Posted on 09/05/2007 12:31:12 PM PDT by Between the Lines
Add the director of the South Carolina Department of Insurance to the thousands of coastal homeowners who have lost property insurance since Hurricane Katrina.
Scott Richardson, who lives on Hilton Head Island, was notified three weeks ago that his policy would be dropped.
Following Katrina two years ago, premiums rose as much as 400 percent in hurricane-prone areas, and many insurers stopped writing coverage.
Richardson now finds himself shopping for insurance.
"I guess it just proves nobody's immune. If I'm not immune, then nobody is," said Richardson, who was appointed to head the Insurance Department in February.
Richardson may have to join the South Carolina Wind and Hail Underwriting Association, known as the wind pool. In July, the department announced rate increases averaging 35 percent.
"I might be in the wind pool before you know it," Richardson said. "I get to try a little of my own medicine."
The wind pool provides last-resort coverage in areas where other insurers have stopped writing policies. Florida's program created three years ago attracted 1.3 million customers and became the state's largest property insurance provider.
Insurance companies are like bookies. They lay off part of the possible liability to re-insurers. Insurance companies never take the full hit from something such as a hurricane or a twister.
Florida gave the insurers a break on re-insurance...hoping they’d lower their rates because of it and pass the savings along to the consumer, but they just used the windfall to buy more re-insurance from their parent company (at least that’s what State Farm did.)
If a company buys re-insurance from its parent company isn’t it failing to off set any of the liability for the parent company. I don’t see an advantage to the parent company of entering into such an arrangement.
Here’s the article that explains their practice of buying reinsurance from their parent company. It’s under the heading “What’s Fair”
http://www.sptimes.com/2007/07/15/State/Muddy_waters_of_reins.shtml
Thank you.
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