 11 9 2019 READ!

 

Market update and more fire insurance information:

 

Greetings fans,

Read on about fire insurance and what is happening under the surface on Wall Street. Both important machinations in process!

 

 

Don't let this cost you. Insure now with a licensed agent

Marc Cuniberti California Insurance License # 0L34249

 

 

273996

 

Fire Insurance.

The very mention strikes fear in the hearts of homeowners. With the recent catastrophic wildfires wiping clean whole neighborhoods, an unprecedented situation has arisen not only in the scope of the destruction by those affected, but in the environment that California homeowners find themselves in obtaining fire insurance to protect their residences and businesses.

Facing skyrocketing claims at saturations levels seldom witnessed, insurance companies are pulling back their exposure to high fire prone areas by cancelling in masse’ homeowner policies.

Nevada County’s beauty comes from being surrounded by trees and brush and its the very reason for cause of its insurance problem.

Home and business owners are finding cancellation notices arriving in their mailboxes. Regardless of loyalty or claims history with a company, the notices keep coming with seemingly no consideration for any other factors. Basically if you live here and home happens to be in a designated brush area, expect a cold hearted sounding letter to arrive in your mailbox.

Few have been spared. Regardless of the amount of tree work you’ve done, or open space that surrounds your house, if you’re on a specific spot on the map (and there are many such spots) you’re probably going to be scrambling for a fire insurance policy.

With such wide spread problems, there is likely to be misinformation, wild claims and exaggerations, some name calling and a host of upset homeowners.

And there are.

The basic question now being asked is where can I find fire insurance and how much will it cost?

The answer can be distilled down to a simple answer for most.  You will be able to find a policy somewhere and yes, it’s probably going to cost you more. In some cases a lot more.

As in any screwy situation like what exists currently in the homeowner’s insurance arena, there is no steadfast rule as to what to expect. As a licensed insurance agent, and one deeply entrenched in social and news conduits, I have seen little that resembles normalcy. I can say the stories run from ridiculous to unbelievable to situations that almost appear almost like little has changed.

Some claim they can’t get any insurance at all (usually untrue) to claims they actually paid the same or even less than before (usually untrue as well). 

From recent my experience, and probably like almost all agents in Nevada County and California for that matter, the intensity of the situation is as new to us as it is to you. The phones are ringing nonstop as consumers scramble for coverages.

Experienced agents know coverage is possible for most but that coverage is also going to cost more. In many cases, I see costs rising from 200-250% of previous premiums. Those claiming their premiums stayed the same or went even down may not have looked at their coverages closely.

It’s a rapidly changing environment. The common belief is the insurance companies are immersed in a Frankenstein-like confusion of an untenable situation. Some say it’s all one big grand experiment in what has to be done and what will be done forced upon all of us by necessity caused by the workings of Mother Nature.

The questions being when you get a policy (usually not if), how much will it cost and what sort of coverage will I get. If God forbid my house is obliterated in a catastrophic fire like the ones witnessed in recent years, will the insurance companies be able to handle the onslaught of claims in a timely and efficient manner. These are questions that are difficult to answer.

Lord knows the insurance companies, much like the agents, are bombed with fire policies applications. They are also bombed with claims. Having to settle hundreds of homeowner claims as whole communities get incinerated is no easy task, and likely not a cheap one for the insurers. Hence the cancellations.

Remember insurance companies, like most companies, exist to provide a service and make a profit in doing so. If the profits burn up in a wildfire along with the homes they insure, they are within their rights to pull back from the market. In other words cancel you.

The good news is there is an entity called Cal Fair.  From Google: The FAIR Plan is an association located in Los Angeles comprised of all insurers authorized to transact basic property insurance in California

In other words, Cal Fair is made up of many of the same companies that cancelled you but assembled in conjunction with the Department of Insurance to provide insurance that otherwise is not available. Much like the assigned risk program for problem drivers, you could say Cal Fair is for problem home policies, and in this case the problem is wild fires.

I’ll cover how Cal Fair works and the subsequent coverage issues in future articles. Just know for now, you will likely have little problem in getting a fire policy. Contact a licensed insurance agency for assistance and yes, they are busy. If you find you’re not getting a call back, try another agency. There are a host of reputable agencies and agents in Nevada County that can help.

This article expresses the opinions of Marc Cuniberti and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. Mr. Cuniberti is a licensed insurance agent. California Insurance License # OL34249

 

 

 

 

The "REPO" Market has recently seen some things not witnessed since the 08" crisis

 

 

 

269934

Since the 2008 crisis, the Federal Reserve injected somewhere in the area of 5 trillion dollars into the banking systems both here and abroad to help stabilize the financial `system` that was spiraling out of control due to the real estate implosion. They also guaranteed another 7 trillion or so (https://michael-hudson.com/2011/06/how-a-13-trillion-cover-story-was-written/) of debt from various institutions in addition to the injection.

It’s safe to say things have calmed down a bit since then, with the markets rising to new highs and the real estate market for all intents and purposes has taking off the to the proverbial races since 2011.

That said, last week witnessed a blast from the past in an area the average Joe Blow doesn’t really understand or even know it exists, the overnight repurchase agreements (repos) market mechanism.

The repo market is the plumbing of the financial system. The banks and market funds of all types rely on this market to finance their day to day operations. Billions of dollars flow into and out of this market daily. It’s where business and investment firms of all types draw on funds to operate, while others deposit excess funds for safekeeping and possible income.  The market operates funding for as short as overnight to longer terms. From CNBC : In a repo trade, Wall Street firms and banks offer U.S. Treasuries and other high-quality securities as collateral to raise cash, often overnight, to finance their trading and lending activities. The next day, borrowers repay their loans plus what is typically a nominal rate of interest and get their bonds back.

Think of it as a huge octopus taking in and handing out thousands of loans a second to all branches of business and the markets.

If demand for funds increases, the interest rates paid for accessing these loans may rise. On the contrary, if demand falls off for this type of funding, interest rates might fall.

The interest rates on repos usually run about 2.25% and the baseline is set by the Fed. The repos typically follow the Fed set rate. Last week the repo rate (which is set by demand) rose to 4% then skyrocketed to 8%. Known as liquidity, it simply means the demand for quick cash was soaring. Higher than normal rates can cause serious turmoil as the cost to institutions rise past what is budgeted and expected. 8% is regarded as extremely high to put it mildly.

As rates climbed the Fed intervened injecting close to 53 billion dollars into the repo market by purchasing Treasuries and other debt (known as agency debt) from the various institutions known as “Primary Dealers”. This is a group of 24 big banks and trading firms that have an agreement to participate in swapping debt for cash and vice versa to provide acts like a  gas pedal to the overall money supply in the system. The intervention was the first one since 2008. Ominous sounding, the recent repo rate rise was called “bordering on chaos’ by a BMO Capital Markets strategist.

The Fed sold debt back to the repo dealers (an opposite move from last week’s action) over many months last year to the tune of 700 billion in an attempt to rid itself of some of its holdings which were stockpiled during the crisis. The most recent move was a reversal of this mechanism.

This spike and subsequent move by the Fed doesn’t necessarily mean the environment resembles 2008/09 liquidity crisis but it definitely doesn’t make this analyst sleep any better. Only time will tell if the recent machinations by the Fed solved the problem and it was a simple one-off temporary occurrence or a sign of something more ominous going on in the financial gearbox of the economy.

Update: On September 18th, the New York Fed printed up another $75 billion to inject into the “repo” market — on top of $53.2 billion the day before. On September 26, the Fed added another 71 billion and I can’t keep up! It is getting more interesting by the day. Who knows how much more will be added by the time you read this?

 

UPDATE-  November 9, 2019. Close to a quarter TRILLION has now been added by the Feds!  Could this be a sign of more problems in the markets than we are being led to believe? This certainly is a very large sum of money!

 


 

Fire Insurance Update- Market update October 13, 2019

\

It can happen again!

Be prepared and be covered

 

Do you need fire insurance, been cancelled or know anyone who has? It can be frustrating. Let me take the worry out of the situation and find you a policy you can live with. Let me answer your questions and guide you through the process.

Join our Facebook Page “Fire Insurance Information and Inquiries” here:

https://www.facebook.com/groups/424062531773299/

This page has updates and posts from other homeowners and people asking the same questions.

Sign our petition on Change.org.     Click link below:

https://www.change.org/p/california-governor-fire-insurance-cost-relief-to-homeowners-also-to-the-cal-ins-commissioner-and-congressman-lamalfa

Specifically it asks:

The Organization for Affordable Fire Insurance

The increase in the cost of fire insurance is hitting the working family through no fault of their own. Many can’t afford the massive increases and for many the added costs are crippling budgets and hurting the state economy.  We the people of California petition the Governor to allocate emergency funds to reimburse all those that have had premium increases over and above the CPI inflation index. We also request the insurance commissioner to negotiate and regulate insurance companies to resume underwriting in fire prone areas with reasonable and if necessary subsidized rates.

 

Need guaranteed income for life? Never outlive your money? How about a minimum guaranteed with also stock market upside participation possible? The Best of Both Worlds. Or monthly income? Retirement planning? College planning? Tax free pass on assets to heirs with no tax?

CONTACT ME.

(530) 559 1214

 

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Look at the photo above: The people represent the banks with the money falling from the Fed in the REPO Market.

(keep reading) 

 

269934

Since the 2008 crisis, the Federal Reserve injected somewhere in the area of 5 trillion dollars into the banking `system` both here and abroad to help stabilize the financial `system` which was spiraling out of control due to the real estate implosion.

They also guaranteed another 7 trillion or so (https://michael-hudson.com/2011/06/how-a-13-trillion-cover-story-was-wri...) of debt from various institutions.

It’s safe to say things have calmed down a bit since then, with the markets rising to new highs and the real estate market taking off the to the proverbial races since 2011.

That said, the last few weeks witnessed a blast from the past in an area of the financial markets few people understand or probably even know it exists. This seldom discussed but very important part of the marketplace is called “Overnight Repurchase Agreements” (repos) mechanism.

The repo market is the plumbing of the financial system. Banks, businesses and financial institutions of all types rely on this market to finance their day to day operations. Billions of dollars flow into and out of this market daily. The various entities borrow  funds to operate, while still others deposit their excess funds for safekeeping and possible income. 

The market operates funding for as short as overnight to longer terms.

From CNBC:  In a repo trade, Wall Street firms and banks offer U.S. Treasuries and other high-quality securities as collateral to raise cash, often overnight, to finance their trading and lending activities. The next day, borrowers repay their loans plus what is typically a nominal rate of interest and get their bonds back”.

Think of it as a huge octopus taking in and handing out thousands of loans a second to various branches of business and markets.

If demand for funds increases, the interest rates paid for accessing these loans may rise. On the contrary, if demand falls off for this type of funding, interest rates might fall.

The interest rates on repos usually run about 2.25% and a baseline is set by the Fed although the rate in the day to day repo market moves up and down based on demand. The repo rates typically follow the Fed’s baseline rate closely however a few weeks back the repo rate rose to 4% then skyrocketed to 8%.

Known as liquidity, it simply means the demand for quick cash was soaring. Higher than normal rates can cause serious turmoil as the cost to institutions rise past what is budgeted and expected. 8% is regarded as extremely high to put it mildly.

As rates climbed the Fed intervened injecting close to 53 billion dollars into the repo market starting two weeks back. The injections happen when the Feds purchase Treasuries and other debt (known as agency debt) from the various institutions known as “Primary Dealers” in the group. This is a group of 24 big banks and trading firms that have an agreement to participate in swapping debt for cash and vice versa which acts like a gas pedal to the overall money supply in the system.  

The intervention was the first one since 2008. Ominous sounding, the recent rate spike was called “bordering on chaos” by a BMO Capital Markets strategist.

In an opposite move last year, the Fed started selling debt back to the repo dealers over many months to the tune of 700 billion in an attempt to rid itself of some of its holdings, which the Feds had stockpiled during the crisis. Now the Feds found it necessary to reverse some of those transactions as rates climbed.

This spike and subsequent move by the Fed doesn’t necessarily mean the environment resembles 2008/09 liquidity crisis but it definitely doesn’t make this analyst sleep any better.

Only time will tell if the recent machinations by the Fed solved the problem and it was a simple one-off temporary occurrence or a sign of something more ominous going on in the financial gearbox of the economy.

Before I sent article this to publishing, on September 18th, the New York Fed printed up another $75 billion to inject into the “repo” market — on top of another $53.2 billion the day before. On September 26, the Fed added yet another 71 billion and its becoming increasing hard for me to keep current!

It is getting more interesting by the day.

Who knows how much more will be added by the time you read this?

 

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

 

 


 

The Department of Insurance Commissioner meeting- Update 10 3 2019

 

California Insurance Commissioner Ricardo Lara

 

They say first impressions are the most important. I have to admit what I expected to see when Insurance Commissioner Ricardo Lara showed up at the local town hall meeting on fire insurance and what I saw did not exactly mesh, at least for me.

What I expected was a seasoned insurance man, in the know about the insurance business hardened by years of experience. What I saw was a handsome, strapping younger gentlemen, dressed in peg-legged jeans, cowboy boots and a Nehru type shirt, tight fitting around rather impressive biceps, all indicating this man spent at least some of his waking hours in the gym. Not exactly the fat old guy in a tie and suit that I expected.

Lara’s background as it turns out has little to do with experience in the insurance industry. Born in Commerce, California, Lara is the son of a formerly undocumented factory worker and seamstress from Mexico. Lara attended Los Angeles Unified School District schools and graduated from San Diego State University, where he earned a Bachelor of Arts degree and served as student body president. He is currently pursuing a master's degree from the University of Southern California.

A longtime Assembly staffer, Lara worked as Chief of Staff to Assemblyman Marco Antonio Firebaugh (D–South Gate) when Firebaugh served as Majority Leader. Lara later served as Fabian Nuñez's district director during Nuñez's time as Speaker. He then served as communications director for Assemblyman Kevin de León (D–Los Angeles). (Wikipedia).

All this has to tell you something and you got the feeling he was to be protected and isolated the entire time he was there and he was.

From the onset, a celebrity like aura engulfed the building. Photo ops and handshakes occupied the first 15 minutes and after the obligatory thanks you and introductions from those that do such things, Lara took to the stage in front of a video screen that I imagined would act as a security blanket and guide all in one.

After all, it’s easier for the speaker and audience-distracting if they, the audience, have a TV to watch instead of focusing their entire attention on a speaker. It’ the reason I use no such visual complements when I speak. I WANT the complete attention of the audience.

Not one to jump to conclusions however, I let the cameras and microphones roll and sat back to see what nuggets of wisdom and subsequent action Lara was to bequeath to the room full of anxious homeowners and insurance professionals, dignitaries and wannabes that were in the packed house that was the Foothill Event Center on August 22, 2019.

He started out by what I perceived as a prepping us for a watered down presentation what was to follow by saying the department somewhat has its hands tied and “is trying” to get the insurance companies to do this and that.

Oh boy. Starting with the “poor us” theme didn’t instill a lot of confidence, at least in my mind, and probably a few others in the room as well.

Flipping from slide to slide, Lara attempted to instill some sort of rebound by illustrating some of the problems homeowners were having obtaining, keeping and paying for fire insurance.

Tell us something all of us in the room don’t know sir.

I have to admit I was somewhat taken in by his charm and good looks, as I’m sure others were, and gave him the benefit of the doubt that this was a sincere and caring man in front of me. That said, I caught myself shaking my head thinking “if this is our main defense against the huge conglomerates that are the insurance companies, we’re all screwed”.

I kept thinking as the slides slipped by illustrating little but visual lip service, this vegetarian type of presentation resembled the Beyond Meat phenomenon. Beyond Meat is a company that makes vegetarian hamburgers that look and taste like meat but have no real meat in them.

Yea, the evening was kind of like that.

Lara dived into what I perceived as a less than critical “honey do’ list of things the department was trying to implement such as longer notification times for cancellations and such. I’m thinking “we all came tonight because insurance is so damned expensive, not because a 45 days’ notice is too difficult to understand.

You get what I’m saying here?

After an hour or so, and without questions, the commissioner left the stage and ended what was obviously a very well prepared presentation. In the old days it was known as the proverbial “dog and pony show”.

Hearing him speak and in speaking with him, I perceived mostly lip service, generalities and prepared responses to the same old questions he was hearing in the green rooms of the many such presentations he was giving on this road show.

After a few more smiling photo ops with those waiting in line to shake the hand of this handsome gent, Lara was whisked away in a waiting black SUV (yea I know) and in his place two topic knowledgeable non-politicians fielded handwritten and prepared questions taken earlier from the audience by staffers.

If there was meat in this dish, we got a taste of it from these two. For more than an hour, they answered honestly and diligently every question handed them, and it was here that we learned at a bit more about the department and its machinations that are taking place addressing this very serious issue.

I have to at least give the Department of Insurance (DOI) some credit for making the effort to address the fire insurance issue in California by these ongoing roadshows, if not really making a lot of real headway on the main issue of insurance costs, but holding the hands of nervous and concerned homeowners. In the final end however, when I think of whom I saw from the DOI at this town hall meeting, then picturing them going up against armies of Ivy League educated CEOs and VPs of huge and powerful conglomerate insurance companies, in reality these DOI folks don’t stand a snowballs chance in hell, or should I say our house’s chance of survival in an out of control wildfire.

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 66 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages and You Tube. The views expressed are opinions only.

------------------------

 

 

Do you need fire insurance, been cancelled or know anyone who has? It can be frustrating. Let me take the worry out of the situation and find you a policy you can live with. Let me answer your questions and guide you through the process.

Join our Facebook Page “Fire Insurance Information and Inquiries” here:

https://www.facebook.com/groups/424062531773299/

This page has updates and posts from other homeowners and people asking the same questions.

Sign our petition on Change.org.     Click link below:

https://www.change.org/p/california-governor-fire-insurance-cost-relief-to-homeowners-also-to-the-cal-ins-commissioner-and-congressman-lamalfa

Specifically it asks:

The Organization for Affordable Fire Insurance

The increase in the cost of fire insurance is hitting the working family through no fault of their own. Many can’t afford the massive increases and for many the added costs are crippling budgets and hurting the state economy.  We the people of California petition the Governor to allocate emergency funds to reimburse all those that have had premium increases over and above the CPI inflation index. We also request the insurance commissioner to negotiate and regulate insurance companies to resume underwriting in fire prone areas with reasonable and if necessary subsidized rates.

 

Need guaranteed income for life? Never outlive your money? How about a minimum guaranteed with also stock market upside participation possible? The Best of Both Worlds. Or monthly income? Retirement planning? College planning? Tax free pass on assets to heirs with no tax?

CONTACT ME.

(530) 559 1214


 

Update The fire issue in the state September 10 2019

Do you need fire insurance, been cancelled or know anyone who has? It can be frustrating. Let me take the worry out of the situation and find you a policy you can live with. Let me answer your questions and guide you through the process.

Join our Facebook Page “Fire Insurance Information and Inquiries” here:

https://www.facebook.com/groups/424062531773299/

This page has updates and posts from other homeowners and people asking the same questions.

Sign our petition on Change.org.     Click link below:

https://www.change.org/p/california-governor-fire-insurance-cost-relief-to-homeowners-also-to-the-cal-ins-commissioner-and-congressman-lamalfa

Specifically it asks:

The Organization for Affordable Fire Insurance

The increase in the cost of fire insurance is hitting the working family through no fault of their own. Many can’t afford the massive increases and for many the added costs are crippling budgets and hurting the state economy.  We the people of California petition the Governor to allocate emergency funds to reimburse all those that have had premium increases over and above the CPI inflation index. We also request the insurance commissioner to negotiate and regulate insurance companies to resume underwriting in fire prone areas with reasonable and if necessary subsidized rates.

 

Need guaranteed income for life? Never outlive your money? How about a minimum guaranteed with also stock market upside participation possible? The Best of Both Worlds. Or monthly income? Retirement planning? College planning? Tax free pass on assets to heirs with no tax?

CONTACT ME.

(530) 559 1214

----------------------------

 

 

My take on the Town Hall Meeting with Insurance Commissioner Ricardo Lara

 

They say first impressions are the most important. I have to admit what I expected to see when Insurance Commissioner Ricardo Lara showed up at the local town hall meeting on fire insurance and what I saw did not exactly mesh, at least for me.

What I expected was a seasoned insurance man, in the know about the insurance business hardened by years of experience. What I saw was a handsome, strapping younger gentlemen, dressed in peg-legged jeans, cowboy boots and a Nehru type shirt, tight fitting around rather impressive biceps, all indicating this man spent at least some of his waking hours in the gym. Not exactly the fat old guy in a tie and suit that I expected.

Lara’s background as it turns out has little to do with experience in the insurance industry. Born in Commerce, California, Lara is the son of a formerly undocumented factory worker and seamstress from Mexico. Lara attended Los Angeles Unified School District schools and graduated from San Diego State University, where he earned a Bachelor of Arts degree and served as student body president. He is currently pursuing a master's degree from the University of Southern California.

A longtime Assembly staffer, Lara worked as Chief of Staff to Assemblyman Marco Antonio Firebaugh (D–South Gate) when Firebaugh served as Majority Leader. Lara later served as Fabian Nuñez's district director during Nuñez's time as Speaker. He then served as communications director for Assemblyman Kevin de León (D–Los Angeles). (Wikipedia).

All this has to tell you something and you got the feeling he was to be protected and isolated the entire time he was there and he was.

From the onset, a celebrity like aura engulfed the building. Photo ops and handshakes occupied the first 15 minutes and after the obligatory thanks you and introductions from those that do such things, Lara took to the stage in front of a video screen that I imagined would act as a security blanket and guide all in one.

After all, it’s easier for the speaker and audience-distracting if they, the audience, have a TV to watch instead of focusing their entire attention on a speaker. It’ the reason I use no such visual complements when I speak. I WANT the complete attention of the audience.

Not one to jump to conclusions however, I let the cameras and microphones roll and sat back to see what nuggets of wisdom and subsequent action Lara was to bequeath to the room full of anxious homeowners and insurance professionals, dignitaries and wannabes that were in the packed house that was the Foothill Event Center on August 22, 2019.

He started out by what I perceived as a prepping us for a watered down presentation what was to follow by saying the department somewhat has its hands tied and “is trying” to get the insurance companies to do this and that.

Oh boy. Starting with the “poor us” theme didn’t instill a lot of confidence, at least in my mind, and probably a few others in the room as well.

Flipping from slide to slide, Lara attempted to instill some sort of rebound by illustrating some of the problems homeowners were having obtaining, keeping and paying for fire insurance.

Tell us something all of us in the room don’t know sir.

I have to admit I was somewhat taken in by his charm and good looks, as I’m sure others were, and gave him the benefit of the doubt that this was a sincere and caring man in front of me. That said, I caught myself shaking my head thinking “if this is our main defense against the huge conglomerates that are the insurance companies, we’re all screwed”.

I kept thinking as the slides slipped by illustrating little but visual lip service, this vegetarian type of presentation resembled the Beyond Meat phenomenon. Beyond Meat is a company that makes vegetarian hamburgers that look and taste like meat but have no real meat in them.

Yea, the evening was kind of like that.

Lara dived into what I perceived as a less than critical “honey do’ list of things the department was trying to implement such as longer notification times for cancellations and such. I’m thinking “we all came tonight because insurance is so damned expensive, not because a 45 days’ notice is too difficult to understand.

You get what I’m saying here?

After an hour or so, and without questions, the commissioner left the stage and ended what was obviously a very well prepared presentation. In the old days it was known as the proverbial “dog and pony show”.

Hearing him speak and in speaking with him, I perceived mostly lip service, generalities and prepared responses to the same old questions he was hearing in the green rooms of the many such presentations he was giving on this road show.

After a few more smiling photo ops with those waiting in line to shake the hand of this handsome gent, Lara was whisked away in a waiting black SUV (yea I know) and in his place two topic knowledgeable non-politicians fielded handwritten and prepared questions taken earlier from the audience by staffers.

If there was meat in this dish, we got a taste of it from these two. For more than an hour, they answered honestly and diligently every question handed them, and it was here that we learned at a bit more about the department and its machinations that are taking place addressing this very serious issue.

I have to at least give the Department of Insurance (DOI) some credit for making the effort to address the fire insurance issue in California by these ongoing roadshows, if not really making a lot of real headway on the main issue of insurance costs, but holding the hands of nervous and concerned homeowners. In the final end however, when I think of whom I saw from the DOI at this town hall meeting, then picturing them going up against armies of Ivy League educated CEOs and VPs of huge and powerful conglomerate insurance companies, in reality these DOI folks don’t stand a snowballs chance in hell, or should I say our house’s chance of survival in an out of control wildfire.

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 66 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages and You Tube. The views expressed are opinions only.

 


 

Tariffs and their real costs to American families. More on Fire Insurance update July 15, 2019

 

Tit for tat. 
Do tariffs really accomplish anything besides spawning inflation?

 

In a recent article from Money and Markets entitled “Fed: Tariffs Will Cost Average Family $831 More in 2019”, the argument was made that after the latest increase from 10% to 25% on $200 billion in tariffs on Chinese goods, the average U.S. family will pay $831 more a year for the same goods they bought last year. What the article didn’t include was the next round of tariffs on Mexican goods. Also not factored in is the rising costs of goods and services as a general result of inflation here in the United States. Indeed no one needs to remind you of the sudden increase is gasoline which pushed close to four dollars or more per gallon in recent months. This also means the approximate 6000 other things made out of petroleum will also likely go up in price.  

The average American family is having a hard enough time making ends meet and the challenging effects of increasing prices undoubtedly put more strain on some families.

Tariffs are fees put on incoming goods coming from countries outside the U.S. under the auspices of protecting the American business counterpart of whatever it is you’re applying the tariff to, and/or punishing the other country for some egregious act or violation, as the case may be.

Tariffs are not new and usually there are tariffs on a variety of imports at any one time. To the degree we are seeing them now however is something of a rarity historically.

Because the price of something in the market place is somewhat arrived at by the sum of all prices of the item with slight variances off the average price to account for local demand and conveyance, raise the price of any one major supplier of something and the price of that something will rise. Since tariff money goes to into government coffers and the consumer ends up paying the higher price, tariffs are generally believed to be ultimately paid by the consumer.

I have made the argument in a previous article that should protection of U.S. companies selling into any market where imports are sold competitively, a tax CREDIT to the U.S. company would serve the same purpose. Although tariffs raise the price of a good to the consumer and therefore make a domestic made good that much cheaper in comparison, a tax credit would enable the U.S. company to sell its product cheaper and thus better compete with the import just the same. The difference being the average cost of the good would decrease thereby lowering the cost of the item to the consumer.

I don’t hear the argument for tax credits anywhere in the media and that’s baffling. Both a tariff and a tax credit accomplish the same thing which is to punish the importer and give an advantage to the domestic producer.

As to who pays the tariff and where the money ends up is quite different thing. In the case of the tariff Washington gets the money that the consumer pays in the price increase. In the case of a tax credit, the consumer would pay less for the good and therefore have more money left over to spend on other things. In the latter, the economy would also benefit from higher consumer spending which came from the consumer having more money to spend because of the savings.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

 

 

 

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The Organization for Affordable Fire Insurance

The increase in the cost of fire insurance is hitting the working family through no fault of their own. Many can’t afford the massive increases and for many the added costs are crippling budgets and hurting the state economy.  We the people of California petition the Governor to allocate emergency funds to reimburse all those that have had premium increases over and above the CPI inflation index. We also request the insurance commissioner to negotiate and regulate insurance companies to resume underwriting in fire prone areas with reasonable and if necessary subsidized rates.

 

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