Pulling out totally seems like an odd decision to me.
fact is, people MUST have home and auto insurance. Its not as if people will stop buying it if its to expensive.
So why don't insurance simply charge the amount necessary to cover their expenses plus a (competitive) profit margin?
I suspect however, that if laws are passed to prevent "cherry" picking, you'll see rates rise for auto and other insurance as well. The excuse won't be risk, but something else the accountants will invent (which will end up subsidizing lines of business they cant seem to adequently underwrite)
Because the company has more than expenses to think about - they have to create a loss reserve (a large account set aside to pay claims) based on actuarial analysis. The odds of a total loss from a Katrina-like hurricane have now gotten so high in Florida that they would have to charge homeowners huge premiums to establish an adequate loss reserve and limit their risk by only taking on a few homeowners in any given area - thus the loss of availability. If State Farm already covers twenty houses in, say, Palm Beach, that's the limit - they won't take on more risk in that area because of the way hurricane damage occurs.
The existing housing stock is pretty much uninsurable - if everyone tore down their wood frame houses and moved into concrete domes, I'm sure the companies would come back.
Yes, we will and have to sell our homes (if we can) because the insurance premiums have become unbearable. Mine went from $500 to over $1600 in ONE YEAR! and ALLSTATE (may they go bankrupt)cancelled our policy even tho we never made a claim, nor are we in a flood zone. We now have to go with el cheapo insurance Universal for $1600 and it may go up. Others have had premiums go from less than 1k to over 10k..........Many here are thinking of selling and moving across the border to Alabama, but nobody wants to buy! The only ones who can afford to live here now are millionaires, but they don't want to live in a 100k neighborhood.......or even a 500k one...
I don't know if Florida regulates how much they can charge.
But often states do have limits on DIFFERENCES in charges in an area.
So if the insurance company wants to raise the prices really high to cover the high-risk houses, they have to also raise the prices really high on low-risk houses.
The low-risk people will drop out, leaving too little money for the high-risk houses. You end up only insuring the people that are certain to have claims, and charging them so much they could buy the house with the premiums.
If the fees were unregulated, the insurance companies could tailor the costs to the risks. Of course, they could also price the houses they don't want to insure out of the market.
The problem is that we have meddled so much in this market, that it's hard to unravel it back to a free-market system. For example, in some states you MUST have insurance, so you can't self-insure.
Perhaps the law should change....no more mandatory insurance.
This was foreseeable when states began requiring insurance as a matter of law; the insurers supported all of these laws and now the bill has come due.
Link homeowners insurance to liability so that even property owners without mortgages must buy policies to protect the neighborhood and then set up a pool whereby the insurers can spread the risk over the range of companies participating.
Of course this could lead to a state insurance program guaranteed by the state's resources, primary of which are the taxpayers, and when the next natural disaster hits the infighting will begin anew.
The closer we get to a risk-free society the more restrictions we endure.