Posted on 01/18/2007 9:00:06 AM PST by doc30
TALLAHASSEE - Florida lawmakers appear ready to deliver on one of Gov. Charlie Crist's campaign promises to punish insurers who have retreated from the state's property market while still writing other insurance in the Sunshine State, such as auto.
In a surprise voice vote Wednesday, the Florida Senate agreed to force Florida insurance companies who write property insurance in other states to offer it here if they want to continue writing any insurance in this state. The House has a similar proposal.
"The 'cherry-picking' in this state has got to stop," said Sen. Mike Fasano, R-New Port Richey, as he proposed the new language on the Senate floor with co-sponsor Sen. Ronda Storms, R-Brandon. "We've got to send a message to the insurance industry, because we've heard that message from our homeowners back home that they won't tolerate the cherry-picking in this state any longer."
(Excerpt) Read more at sptimes.com ...
Most of the uninformed nimrods who bellow and squeal about the huge "profits" made by the insurance companies are totally clueless re: the fact that almost NO company (Erie insurance being a big exception) makes money on "underwriting." That is, the money paid in on premiums is NOT more than the money paid out on claims, or at least it is not substantially more, in almost every company in America. Once you figure out HOW they can make money in a "neutral" or slightly negative cash flow situation, THEN you have a right to an opinion. Until then, it is just ignorant dithyrambs.
Homeowners premiums in Florida have subsidized a grand total of almost 60% of the losses in Florida over the past three years. Several years ago, Allstate (the number two insuror in the USA at the time) almost went broke over Hurrican Fredrick.
Cretins who bark out about the "obscene profits" of insurance companies, oil companies, or whatever are not "conservatives" at all. They remind me of the intellectual detritus you normally find at a Ross Perot rally. They are secure and impregnable in their ignorance, and hostile to the market itself. The fact is, Florida is a RISKY state to build a home in, because of the weather patterns and its proximity to storm sources (the ocean and the gulf). Homeowners insurance is EXPENSIVE, if the companies writing it don't go broke, yet the rates are set in collusion with some airhead bureaucrat (usually elected, but always a political post)who sets a cap on the rates the companies can offer. If the market has its way, IT WILL PRICE SOME PEOPLE OUT OF THE MARKET. But the state insurance agencies have rigged the market so that there is a cap. Therefore "everyone can afford it." Except the companies offering it, that is. Companies prefer (strange as it may seem) not to commit fiscal suicide, and pull out. The state, in a Stalinist fit of righteous indignation, has decided that if a company decides it cannot make money in the HOUSING market, then the CONSUMER should suffer by reducing the number of bidders for lower AUTO rates. That'll teach em!!!
Absolutely freaking brilliant. Should resonate well with the dyspeptic loons over at DU..., and of course their mirror images over here. Whatever happened to the idea that the market corrects its own excesses? Isn't that sort of, uh, "conservative" or something?
What I mean is that the insurance companies should simply be licensed to operate in the state based on adequate capitalization.
People should be free to choose whether to insure or not, but if they do, know that they are purchasing a reputable product.
Yeah, they're not really an insurance company, but probably 2000+ companies with billions of dollars of risk.
They can insure your 10-million-dollar mansion on the San Andreas fault ---- for a mere $500K a year or somesuch --- because they similarly insure 10-million-dollar mansions on the flood plane of the Mississippi --- for the same price --- on the theory that not everything falls apart all over the world at the same time.
My rigs (oil rigs) are casualty-insured by probably 10 different companies at the same time under the same idea.
Big risks. Big costs.
ok defend the insurance companies
ok defend the insurance companies, you must work for one
"you cannot buy a home without insurance period."
Of course you can, with cash. What you cannot do is expect someone with an insurable interest in your property (e.g., a mortgage company) to lend you money with said property as collateral without hazard insurance on that property.
First of all, ALL the wiring, heating, cooling, and cabling are OUTSIDE the main structure. The insides are business ONLY. (you step "outside" the building to go to the bathroom).
Some guy at a desk says "I have 500 million dollars of risk on some condos here in Myrtle Beach SC, revenue from the policies at x amount of dollars, loss ration 82.4% for last three years..." and some giant consortium of Arabs, or some big financial somebody says "I will take that!" and you have someone "buying" the cash by assuming the risk and the deal is done! It is very heady.
As an aside, there are about 11 big conglomerates who "underwrite" the big big big risks at Lloyds. These are the people who stand BEHIND the Travelers, and the Hartfords, and the Chubbs, and all. Eight of those were functionally bankrupt after 9/11, in that they did not have the cash reserves mandated to continue to underwrite business. We don't know how close the entire world insurance market came to collapsing. There was an agreement to allow these guys to continue to function with reduced margin requirements, in the hopes that they could build up equity and continue to function, so as not to roil the mkts more than they already were.
It is really pretty interesting to look into.
I actaully called my mortgage company about getting 'forced insurance." That' the expensive insurance they put on you if you lose or drop coverage with an insurance company. They said they don't quote rates for that because it is only calculated when they get a notice your policy is dropped. But the service rep I talked to said that there have been many calls from people in FL investigating going with what the mortgage company would provide. Also, those that did go with it got cheaper insurnace than what private companies offer. The difference is that it doesn't cover contents.
Florida's not a state where I have experience, but I have considerable in the insurance industry. Only if the risks are similar in nature does that work out.
To give a good example, the risk associated with a driver who is still driving with 4 drunken driving tickets is incalculably higher than a driver that has "normal" driving habits. There aren't enought of the 4 drunken driving ticket folks that haven't had big losses to charge a premium appropriate to the category.
It would also be roughly the equivalent of insuring a house that is currently burning down - the risk of loss is 100%, so you would have to charge the full value of the house.
Insurance carriers typically assess the risk associated with broad, similar categories (so that the expected loss result can be predicted and those that have minimal losses pay for those that have major ones).
Some choose to insure the more difficult, less predictable, or high insurance coverage amount risks - if they're wrong, they tend to buy the farm. Many companies went broke after hurricanes Iniki and Andrew.
In order to insure in predictably high risk areas in Florida at a lower premium, the company would have to charge considerably higher rates throughout the rest of the state, making those folks cranky.
That's partially true. Landlords can still get Citizens if their house is under 200K. But since I'm in FL and on a work visa, I can't get homestead. Even though I've lived here for 12 years, have a FL drivers liscence, 2 FL registered autos, and qualify for in-state tuition as residents, my wife and I are not considered residents of FL for homestead. That means I may not be able to buy insurance at all! But if I rented my house with a long term lease, I could get Citizens. My agent is in a tizzy because they have no idea how I can get insurance at all. And Citizens is supposed to be the company of alst resort and insure those of us who can't get insurance from the private market.
Yep.
I love USAA for that reason. My car insurance ($100K liability, $1000 deductible) is basically free --- and one of the cars is a Porsche 911.
I've never been there, but had to insure $200Million worth of drilling iron --- talked to some guy with a Scottish accent -- knew all about me, the rigs.
Gave me a price that was reasonable (cheaper than an "admitted" carrier) with none of the B.S. "Downhole tool" and other exceptions.
And we did business.
Took about 10 minutes, two phone calls, and some faxes.
And big checks, mind you.
$1600 per year on $100K for home replacement is cheap in FL. A more realistic number would be about $3000K per year for such a home. And Citizens had a 25% rate increas on Jan 1, plus another 55% increase in March. That means insurance for such a house would jump to $5800 per year. That's like saying there's a 6% risk of your house being wiped out every year, or your home would likely be replaced every 16 years. You would be paying almost double the principle on your mortgage in insurance costs. That is exploitation on the part of the insurance company.
Must be nice to be able to have $90K cash on hand to do that. The vast, vast majority of people in America do not.
You don't necessarily have to use cash. You can pledge part of an asset (e.g., your house).
And one problem with Citizens is that private insurers drop even the tiniest risk policies and keep all the low risk policies. That means it's Citizens, not the private companies, that take the hit when there is a bad hurricane. And don't forget that hurricane coverage is separate from the rest of your homeowners policy.
actually, no. I do not. You should learn the difference betweeen defending free market and defending those who may buy and sell IN that free market.
It doesn't have replacement cost, either. A private insurance policy insures YOUR interests. A "forced place" policy insures the BANK's interests. If you have any equity at all, you lose big.
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