This statement alone indicates that you have no idea what you are talking about. Insurance is based on spreading the risk. Not everyone in Florida lives on the beach, but we all are at risk here.
Complaining about insurance companies not wanting to cover your house which is in a hurricane prone area is the same as the overweight, junk-food scarfing, cigarette smoking slob who insists that they should be given health insurance for the same premium as someone who watches what they eat, exercises, etc.
And this one takes the cake. You have no idea what it is like to worry whether you will have insurance next year, or what it might cost. When your insurance doubles, and then doubles again, and might just dissappear all together, it is a bonafied CRISIS!
Homeowners insurance is REQUIRED by anyone with a mortgage. It is also desired by anyone that would like to keep his or her house should the paper boy fall on your driveway and bust his kneecap. Nobody is suggesting that Insurance companies lose money either. I do think that it is unfair for a company to offer Homeowners insurance in one state (or county) and not another. If you bought a house in Florida today, your choices in insurance are one: Citizen's.
I live about 10 miles inland, in a well-drained location about 60 feet above sea level. If I board up well, I should have minimal damage even from a major storm.
Should I pay the same amount per $100,000 of value as somebody with a new $5M home right on the beach, which will absolutely, positively be destroyed if a Cat 4 comes ashore there?
If so, I am paying part of the risk for somebody with a great deal more money than I have. Those on the coast generally are wealthier and more politically powerful than those inland. That's why the state refuses to allow individual risk assessment by property.
There was a time conservatives understood the concept of business, markets, and freedom.
Sadly, that time seems to have passed.
Insurance, like every other business, is pretty simple. A person wants to make money, so they look around for a need not being met. Oh, there's a bunch of people with houses that could burn down, and they are expensive to replace, and most people don't have that much money sitting around and can't afford such a big loss. But only a few burn down.
IDEA!!! We offer to "insure" people against such an event. To make money, I have a simple job. For each house I insure, I calculate the replacement cost for every possible damage, and the likelyhood of that damage. That gives me a yearly "cost" associated with that house. That's what I charge for that house, plus a fee so I make money.
I do that for every house -- so every house pays a different amount, based on my own decision as to what the risk is for that house.
BTW, I'm not the only bright person in the world, there are thousands of others who could do the same thing. So a smart homeowner is talking to all of them, finding the person who is willing to take the greatest risk for their business by offering the cheapest insurance.
There is no "spreading of risk" in the sense you describe. The "spread of risk" is over TIME. But that's a small fault, because obviously if I insure thousands of homes because I've been a really good salesperson, the risk spread over time translates into losses every year, spread over the houses -- assuming I didn't do something really stupid, like sell policies to a thousand people who all lived right next door to one another. If I did, it's like investing all your money in one stock -- great if the stock goes up, disastrous if the company goes bankrupt.
But I didn't NEED to sell a thousand policies for this to work -- I merely needed to have, in my pocket, enough money to pay out on whatever I was insuring, whenever the insured risks happened to be realised.
If you want to get picky, you would note that I've really described how you budget replacement costs for capital with known failure but unknown occurance of failure -- in fact a house could go forever without EVER having an insured loss.
But the rule stands -- I valued each house based on that risk, and I made money based on that house matching it's risk profile. The fact is that I needed to insure only one house if I get lucky, but if I don't I'll be OK if I insured a lot of houses.
In any case, the amount I charge for a house is NEVER, I repeat NEVER, based on how many other houses I insure, or how much I charged for those houses. No matter how many houses I have insured, the NEXT HOUSE I insure is charged exactly what my formula dictates for THAT HOUSE.
The only reason this doesn't happen is because of regulation. Some lawmaker decided it wasn't "fair" for people to get charged different amounts, or maybe some unscrupulous businessmen used their business to settle personal scores (which in a perfect world would just mean others would take their business from them).
So now the state starts regulating how you can charge people for stuff, and next thing you know some people are paying more than they should so others can pay less than they should, and the more you make that happen the more pressure there is on the insurance companies to falsify or make up stuff so they can insure more of the people forced to pay more, and fewer of the people allowed to pay less.
Maybe the government will do a stupid thing like set up an "insurer of last resort", for which every insurance company pays a fixed fee based on the NUMBER of people insured. Now it's like the OK Corrall.
Every insurer tries to dump their worst houses into the common pool, while cherry-picking the best houses, thus driving up their profits. What a STUPID WAY TO RUN A STATE.
And then people blame the insurance companies, who are in fact doing exactly what the law seems to encourage them to do.
I read a short story once that illustrated this so well, but I can't remember it's name. Anyway, there's like a public facility where every citizen can get goods like watches, jewelry, cars, whatever it is you want.
At the end of each year, the state adds up all the money spent to buy the goods people took, and sends a bill to each person evenly.
So of course, each person sets as their goal to make sure they take more goods than what they have to pay in costs. Which drives up the costs for everybody.
Do you also think it's unfair for In-N-Out Burger to only offer hamburgers in one state and not another?