Profits are good and I want my insurance companies at least "A" rated with huge cash reserves.
But it isn't true that they've lost their shirts in Florida. Not at all.
The actuaries know that the losses all balance out in the long run. A grouping of losses in a year with years of low loses all balance out.
I'd like to start a company that could sell deducible insurance in Florida!
Yes, but if you roll snake-eyes too many times in a row, you're busted, out of the game, and the 'long run' never comes along.
"The actuaries know that the losses all balance out in the long run.
Yes, but the problem is that sometimes the short run comes before the long run, and you get wiped out.
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.