Posted on 01/18/2007 9:00:06 AM PST by doc30
Insurers' trick: profit amid cries of poverty:
http://pqasb.pqarchiver.com/sptimes/access/1191337521.html?
What is the basis for that statement? I don't think you can prove the insurors are making a profit on homeowners insurance in Florida.
Please cite the reference.
Here it is. The other one had a bad link. Insurers' trick: profit amid cries of poverty
I don't think I can prove that either.
But then again, I never made that claim!
There's a feature on your browser that allows you to type in words and then seach the web for information pertaining to those words. Since it seems that you don't live in Florda maybe you might want to get some info on the subject before wading into the conversation.
We had USAA for years before we moved here, and were really surprised when they refused to insure us. And, even after all the hurricanes, we have yet to file a claim. We're out of the storm surge area and not in a flood zone, but USAA is nothing if not super careful. I call them every year and ask if they'll insure our home. Maybe one of these times the answer will be yes. I just hope this legislation doesn't make USAA's rates for other insurance rise to make up for homeowner's losses (in which case, consumers aren't gaining anything, just paying homeowner's in the guise of another bill) or worse, leave the state.
dead link
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.
If the state of Florida was so damn smart, they'd forget about the insurance companies and simply regulate the weather instead.
Insurance companies can and do make money, but it is not from underwriting.
I think the article is smoke and mirrors. The article cited refers to underwriting revenues and profits as a whole.
It says nothing about business in Florida.
When I watch CSI Miami and see all the structures right on the water and having spent considerable time in the construction of such buildings a few miles to the north in Plam Beach County, I wonder why anyone would insure any structure in South Florida.
When the big one hits dead on, its all over.
And I'm far from the only one.
Amen.
If and WHEN the housing market turns around.
I do not work for Allstate, and have no connection with them in any fashion.
But everything you just said would speak AGAINST what the legislature is doing by forcing insurers to issue policies against their will.
Of course I'm not versed in the details, that's why we have these conversations.
Do you believe that, absent intervention by government, insurance would be impossible to obtain in a state like Florida? Or is your argument that government has messed things up so bad that only further government intervention can help?
I guess the problem on threads like this is there are many participants with different points of view, and it's hard to keep them all separated when responding. We have the anti-state-intervention people, they free-market people, the "insurance companies are evil" people, the "republicans better make government work for us" people, and the "insurance should follow the 'from each according to their ability, to each according to their need' philosophy.
So, should we required that any insurance company offering insurance in the state of florida to offer it at a price less than when the actuarial costs to them are, forcing them to overcharge others to compensate? Should we require that if they offer car insurance they MUST offer homeowner's insurance even if they don't think that is a profitable business for them?
What burden to we want to put on the insurance business?
Believe it? I have seen it with my own eyes! I thank God every day that I have not been dumped by my Homeowners insurer. That said, the "Dear John" letter could be in the mail right now. I have all my insurance with them, and while I could save money by switching my cars to another provider, it would cost me more when my homeowners policy was cancelled.
Or is your argument that government has messed things up so bad that only further government intervention can help?
Mother Nature has messed things up so bad that something HAD to be done, and Citizens is it. It was the only way that homes could be, and are being, bought and sold in the state. Citizens was intended to be a stop gap measure that would go away once Insurers started to write policies again, but that is unlikely to happen.
If all insureres pull out, at least Citizens would be able to get some of the cherry policies, and spreading the risk out more would help keep the premiums down. As I said, we understand that we have to pony up. We just want the insurance companies to pony up as well. Either they are in all the way, or they are out.
All the way.
That is why America is dead. This is FREE REPUBLIC, arguably the most "conservative" voice/bb on the internet, and half the people in these threads, whether it is about the price of gasoline at the pump, price of banking fees, insurance costs, or whatever johnny come lately "price gougers" are out there in the cross hairs of some bureaucrat, they desert the principles of the market and individual freedom faster than Brittany Spears can run to a line of coke. If people will not defend the freedom of companies to operate HERE, they won't do so anywhere. We have few real believers in freedom in this country anymore. Mainly, we have a bunch of whining geezers who could care less about freedom and principles of liberty. As long as they can slop at the state or federal trough, or can whine about the state not tilting the trough their way so that the swill flows towards them, they are happy, will wave the flag and get all misty eyed singing the star spangled banner.
I know insurers make money somehow, and I presume it's on investment of the money (like banks, which also make money by taking your money and paying you interest of 1-5%).
So I guess it's like a bank? and the payouts for damages are like the interest paid to people for their deposits? And in the end you can pay out more than you take in, but make money investing the cash flow because you hold the money for a time before paying it back out?
Gouging is not a conservative value, either. It's like the @sshats that sell water for $20 a bottle after a storm. They are scum.
I agree. They are scum. Only slightly scummier, in fact, than those who go running to government to regulate them. I had rather pay 20 dollars a bottle for water and curse the guy who exploits, than die of thirst because some idiot halfwit decided the guy couldn't sell it at all because he might overcharge. The difference is that the market approach WILL CORRECT ITSELF. The bleeding heart idiot approach just allows the leviathan a door in the market. Once it gets in, it never leaves. Your response reminds me of some of the lugubrious wails about how the big oil companies were "ripping us off" after Katrina.
The difference between a socialist and a free marketer is NOT that the free market person believes that buyers or sellers are noble, selfless giving people and that you shoudl trust them because they are such sterling characters. Rather, believers in freedom and free markets believe that the BEST way to reign in exploiters, "gougers," and others who would "exploit" others is to allow any and all to compete with them. The reason is that government regulation of prices NEVER has any effect other than to cause shortages. No, let me take that back. It does cause idiot moralists and bureaucrats to preen and posture that they have "protected" the populace.
I am convinced. Lets just do away with all that confusing stuff about markets and freedom and all.... we can just trust the state officials to find a "fair" price for everything, shall we? If we can trust them in a crisis, then why not in stable times?
The largest players in the investment markets are insurance companies. When I used to trade on the floor of some of the commodity exchanges, for example, Prudential had so much action in the SPZ pit they had their own broker to fill paper.
Further, MANY long term real estate investments are funded by insurance investments.
First, most homes that are wiped out by hurricanes on the cost are from storm surge, not wind. Hence, property insurance is not liable.
Secondly, hurricane damage can be classified in one of two categories. Either the house is wiped out, or the damage is less than $10K. There aren't many claims in between. It is a bi-modal distribution. With a 2% hurricane deductible on a $200K replacement cost, thats $4k out of pocket before insurance kicks in. With a conservative annual insurance premium of $3-4K, the insurance company is only out $2-3K on a claim at $10K and that's just on that one property in one year with the lowest deductible. With a 5% deductible, that's $10K out of pocket before insurance kicks in at all! Guess what - insurance doesn't pay a dime even though the homeowner is paying $3-4K a year in insurance! The insurance company made money on that homeowner, even after a storm hit!
So factoring in storm surge, flooding and high deductibles, insurance companies aren't in as bad a situation they claim. Now with rates almost doubling this year again, the insurance company would make a profit even if a low deductible homeowner filed a claim for typical storm damage.
Throw in the cherry picking who they cover and they are quite ahead. I personally believe they are lying when they say they can't make a dime in FL. They, and their numbers, are not to be trusted, IMHO.
The other thing that does not make sense is paying more for insurance than for one's mortgage. With roughly 5% of the home's replacement cost going to insurance every year, you will have paid your replacement cost in 20 years, before your mortgage is even paid if it's a new purchase in today's market. In other words, the insurance company is betting your home will be wiped out within 20 years time. Or, in 20 years, every home will need to be replaced in FL. That does not make statistical sense at all. Just based on that, I call shennannigans on the insurance companies and the legislature is right to get their brooms.
And even scummier are those that accept the exploitation of price gouging after a major disaster and put their faith in free market correction. Under such circumstances, people may not have $20 in their pocket and can't get to an ATM. When it's life and death during a emergency, the free market approach you advocate is not applicable. There is no time for market corrections to take place before irreparable harm is caused by gougers.
If you want to call me scum, go ahead. I'm one of the people that goes to the government when exploitation over a mandated requirement, like insurance, occurs. The situation is unbearable and the rate, IMHO are unquestionably higher than the risks of being in FL. If you asked me 10 years ago, I would have said the opposite. Paying 5-6% of your home's replacement value does not make sense statistically or historically with respect to hurricanes.
Insurance is not "mandated."
You can
1)Sell your home
2)Pay it off
3)Move
4)Find a lender who doesn't demand you insure it (lotsa luck on that one!)
Millions of people moved to Florida during a period of relatively tame weather. There were very few major hurricanes in the period between 1930 and 1990 (look it up!). Now the weather patterns have returned to normal, and poor baby wants the "government" to fix it.
Cry me a river
P.S. I was probably the poorest resident of Boca Raton Florida in 1981-1983.
"Link homeowners insurance to liability so that even property owners without mortgages must buy policies to protect the neighborhood..."
WTF??????????
Why should someone who owns their home free and clear and has the $ to care for their own personal losses be REQUIRED to pay for premiums to pay for the entire fickin' neighborhood? That is the stoopidest socialistic nonsense I've ever heard!
Please...give me one conservative reason!
Maybe I should also pay $ for those who simply don't have enough money meet their other monthly bills? Can't afford to pay for homeowners insurance? ...grocery bills? ...vacations? ...Car payments? ...Kid's private school?
The Old Professor has a great innovative new idea...we'll just take "from those according to their abundance and give it to those according to their needs!" (sound familiar Karl?)
Exactly where would your entitlement thinking stop? Maybe we should solve the problem with homelessness by requiring all homeowners to "host" a homeless person one week per month..."for the good of the neighborhood". Great idea! Let's start with your house OP!
I've worked too damned hard to put myself in a position to not have to be held hostage by $10,000 per year insurance protection racket fees. In 14 years, I've saved the equivalent of the replacement value of my house....of MY money...it sure as hell isn't the "neighborhood's" money that I earned and saved!
Why should I pay for my neighbor's rates? I've never heard such utter crap!
Get real. Your harebrained suggestion is an insult to conservatism. You speak socialism. Period!
...ok...I feel better...nothing personal...but Good God man...get yourself together!
...fercyinoutloud....conservatives are reading what you're posting!
...nothing personal OP
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