Posted on 01/18/2007 9:00:06 AM PST by doc30
Pulling out totally seems like an odd decision to me.
fact is, people MUST have home and auto insurance. Its not as if people will stop buying it if its to expensive.
So why don't insurance simply charge the amount necessary to cover their expenses plus a (competitive) profit margin?
I suspect however, that if laws are passed to prevent "cherry" picking, you'll see rates rise for auto and other insurance as well. The excuse won't be risk, but something else the accountants will invent (which will end up subsidizing lines of business they cant seem to adequently underwrite)
This could hurt me. We have auto, disability and life insurance through USAA, but USAA will not insure our house, saying it's too close to the coast. USAA will probably drop our other forms of insurance, costing us a lot of money, rather than write us a homeowner's policy.
Thanks a lot, politicians. Way to create a new set of problems.
The insurance companies are being disengenuous telling us, on the one hand that they are hurting yet on the other hand posting record profits.
Insurance is one of the most highly regulated industries out there and that contributes to the problem.
NOTHING is uninsurable with the proper premium.
Any insurance company writing in Florida that doesn't account for some catastophic losses isn't underwriting properly.
So how is it that in a time when most insureds did not file claims or have large losses that premiums double and triple?
The State has no choice but to step in. Non homesteaded properties and secondary residences are becoming uninsurable. That means that snowbirds can't insure their winter home. That also means that landlords now find that they can't insure their properties.
People can't insure their properties but can't sell either, because of lack of insurance!
No, it's not the way to run a state. Insurance is not a free lunch or platinum gift card with no spending limit. The more a state meddles with regulating the insurance industry the more harm they do to their entire business community via the law of unintended consequences.
The insurers make money in other states but lose in FL. That means they stop insuring FL.
What will happen is that you will pay a lot for car insurance in FL to subsidize homeowners.
By the way, I say the bigger the profits for insurance companies the better. The real problem is when insurance co. lose money. Then you have insolvency, govt. bailouts, customers who don't get paid, employees who get fired and shareholders losing their investments.
Profits are good, Loses are bad.
So, basically, it's your opinion that people who think ahead, and chose to live in places where they are not at "high risk" have to pay higher premiums so you can have the luxury of living where you live?
Why should they bear the burden of your choices?
Eventually, some company will step in and charge you a rate where they can make money without having to rip-off people who live in places where the scenry is not so pretty, but the hurricanes don't hit.
Yeah, you'll pay more. As you should.
150 billion dollar profits and 250pct rate increases and they were still crying. The worm has turned for the insurance companies
Folks keep in mind, insurance is MANDATORY in many situations.
For example, in FL you MUST have auto insurance so the insurance companies have a captive market.
Insurance is not a free market product. In fact it is highly regulated because of past games with the insurance companies which literally wrote polices which stated your insurance is automatically invalid if you actually make a claim.
Should policyholders in other states, with lower risk, subsidize those who choose to live in FL?
Insurers made a lot of money in FL on homeowners this year, as there were no hurricanes. However, they must accumulate a reserve somehow with which to pay for future hurricanse. If premiums are set too low by the state, when the big one hits reserves will be inadequate and the insurers won't have the money to pay out to claimants. Blood and turnips and all that.
It is estimated that a repeat of the Great Miami Hurricane of 1926 (which did $2B in damage in 1926 dollars) would cost $100B to $200B today despite the improvements in construction methods. And that's from a single hurricane. A couple years ago FL was hit by 5 in one year.
Because the company has more than expenses to think about - they have to create a loss reserve (a large account set aside to pay claims) based on actuarial analysis. The odds of a total loss from a Katrina-like hurricane have now gotten so high in Florida that they would have to charge homeowners huge premiums to establish an adequate loss reserve and limit their risk by only taking on a few homeowners in any given area - thus the loss of availability. If State Farm already covers twenty houses in, say, Palm Beach, that's the limit - they won't take on more risk in that area because of the way hurricane damage occurs.
The existing housing stock is pretty much uninsurable - if everyone tore down their wood frame houses and moved into concrete domes, I'm sure the companies would come back.
Profits are good and I want my insurance companies at least "A" rated with huge cash reserves.
But it isn't true that they've lost their shirts in Florida. Not at all.
The actuaries know that the losses all balance out in the long run. A grouping of losses in a year with years of low loses all balance out.
I'd like to start a company that could sell deducible insurance in Florida!
Here is the problem with your analysis.
Since Andrew (are before) the codes have been made much much stiffer. You can't build the way you once did years ago.
In fact many people in northern and central florida were in LOW risk areas and had far worse damaga that south florida which took a direct hit.
N.O. had no hurricane codes which is why many of their homes are just plain gone.
The insurance companies want to charge as if there is no code improvement. IOW they want to charge a high survival concrete block building as if it is a wood and tar paper shanty.
You complain about burden of choices, but much of this debate is about the fact there is no BENEFIT OF REWARD IN SMART CHOICES.
Discounts in crumbs is no discount.
Yes, we will and have to sell our homes (if we can) because the insurance premiums have become unbearable. Mine went from $500 to over $1600 in ONE YEAR! and ALLSTATE (may they go bankrupt)cancelled our policy even tho we never made a claim, nor are we in a flood zone. We now have to go with el cheapo insurance Universal for $1600 and it may go up. Others have had premiums go from less than 1k to over 10k..........Many here are thinking of selling and moving across the border to Alabama, but nobody wants to buy! The only ones who can afford to live here now are millionaires, but they don't want to live in a 100k neighborhood.......or even a 500k one...
My kind of people. You can trust people that admit that they're in it for the money. You can't trust those that claim otherwise.
I can't pick an choose with my customers why should they be able to.
Sure you can. You choose customers that want rods. Should the government also force you to provide bait, or should you only stick to rods where the big bucks are?
You also can't get a mortgage on a home without insurance.
That's the way insurance works.
Insurance being a social device whereby insureds trade a certain small loss in exchange for coverage in case of a large loss.
Those who don't have claims subsidize those that do and it really doesn't matter where you live.
All that we can ask is that each risk be underwritten properly and that adequate premiums are paid.
They don't. ALLSTATE, Statefarm, et al, are all incorporated in FL as ALLSTATE Floridian, Statefarm of Florida, etc. That way the policies from other states are not included in their risk sharing, and are basically non existent.......That's how they say "we [Insert name of insurance co] of Florida are losing our shirts" while the parent company makes a profit......
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