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 ...
That won't happen. The mortgagor needs to have some protection for the value of the property on which it has lent money.
Whether your mom has been a customer for 30 years, or 300 years, should not make a difference to an insurer with sound business sense.
All that should matter is that they are able to justify the coverage of her insurable assets with the premiums they can charge.
The street goes both ways, does it not? If your mother's dwelling suffered a catastrophic loss in her first year of coverage, the insurance company would have taken it in the shorts by your account of the business situation...they had all the risk at the beginning, no?
And, if you say that the insurance companies risk in the first years of your mother's coverage were justified by the premiums they charged, then I would say that's an even exchange...your mother's mental well-being against the loss of her dwelling vs. the insurance companies profit.
Why is the situation now different? Just because the premiums are too much? Or, that the regulations by the state do not allow the charging of premiums that justify the risk exposure?
I don't think you understand the situation at all.
In fact, I'm sure you don't.
A significant number of Florida residents have had their homeowners/property insurance nonrenewed and the new premiums are 2, 3, 4 times last year's premium...when they can get insurance.
Property that isn't homesteaded or primary residence may have premiums that cannot reasonably be met.
Those that own rental property may not find insurance at all.
Now you have thousands and thousands of residents who cannot insure their property and cannot sell it.
This isn't one or two people.
Mine is between double and triple but I can handle it, but I'll probably sell and move when I can.
And I'm far from the only one.
Now tell me that the state doesn't face a problem.
You are absolutely correct that housing is very difficult to build to withstand a cat 3 or 4 storm. It's rather like trying to "earthquake proof" buildings as Kobe Japan thought they did. I don't live in an area that's subject to hurricanes, and sounds like you do. However, I am very aware of the affect of catastrope losses and/or adverse regulatory/political climate on the insurance industry - fire, hurricane, earthquake, or whatever.
I have underwritten property insurance for about 30 years, personal lines and small commercial, not large commercial, so you've got me there. I've worked for national and regional carriers and large and small independent agencies and been involved in pricing/regulatory issues for the last several.
As you point out, when a major hurricane hits, it can cover a very large area and damage can be/has been in the billions.
I don't know what you mean by the one account, 138 million, making money. If you mean that a single, commercial account had more premium than loss on a particular hurricane, that could well be true. However, pricing is usually set based on multiple accounts - preferably lots of accounts.
In commercial, there is individual risk premium modification (based on aspects/predicted profitability of a particular account) but that occurs by account or risk and after the "basic" pricing is set.
The point I was trying to make is that the risk of loss in Florida for homeowners may be beyond what many preferred risk companies may be willing to gamble, even if they have other lines of insurance there and even if they can raise their rates at will (which they cannot due to regulatory issues). And there may not be enough low-exposure risks in the entire state to adequately subsidize the ones that are most exposed to hurricanes. Last but not least, those folks will be cranky when their rates go up in order for coastal properties to get lower rates.
States not subject to as much severe weather as Florida would also be cranky if a large national carrier like State Farm or Allstate put a "Florida hurricane surcharge", obvious or not-so-obvious, in their other states' pricing.
I have seen carriers pull out of or go broke in Hawaii, California, New Jersey, Texas, Florida and other states when they could not get adequate pricing for the exposure. Availability and affordability, interestingly enough, tend to be reduced when the regulatory climate gets too onerous. "All or none" risks the possibility of none.
It is also notable that insurance companies sometimes have short memories and market share and price cutting become more attractive as the latest disaster gets older.
Insurance is a numbers game, for profit, like any other business. No profit, no insurance.
You are already subsidizing those in tornado, hail and earthquake areas. I don't know where you live, but I'll bet mother nature can do some damage to you too.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
I hope you realise that I was using "you" as a generalized example, without any knowledge of your specific circumstances.
I would probably still insure your house, but I bet the major companies would do it for less :-)
However, it sounds like i might want to LIVE in your house :-)
My point exactly.
The property insurance crisis in Florida isn't just a couple of people who are angry over increased premiums.
There are major subsequent problems that will impact the state's economy if things continue as they are.
It is pretty obvious from your post that you have no clue what the situation is here in FL.
You cannot get a mortgage without insurance. Without Citizen's, it would not be possible to purchase a home, unless cash is paid. Everybody, EVERYBODY here in FL knows it is a bad idea for the state to get into the homeowners game. But if there are no insurers writing, then no mortgages sold, no houses are sold (to speak of) and that can be bad for the state (and the citizens), as well.
You write in simplistic terms that I am trying not to be offended by, and I attribute it to your distance from and ignorance of the problem here.
People in FL understand that insurance companies, like any other company, need to make money. We understand that we have had it good in the past, and that we will have to pony up for insurance going forward. We really do understand. We want the competition back. We want to be able to choose from 6 or 8 different companies, instead of being told that only one is available, and that the premiums are the the highest in the state, as mandated by law.
If you are so inclined, come on down, and offer homeowner policies here. I can pretty well guarantee that you will find willing customers.
But you won't do it.
The insurance companies have no restraint when dumping what they consider to be high risk properties onto the state via Citizens. ANd I don't think the isurqance companies will pull out of FL. Even in 2005, they still made money. The trick they are tryting to pull is to get people to have a high deductible. Hurricane damages are, for the vast majority of homes, either less than $10K or are complete destruction of the house. The insurance companies want your deductible to be greater than $10K so coverage will only kick in if your house is wiped out. In FL, most homes are not wiped out by wind damage. They are destroyed by storm surge and homeowners policies don't cover storm surge. That's considered flood insurance so there is no risk to the insurers.
I like your photo. But all those homes, not just the two built right by the surf, have the same risk. If there is a hurricane, it won't be wind damage that hits them, but storm surge. Private insurance would not cover any loss for those homes. That would all be covered under the federal flood insurance program.
......yet on the other hand posting record profits.....
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.
......yet on the other hand posting record profits.....
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.
Businesses are all in that boat. THey can't get in Citizens and their rates are not capped. A boat place down the street just had their insurance quadruple last year and it will double again this year. Owner is closing the place, moving to GA and laying off 50 people because the insurance costs are so high that they can't be passed on to the consumer. THing is, coastal GA is just at risk as coastal FL for hurricanes, but they don't have this insurance crisis.
Not a valid example. It's not whether or not the company has a presence in one state and not another, but what products it offers in one state or andother. And those products are mandated by third parties. Does In-N-Out Burger have stores in one state that has different products than in another and whose products are required by a third party? I didn't think so.
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.
Personally, I think the caps are the problem. Because if there is a cap, that's what businesses will charge, regardless of reality. The insurance companies are charging higher rates than what is needed to cover losses because the government caps are set that high. A lot of people in the forum believe in an unregulated insurance market and that the insurers are losing their shirts to storm damage. Most people do not understand that over the past 4 years, rates have more than quadrupled. In 3 years I went from ~$600 to almost $3000 - a x5 increase. THis year, if the legislature does not rescind the planned increases, my rate will increase by about $2700. Our rate increases are more than what most people pay in other coastal states in total! Insurance payments are often more than the mortgage payment on a house! The insurance companies are betting that everyone will lose their house in a storm before the mortgage is even paid. That is just nonsense. These rates are well above and beyond what the risks are. The insurance companies are gouging as much as they can.
The other serious point is that it is going to destroy the economy in FL. This state is a relatively low income state and the insurance rates are simply unaffordable to many. The political and economic reality is that the insurance companies are making money, not losing it and it is killing the state.
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