Posted On: May 17, 2007, 6:50 am CDT

Posted By: David

#1 Don't blame the insurance industry for your having to carry insurance on your home. If I remember my insurance 101 correctly, it is not the insurance companies that require you to purchase insurance on your home. The banking industry and more specifically the mortgage industry requires that you purchase the coverage. Why does the banking industry require you to purchase insurance? The reason behind that in order for a bank to be federally insured, the bank must be able to prove that it will remain solvent. To do that, the bank must be sure that it will be able to collect on loans it makes. (note I am talking legitimate banks and not these sub prime loan groups)

#2 Right now there are two problems with homeowners insurance in Florida. The first is cost and the second is availability. The route that the state is taking is going to greatly impact the availability of insurance. We see that now with carriers backing out of the state or not accepting new business. As the number of carriers decreases, the remaining carriers percentage of exposure in an area increases. Our reinsurers do not like for us to have too high of an exposure in any one area and they in turn charge the industry higher premiums, forcing the rates up even more. So how does that impact cost? If the state would stay out of the insurance business and allow open competition, the probability is that there would be more carriers doing business in the state. Competition feeds competitiveness and while the premiums may be higher than "YOU" want them to be, coverage would be available and probably at a lower cost than todays rates.

#3 Finally, while it is interesting to read some of the emotional posts on this sight the amount of misinformation or the illogical positions taken prove that very few people outside of the industry actually understand anything more than Premiums In = Losses Out.