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 ...
Joe, will you kindly add me to your FL ping list?
Thank you ahead of time.
Best wishes,
baa
Yeah, they will pull out of a state and leave all that PURE PROFIT on the table just to make a point, because they cant screw us even MORE! Evil bastards!
Do you realize how incredibly stupid this sounds?
I wasn't advocating such, just being prescient; why do you have car insurance (liability)?
Done!
First, b/c FL law requires it.
But mainly, b/c liability on my home and auto is to protect my other assets from lawsuits, as greedy lawyers look for victims with pockets.
Fire, theft, flood and windstorm are another matter entirely though. Very little fear of a lawsuit from greedy lawyers due to a fire at my home (3 blocks to firehouse), or from theft, or flood, or windstorm.
I suppose that in essence, by God's grace, I self-insure my home/auto from fire/theft/storm damage, but have to pay for insurance against devastating lawyer damage.
Sick world huh!?!
Hope no hard feelings with my rant OP...really.
And THAT is where you are wrong. If insurors could simply sit down, do their analysis, and decide what rates they have to charge to make money, you would see tons of them in the market. The problem is, they can't charge that for the caps. Some state official has decided the populace has to be "protected" from the "greedy exploiters" and has set a cap.
I would have thought that on FREE REPUBLIC of all places, people would understand that government manipulation of prices ALWAYS ALWAYS ALWAYS ALWAYS leads to shortages. It is done in the name of protecting Bill and Suzy from the evil exploiters, but it always leads simply to shortages. You see it now in Florida in insurance, but there are myriad other examples. The really sad thing is that folks advocate as a solution MORE of what created the problem in the first place. It is like a person irritated that his foot hurts, so in revenge, he chops it off with a machete.
Do you realize how incredibly stupid this sounds?
They aren't going to pull out.They really are making money, despite what they say. They are bluffing and trying to intimidate Tallahassee into giving the insurance industry what they want. If they could have 50-100% rate increases in other hurricane prone states, they would.
None of your options are viable to me at this time. And like I've said in other posts, the rate increases are out of line with the increased risks. I don't think you even understand or care how much the rates are in FL today. And if you haven't noticed, if people are moving to FL, they aren't buying homes. It's a flat market and the insurance rates are one of the things keeping them out. You can only advocate for the insurance companies because you don't live in FL anymore. You can't compare the '80's to today.
We are done here.
Bullhockey. The truth is that they would raise rates 80,000 per cent IF THEY COULD. The difference is that I believe that free market competition is a FAR better corrective to prices than statism. You have a right to a socialist opinion, if you prefer, I suppose.
"Profits breed competition. Outrageous profits breed ruinous competition." A little ditty I learned way back when in Econ 101, when people still believed in freedom and free markets. Naive fools that we were, how could we have anticipated the Florida real estate situation (or the 70's oil boom, or the earthquakes in California, or the water demands in Phoenix, or the effects of boutique refinery production coupled with a major gulf hurricane......etc, etc, etc, ad nauseum). There is ALWAYS some extenuating set of circumstances that invalidates free market policies and is a clear reason why they "don't work."
It really gripes me to see a subculture ("conservatives") supposedly dedicated to freedom and preserving property rights lining up at the door BEGGING to be enslaved by the state. That IS what you are asking for, whether you realize it or not. Reagan taught you folks nothing, it seems.
The state is telling them they have to either eat the loss (or quit lying) if they want to sell auto insurance there. Auto insurance in FL is a big and profitable plum, so the revenue stream may be worth it. In the long run, though, the people will be WORSE off by state intervention. They always are.
In several states, individuals are free to pool and "self insure" by forming a "mutual" insurance company. For example, in North Carolina, the assets requirement is only $100,000 to form a Mutual Insurance company. If a group of people, say 20 families, can come up with 5 thousand dollars apiece, then they can "self insure" as long as the policies meed the state requirements. Everybody sticks 5 grand in the pot, everyone pays a thou a year, and any "profits" go back to the stockholders (by definition in a mutual company, it is the policyholders). So, why are there not thousands of little companies springing up in NC, OH, IN and other states with similiar laws? BECAUSE THEY CANNOT COMPETE WITH THE BIG BOYS!!!! That is right. The evil exploitative insurance companies have actually driven the prices to the minimum they can afford and still be profitable (it is called "competition"). The small mutuals are actually selling out to the Allstates, the State Farms and the Nationwides of America.
However, if the markets are really as screwed up as you claim they are, there is no reason why the state legislature could not be petitioned to allow smaller insurance collectives to operate as self insurance companies. They can always buy "reinsurance" against major disasters....., the big companies already do that.
That is just ONE off the top of my head potential to alleviate the insurance pressure in Florida, and it doesn't involve the state dinking around with the markets. It just expands the field for more competition. To be fair, a bunch of smaller home/fire companies went bust in the last hurricane and could not pay their claims. They went into receivership and the big guys bought up what little assets ---future cash flow-- they had. Might be a tough regulatory nut to crack there.
In several states, individuals are free to pool and "self insure" by forming a "mutual" insurance company. For example, in North Carolina, the assets requirement is only $100,000 to form a Mutual Insurance company. If a group of people, say 20 families, can come up with 5 thousand dollars apiece, then they can "self insure" as long as the policies meed the state requirements. Everybody sticks 5 grand in the pot, everyone pays a thou a year, and any "profits" go back to the stockholders (by definition in a mutual company, it is the policyholders). So, why are there not thousands of little companies springing up in NC, OH, IN and other states with similiar laws? BECAUSE THEY CANNOT COMPETE WITH THE BIG BOYS!!!! That is right. The evil exploitative insurance companies have actually driven the prices to the minimum they can afford and still be profitable (it is called "competition"). The small mutuals are actually selling out to the Allstates, the State Farms and the Nationwides of America.
However, if the markets are really as screwed up as you claim they are, there is no reason why the state legislature could not be petitioned to allow smaller insurance collectives to operate as self insurance companies. They can always buy "reinsurance" against major disasters....., the big companies already do that.
That is just ONE off the top of my head potential to alleviate the insurance pressure in Florida, and it doesn't involve the state dinking around with the markets. It just expands the field for more competition. To be fair, a bunch of smaller home/fire companies went bust in the last hurricane and could not pay their claims. They went into receivership and the big guys bought up what little assets ---future cash flow-- they had. Might be a tough regulatory nut to crack there.
And you are just as dead when there is no water to be had because the gougers aren't there at all.
Yup. For na hurricane, if you can't get out, be prepared to be on your own for days.
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.
How hard is it to understand this problem? Not very....
Recent weather events/trends have caused insurers to recalculate their risk/cost structure, and are trying to pass the cost onto their customers AS ALL BUSINESSES DO. People complain once they see the 'new' costs, and then regulators/politicians jump into action to save the people...causing more problems of course then they are solving, but then again why anyone is surprised at this result astounds me.
Politicians cap policy increases so that the insurers do not feel that underwriting the policies makes financial sense from a risk perspective, so they drop coverage. Less policy writers = less competition = more expensive policies....PLUS, since no company wants too much Florida risk (so they limit the absolute number of policies they write in the state), less underwriters means less of a total amount of policies available.
See, I understand the situation...I also understand that it is hard...but that doesn't mean that the government is going to help in a cost-effective manner in any way, shape or form, because IT NEVER DOES.
If raising the premiums by a factor of 4 was so abhorrent or out of line with the risk involved, you'd see a flood of insurance carriers flocking to the state to get in on the action...it's not like you need to be physically present in the state to offer an insurance policy, insurance isn't necessarily a local commodity market. Someone sitting at a desk in Omaha can issue a policy for Talahassee pretty easily...insurance writing would probably be one of the most accessible industries to allowing the free market to work INSTANTANEOUSLY in the absence of excessive regulation by the state.
The fact that you, or others find the cost of the premiums oppressive, bothersome and possibly unaffordable doesn't mean that they aren't justified. Nobody guaranteed any FL resident that there would always be 'affordable' (or using your word...'reasonable') property insurance.
Here's another factor to consider...how many people are complaining just because they cannot insure their house for 'face' or replacement value as opposed to just the cost that would be required by their lender for the value of their mortgage? If someone has a $500K house with a $300K mortgage, drop the coverage to the mortgage amount and assume the risk for the equity themselves..it would certainly make their insurance cheaper.
This is just normal business...nothing more, nothing less. You can see largely the same things occurring in multiple other businesses ALL THE TIME. I'm a Doctor, and I see it in medicine EVERY DAY. As others have tried to state, it's basic Econ 101: As the gov't gets involved any market via either procuring of products/services or regulation, the product or service becomes more expensive and less available. It's not that hard of a concept to understand.
Why wouldn't that include having some cash on hand? Isn't that as much a part of preparation as stocking up on water bottles?
Buck up already. Do you want the government to insure you? The insurance companies need to cover their costs and make as much profit as they can for the owners (shareholders). Self insure your house if you have the guts.
For the perpared, yes. And it should be in small denominations. Sad part is that many do not understand what the aftermath of a major storm is like. Otherwise, they'd find a place in GA for at least a week.
You responded with: The fact that you, or others find the cost of the premiums oppressive, bothersome and possibly unaffordable doesn't mean that they aren't justified.
The fact that you didn't read and understand what I wrote means that you do NOT understand the problem.One would think that a good doctor not only listens to what the patient says but also what the patient means to say or even doesn't say. But you definately have to listen and correctly interpret what the patient DOES say!
The problem that I'm talking about isn't the increased rates, it is what may eventually happen if enough people cannot or will not pay those rates.
In your rush to prescribe your treatement of Econ 101, you didn't even address one of the bigger problems that I described, those that CANNOT obtain insurance, not because of the actual risk but because the companies won't insure non-homesteaded and secondary resident properties.
I listened to an investor describe that his millions invested in rental properies (houses and apartments) will soon become non insurable. What does he do if he cannot obtain adequate insurance and cannot sell because prospective buyers face the same problem?
What do regular home owners, expecially those without a great deal of equity do if they cannot obtain or cannot afford insurance and cannot sell?
So what happens to communities when a substantial portion of the community cannot remain in business and the residents cannot live there?
What happens to the state when this happens statewide?
That, good doctor, is the problem.
This isn't happening to just a handfull of beach residents in fancy beach bungalows or condos. It is happening to those of us in modest ranch homes miles inland, too.
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