Like these two guys? I'll bet they are among the first to demand that everyone else needs to subsidize their insurance. One of them may even be posting here in this thread.
Posted on 01/18/2007 9:00:06 AM PST by doc30
get real, try and be a licensed lender without requiring the insurance, you can't.
Regulators would shut you down so don't say it is actually a free issue when the regulatory realities say otherwise.
Because it's a free country? Try some parallel examples. "If Walmart won't sell abortion pills in Florida, why should we let them sell groceries?" "If 7/11 won't sell pornography in Florida, why should we let them sell coffee?"
Do you also think it's unfair for In-N-Out Burger to only offer hamburgers in one state and not another?
Then why don't you put all your money into insurance company stock or even start your own company?
If WalMart and 7/11 sold those items in other states but not mine -- I just might holler.
Think about multi family units!
A gentleman on a local radio talk show lamented about how he thought he'd acheived the American dream via real estate, slowly building what sounds like several million in assets and employing a could hundred people only to find that if he can get insurance for all his properties it will cost a fortune that must be passed on.
That is IF he can get insurance. If he can't, what then? He might not be able to sell.
Like these two guys? I'll bet they are among the first to demand that everyone else needs to subsidize their insurance. One of them may even be posting here in this thread.
First of all, you didn't sound like you had much experience with underwriting or with hurricanes.
Building a home that is 'guaranteed' to withstand a Cat 3 or 4 storm would make it prohibitively expensive. Forget computer modelling; when winds get past 120 mph there are too many variables based on individual structures and landscaping. Near or above 120 mph wierd things happen.
Although most believe that the coastlines are the worst, there is significant damage miles inland from hurricane winds and tornadoes. Also there are more deaths and damage inland from flooding than there is near the coast.
Regarding damage and risk assessments, one account I worked was about $138 million and based on my report and assessment the insurance carrier still made money after it was hit by Hurricane Ivan. So I have an idea of what goes on.
Under what terms would you routinely grant $100k-$500k loans on property that the owner couldn't insure?
I suspect that your terms would not be acceptable in the housing market.
Sadly, that time seems to have passed.
Insurance, like every other business, is pretty simple. A person wants to make money, so they look around for a need not being met. Oh, there's a bunch of people with houses that could burn down, and they are expensive to replace, and most people don't have that much money sitting around and can't afford such a big loss. But only a few burn down.
IDEA!!! We offer to "insure" people against such an event. To make money, I have a simple job. For each house I insure, I calculate the replacement cost for every possible damage, and the likelyhood of that damage. That gives me a yearly "cost" associated with that house. That's what I charge for that house, plus a fee so I make money.
I do that for every house -- so every house pays a different amount, based on my own decision as to what the risk is for that house.
BTW, I'm not the only bright person in the world, there are thousands of others who could do the same thing. So a smart homeowner is talking to all of them, finding the person who is willing to take the greatest risk for their business by offering the cheapest insurance.
There is no "spreading of risk" in the sense you describe. The "spread of risk" is over TIME. But that's a small fault, because obviously if I insure thousands of homes because I've been a really good salesperson, the risk spread over time translates into losses every year, spread over the houses -- assuming I didn't do something really stupid, like sell policies to a thousand people who all lived right next door to one another. If I did, it's like investing all your money in one stock -- great if the stock goes up, disastrous if the company goes bankrupt.
But I didn't NEED to sell a thousand policies for this to work -- I merely needed to have, in my pocket, enough money to pay out on whatever I was insuring, whenever the insured risks happened to be realised.
If you want to get picky, you would note that I've really described how you budget replacement costs for capital with known failure but unknown occurance of failure -- in fact a house could go forever without EVER having an insured loss.
But the rule stands -- I valued each house based on that risk, and I made money based on that house matching it's risk profile. The fact is that I needed to insure only one house if I get lucky, but if I don't I'll be OK if I insured a lot of houses.
In any case, the amount I charge for a house is NEVER, I repeat NEVER, based on how many other houses I insure, or how much I charged for those houses. No matter how many houses I have insured, the NEXT HOUSE I insure is charged exactly what my formula dictates for THAT HOUSE.
The only reason this doesn't happen is because of regulation. Some lawmaker decided it wasn't "fair" for people to get charged different amounts, or maybe some unscrupulous businessmen used their business to settle personal scores (which in a perfect world would just mean others would take their business from them).
So now the state starts regulating how you can charge people for stuff, and next thing you know some people are paying more than they should so others can pay less than they should, and the more you make that happen the more pressure there is on the insurance companies to falsify or make up stuff so they can insure more of the people forced to pay more, and fewer of the people allowed to pay less.
Maybe the government will do a stupid thing like set up an "insurer of last resort", for which every insurance company pays a fixed fee based on the NUMBER of people insured. Now it's like the OK Corrall.
Every insurer tries to dump their worst houses into the common pool, while cherry-picking the best houses, thus driving up their profits. What a STUPID WAY TO RUN A STATE.
And then people blame the insurance companies, who are in fact doing exactly what the law seems to encourage them to do.
Funny, you can almost interchange 'people' or 'person' for 'house' or 'home' and describe the stupidities of government regulated health/medical insurance similarly.
It's amazing to me that even here at Free Republic, it is hard to discuss issues of free markets without a significant percentage clamoring for 'government protection' (read: It's inconvenient for me to pay for it, so let's pass the cost onto others).
It's as if anyone that makes a profit is 'bad' and everyone 'deserves' something they want for what they want to pay for it, regardless of it's TRUE cost. It's just plain sad.
I don't disagree. The so-called Conservatives don't want government out of everyone's pocket they want government out of their pocket and they want to make the decisions regarding how the revenues are spent. Dems or Repubs both are just like the workplace. Every man for himself and screw the next guy! I don't begin to know a direction anymore because I don't like the overview of the direction we are taking. I just keep plugging away hoping for an honest politician. LOL
LOL My back yard ends at a salt water canoe run -- the other side is mangrove. I live four houses down from an inland bay, across the street from a lake, 8 houses down from Tampa Bay and about 15 miles from the Gulf of Mexico. I'm supposed to be 12 feet above sea level - but when I stand at the edge of the water and look back at the house, it looks more like 8 feet. If you're ready to insure me, I'll send my address...
If you find one, PLEASE let me know, because I'm in the same fruitless search. Each election brings up a choice of trying to pick the least objectionable.
Okay, let us assume there are no regulatory impediments to the issuance of mortgages on uninsured properties.
Do you really think anybody is interested in investing their funds in such mortgages? Would you be?
These types of numbers are comprehensively irrelevant. Some examples.
Allstate has well over 11M homeowners policyholders. If Mr. Liddy gave up his entire paycheck to them, each policyholderwould receive less than a dollar.
Let us assume a town of 10,000 $100,000 homes is completely destroyed by a hurricane. Mr. Liddy's entire paycheck would pay to rebuild only 110 of them.
Ain't math a b*tch!
Just possibly Mr. Liddy could implement procedures that provide more than $1 of value to each of his policyholders, meaning his $11M costs them less than nothing.
and once they pass the law and all the insurance companies pull out, who will insure us? The state? the Feds? This is risky business our politicians are playing with our private insurance policies.
And, if the insurance premiums are capped by law, then forcing these companies to provide insurance in various markets in order to sell in other markets is no different than asking them to pay for the privilege of doing business in the state.
I would like to say such shenanigans is un-American, but then I remind myself that I live in a country in which government has a habit of subsidizing stadiums for professional sports franchies. So, I guess it's all **TOO** American.
The inmates, as they say, have indeed taken over the asylum!
Scouts Out! Cavalry Ho!
Good, I hope they do this in Texas. Unfortuanlely they run the legislture here in Texas. One thing I can't stand is the GOP alliance with the insurance companies.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.