Posted On: February 1, 2007, 4:10 pm CST

Posted By: Ralph Balamabama

We have had 3 major catastrophes this year in my state. Our losses were much greater in 2006 than your state. And yet companies are fighting to lower rates and get into our state to do business unlike yours. We had catastrophes in 2001 and 2003 too. The one in 2001 at the time was the 10th largest insurance company payout to date. After that storm most people saw 30-45% increases in premium. We still have competition among insurance companies because our state does little to interfere. By the way, I have clients near the most dangerous fault line in the country and their Earthquake rates are awful high. They know the risk and still choose to live there and pay the high premiums. If it happens we will have increases again and we will pay them and not ask for a Federal bailout. A federal bailout system will only allow insurance companies to make more profit by passing the burden on to taxpayers. I thought you tree huggers were against insurance companies making profit. Why do you think Allstate is in favor of this? They are notorious for being the cheapest (I.E. least responsible with their customers money). When they lose money they try not to pay, take huge increases to make up for it, restrict coverages, and try to leave the area causing the pain. If they had a federal bailout system they could charge as little as possible only to then pass it on to the taxpayers.
It's kind of like your own saving account. If you dip into it because you have to buy a new refrigerator, lawnmower, etc one year. Then in years later when you do not have things break down you put more in the savings account. Insurance companies work much the same way. If you do not allow them to put money back in good years than they eventually cannot do business in your state. I welcome increase premiums even in good years because I know it will soften the blow in the bad years. Free market is the only thing that will help your state. If insurance companies are overcharging you can bet another company will step in and sell if for less. You just have had bad luck there and are paying for it. It hurts, but government price fixing and oversight is only going to make it worse. Pray for more years of no storms and you will see rates fall dramatically but to your detriment because we all know they will return which will in turn cause steep increases again.