Is a market strong because…
every agent has a good company or stable of companies to write the business?
everyone in the state can and does buy the product?
Companies writing the business are financially strong and do quality service?
Premiums are low and customers don\’t complain?
Commissions are high enough for the agent to afford to sell and service the account?
General questions with general answers may leave the impression that there is no consensus about availability. Questions that are specific were not asked nor answered by those who indicated a robust market exists. For example,Is there a wide open homeowners market availability on the South shore of Long Island within 1000 feet of the bays or ocean? answer= no. For many companies the east end of the island and a mile from the south coast is also restricted. But the people running the hearing didnt hear specifics from some of those presenting testimony.
Is there availability on Long Island? It is a big Island.That is a different question. The underwriters deal with specific risks. The hearing dealt with generalizations. Having a Carrier that writes admitedly more than 25% of the market withdraw or stop writing and not anticipate disruption? I am certainly glad that some groups testifying are so confident that the market is great in NY. The world loves optimists. They see the glass as half full. I just hope it doesnt tip over and spill on them! Then they would be all wet.
As I understand it, Allstate felt that they were big enough to be able go without reinsurance for their homeowners business. Since they did not have the significant expense of reinsurance, they were able to undercut almost everyone else\’s rates and consequently wrote a ton of business all over the US.
So, they were hurt badly by the 2005 hurricane season and their gamble back- fired on them. Now they feel that in order to be able to pay a reasonable rate for the reinsurnace they should have carried all along, they have to drastically reduce their coastal property (anything within 5 miles of water, which is roughly all of Long Island, NYC, and Westchester County) exposure. Their hubris in feeling that they were big enough to be able to go without reinsurance seems to have been somewhat misplaced.
Now it seems the insurance department, Senator Chuck Shumer, and various state legislators are all up in arms because the market will be so disrupted. Where were they when Allstate was taking a gamble and stealing so much business from all the other carriers who had the good sense to protect themselves with reinsurance?
Allstate should be allowed to withdraw and lick their wounds. Hopefully other companies will step forward to fill the vacuum Allstate\’s withdrawl will create. The market is what is determining prices and coverage availability here, and if governments try to meddle, things will only get worse.
State Farm did the \”we\’re too big for reinsurance\” thing about 12 years ago. They told Lloyd\’s they didn\’t need the help. Then Hugo bit \’em.
Regulators don\’t get involved until the insolvency signs light up. They can\’t use the insurance commissioner job as a political stepping stone if they are the one that says you have to pay more for auto and home insurance to keep the insurance company solvent. They know they\’d be as popular as a dog catcher at the first grade class.
So, because of this we only see the insurance commissioners when they show up for company closings. Then they arrive like Elvis impersonators at a Wall-Mart opening.
Is a market strong because…
every agent has a good company or stable of companies to write the business?
everyone in the state can and does buy the product?
Companies writing the business are financially strong and do quality service?
Premiums are low and customers don\’t complain?
Commissions are high enough for the agent to afford to sell and service the account?
General questions with general answers may leave the impression that there is no consensus about availability. Questions that are specific were not asked nor answered by those who indicated a robust market exists. For example,Is there a wide open homeowners market availability on the South shore of Long Island within 1000 feet of the bays or ocean? answer= no. For many companies the east end of the island and a mile from the south coast is also restricted. But the people running the hearing didnt hear specifics from some of those presenting testimony.
Is there availability on Long Island? It is a big Island.That is a different question. The underwriters deal with specific risks. The hearing dealt with generalizations. Having a Carrier that writes admitedly more than 25% of the market withdraw or stop writing and not anticipate disruption? I am certainly glad that some groups testifying are so confident that the market is great in NY. The world loves optimists. They see the glass as half full. I just hope it doesnt tip over and spill on them! Then they would be all wet.
As I understand it, Allstate felt that they were big enough to be able go without reinsurance for their homeowners business. Since they did not have the significant expense of reinsurance, they were able to undercut almost everyone else\’s rates and consequently wrote a ton of business all over the US.
So, they were hurt badly by the 2005 hurricane season and their gamble back- fired on them. Now they feel that in order to be able to pay a reasonable rate for the reinsurnace they should have carried all along, they have to drastically reduce their coastal property (anything within 5 miles of water, which is roughly all of Long Island, NYC, and Westchester County) exposure. Their hubris in feeling that they were big enough to be able to go without reinsurance seems to have been somewhat misplaced.
Now it seems the insurance department, Senator Chuck Shumer, and various state legislators are all up in arms because the market will be so disrupted. Where were they when Allstate was taking a gamble and stealing so much business from all the other carriers who had the good sense to protect themselves with reinsurance?
Allstate should be allowed to withdraw and lick their wounds. Hopefully other companies will step forward to fill the vacuum Allstate\’s withdrawl will create. The market is what is determining prices and coverage availability here, and if governments try to meddle, things will only get worse.
State Farm did the \”we\’re too big for reinsurance\” thing about 12 years ago. They told Lloyd\’s they didn\’t need the help. Then Hugo bit \’em.
Regulators don\’t get involved until the insolvency signs light up. They can\’t use the insurance commissioner job as a political stepping stone if they are the one that says you have to pay more for auto and home insurance to keep the insurance company solvent. They know they\’d be as popular as a dog catcher at the first grade class.
So, because of this we only see the insurance commissioners when they show up for company closings. Then they arrive like Elvis impersonators at a Wall-Mart opening.