When was a state run agency ever better than the private market ? Even Nevada & West Virginia work comp figured that out.
Big government socialist minds never see successful private enterprises it doesn’t desire and can’t ruin. Ask Hillary or Michael about health care.
But no one seems to mind that rates in non-coastal areas are going down. Higher profits for insurance companies – higher rates in coastal communities has contributed to a softer insurance market – reducing rates in non-cat sections of our country. If the insurance companies would deal with coastal areas better and stop dropping rates elsewhere to write business there and not on the coast – then maybe the private industry would handle insurance better than the state funds. Believe those in coastal areas PAY LOTS MORE for insurance. The problem now is the LOTS MORE has become LOTS AND LOTS MORE. Recent article stated the average cost for HO insurance had reduced – well keep in mind that is average – and the coastal areas have increased substantially – so I guess the coastal areas are really subsidizing rates for the rest of the country. Yet everyone says they don’t want to help because they do live on the coast. Everyone on the coast is not rich. The coastal areas also provide substantial revenues to the entire country. Too bad we can’t all be in this together – and ultimately EVERYONE would be better off.
If everyone in America would learn to lie back and enjoy a little more socialism and communism then we all could support the idea of helping out our comrades who are forced to live on the coast. Vote for Hillary and let’s fix this and health insurance too!
why do you think that people on the coast pay more??? Look at New Orleans where we think its ok to build several feet below sea level. There are parts of our country where we just should not build, period. But in the name of economic growth local planning and zoning boards allow it. Get that tax base up there. And everybody else pays when there is a disaster. Some how I don’t think that I want to get on the track when I know that sooner or later there is going to be a train coming. Make that sooner then later. It is unbelievable that some people we should keep paying for disaster after disaster whether it be on the coasts or inland.
Wha?? Must be a NY-er… Clinton and Bloomberg, I presume? It’s not socialism that drives Texas to insure these people; it’s capitalism!! (Or the failure of insurers to venture into this kind of risk.)
The country has embarked in a massive 50 year project to transfer large portions of its population from areas that have relatively temperate climates and few natural disasters (ie. the oft disparaged “rust belt”) to parts of the country prone to hurricanes, floods and earthquakes and that have little water resources. Can we really complain now that the bills for this ill-advised move are staring to come due?
Being in good health is a right for all. Not a luxury only for those in society who can afford private health care coverage. The analogy of public health care to state run insures in misleading. The amount of Americans with out health care coverage is climbing, while apparently the amount of Americans with out property insurance (thanks to state run property insurers) is remaining flat. I agree with Bruce that states should stay out of insuring property. However it is our duty as a civilized nation to make sure that health care coverage is available to all.
There was a similar article in yesterday’s Wall Street Journal that stated that as a result of the 2004 & 2005 hurricanes Citizens in FL hit its own policyholders, as well as those insured by other companies in the state for $2.7 billion in premium surcharges. Citizens is the largest property insurer in the state of FL writing 15,000 to 20,000 new policies a week.
The article quoted Dr. Hartwig who put it very well…”The system shifts the risk literally from those who are most at risk to individuals who are at less risk, or even at no risk.”
The state has a new $71.5B budget to go along with the $433B in property exposure insured by Citizens. A couple bad storms and the Governor will be hitting the federal government for a bail out. You have to appreciate how Crist isn’t even attempting to fake financial accountability. As Popeye used to say, “Blow me down!”
Heath, I suggest you try living in a country with a government health plan for a few years. I have lost three family members back in England because they had to wait in a long line to get life saving surgery. They died waiting. If they had the money, they would have come to the US for treatment.
Ted Kennedy and his cronies created our HMO system in the 1970’s with the expectation that it would destroy private health care and bring about socialized medicine in the US. This is SOCIALISM which is a step towards COMMUNISM. Read Marx’s Communist Manifesto. I read it, have you? He explains it all.
What are you talking about, coastal areas are subsidizing the rest of the country? Rates are set in each state. High rates in LA or MS or Florida have nothing to do with rates in the Midwest. The state-run pools are individual animals in each state. If Citizens in Florida wants to compete with the private market in Florida, that’s their problem.
The insurance industry is committed to working in partnership with public policymakers, No no this is a big NO. Get Policymakers out of the insurance industry. Tell Policymaker do not look at all the money-work for the people not all the boys with the $$$$$$$$$$$$$$. make laws that stop all the waste. You do not have to be a insurance agent be a policymaker to do things right.
Heath, please quit posting as your comments are crude and disgusting. While everyone is entitled to their opinion, you have not given much opinion, and have been crudely insulting.
Comment:
The insurance industry is committed to working in partnership with public policymakers, No no this is a big NO. Get Policymakers out of the insurance industry. Tell Policymaker do not look at all the money-work for the people not all the boys with the $$$$$$$$$$$$$$. make laws that stop all the waste. You do not have to be a insurance agent be a policymaker to do things right.
If the private insurer sector will not provide insurance coverage when and where it is most needed, then it is the role of government to meet the need and fill the void. The insurance industry has no grounds to complain….they chose to abandon certain high risk areas such as flood and coastal exposures.
What I find disturbing is that the insurance industry has collected higher rates in places like Florida and other coastal areas for decades for the very reason that they have this added exposure. Insurers were lucky for more than 30 years that they did not get blown out of the water (no punn intended) years ago but in the meanitime they collected billions in premiums and pocketed billions in profit. Finally they get whalloped and now they want to take their marbles and go home.
No doubt some would suggest that those living in coatal areas pay 100% of the cost to insure against this exposure. That would be no more realistic than saying people in the midwest should bear full cost of torndoes which are prevelant in that part of the country. Insurance is intended to spread the risk among a large number of insureds.
I just find it ironic that the insurance industry would complain that the public sector is filling a void they created. But I should not be surprised as they have done the same in health insurance where the cronically ill and those most at risk cannot buy health insurance or can’t afford it but hen they rail against universal health care or other similar programs.
The insurance industry has powerful lobbyists and contributes millions to the elected officials. They are truly a favored business in this country and receive including tax laws that greatly encourage the purchase of their products and allow them to deuct resrves long before they ever pay the loss.
Thank you, rolfneu, for posting at least what is a classy and intelligent response – whether people agree or not – you at least have something worthwhile to say – and by the way – and I do agree with you
Linda, while I don’t necessarily agree with your opinion on the topic at hand, I do enjoy reading a good debate/discussion. That said, I whole-heartedly agree with your last comment on IJ pulling Heath’s posts.
Thoughts from the consumer perspective, which are based on individual responsibility and the acceptance of the consequences of your decisions:
Risks should be stratified and spread within like classes and premiums priced accordingly. For example, all coastal properties would be in one class. It is not fair for someone with little or no risk to have to bear the premium burden of those subject to high risk. This still spreads the risk, but among similar properties. If someone chooses to live in a high risk area, one of the consequences is risk and comensurate insurance premiums. Automobile insurance is priced this way. Those drivers most likely to have accidents are charged at higher rates.
The issue with the state run insurers of last resort is that they are established by politicians who are not fiscally responsible. The coverage is priced to win votes and has no relationship to the associated risk. As a result, the costs of a catastrophe will then be assessed among all policy holders, and likely all taxpayers. On a federal level, the results of the actions of inept politicians of one state should not be borne by other states.
The private sector will provide insurance coverage. It is just that the pricing, while comensurate with the risk, may be deemed unacceptable. This is where the politicians step in and do not let the markets operate efficiently. Insurers want to abandon some markets because politicians will not let them charge a rate comensurable to the risk.
Again, it goes back to responsibility. People should bear the consequences, fiscal or otherwise of their decisions.
They typically emerge for two reasons: (1) States consider it too much of a public policy issue to permit carriers to charge the correct price for individual risks, therefore suppressing rates, and (2)Companies find it impossible or prohibitive to secure the necessary risk transfer mechanism, aka reinsurance, to spread their business risk. The interesting thing is that the state-run mechanisms fail in these areas as well, leaving them to assess residents, insurers and a variety of businesses in the event of catastrophic events they can’t financially cover.
The ultimate failing of these mechanisms is that, unlike the insurance industry, they invariably and dangerously concentrate (as opposed to spreading) financial risks, placing a large toll on a state’s populace and the federal government. Alas, when one commits to live on the coast, there tends to be little to no guilt associated with the fact the risk cost is being subsidized by someone else. It’s this state government-enabled point of view that sends the voluntary market packing.
Of course, one day someone will be able to point to a successful state-run property insurer. I doubt that anyone in this thread, however, will live to witness it.
Most fishermen I know will not live right on the water……we know what the ocean will do, emphasis on will. However, we live in coastal communities and supply the entire country with all that delicious fish they so enjoy. I’ve seen the million dollar mansions swept away in my community. In 30 years as an adult and 20 in my parent’s home, I’ve yet to suffer a weather loss. My house is in a sensible location, although about 1k ft away from the ocean. My insurance bill has tripled. It’s not the entire coastal community. It’s just the idiots who build on sand bars and across from rocky shores who act irresponsibily that have caused this problem.
For sure if you are in FL, one of reasons that your insurance has tripled is because of the surcharges being assessed by Citizens on everyone that has coverage, regardless of carrier, to cover their losses from 2004 & 2005. I share ownership of a condo in FL and our agent says that 30% of our current premium is due to surcharges.
You need to look at your Policy…your assessment is only about $100 to $150 and if that is 30% of your insurance premium then your premium is lower than anyone else I know in Florida,
June 4th 2007: Time magazine reports that 153 million people in the United States live within 50 miles of the Coast, this is more than HALF of the total US population.
I guess we should all move to Nebraska so we can afford our insurance!
Great logic, but people like Kathy and RAL don’t understand the business so your logic falls on deaf ears. The surcharges on non-Citizens policies won’t really be a factor in Florida until the first big blow. Then listen for the whining when the surcharges (up to potentially 74%) start hitting the non-citizens policyholders. The governor and people like Kathy will probably still find a way to blame this in the insurers too since facts and logic don’t enter their thinking. Sad state (Florida) of affairs.
I take exception to some of Rolfneu’s comments although well written.
Where does it say that the government must step to help the stupid. Why, just because I have money and can build on the coast should I expect anyone to pay for my loss.
As for the midwest paying for tornados, we do. We do not expect the coastal states to jump in. Many of the companies in our area are only midwest companies.
All of us have had “too cheap” home insurance and when areas like Florida have to pay more for the risk they are unhappy.
I wish I could afford to live in Florida I will just have to dodge our midwest tornados.
THere is a real Life example of the dangers of government insurance on an economy.
In the mid 70s….dang memory…..Brazil or Argentina had a federal reinsurance program. Federal reinsurance has been mentioned in the news for the US lately. The rule in whichever country it was that to be fair the only reinsurer their companies could use the the federal re.
If you know anything about the reinsurance market and the wide variance in types of cover needed, you can imagine what kind of box that put the companies in.
It lasted only a few years before the economy was so tied up because of the lack of full coverage that, in addition to the rest of the socialist programs at the time – it was a total disaster.
It’s too long a story here, but do your own research on the subject.
‘The insurance industry has no grounds to complain….they chose to abandon certain high risk areas such as flood and coastal exposures.’
I wasn’t aware the insurance industry was complaining. Who in the insurance industry is complaining. The complaints listed here are not by the insurance industry – they are by taxpaying citizens who know whats coming next in Florida. That would be of course Florida taxpayers subsidizing those who live on the coast.
Rolfneu must be new to insurance…. carriers who pull out do so because the losses they are suffering are unacceptable to stockholders or members.
Now everyone is happy. Well almost. Socialists are happy to have government in the insurance business. Insurers are happy because, instead of forcing them to stay and take a beating, the elected government stupidly took it on themselves instead of negotiating on behalf of the citizenry. Taxpayers will be chapped in a year or three when losses exceed revenue with the too low premiums and taxes triple. I cannot believe how little posters here know about the business of insurance. Socialism indeed!
At some point, the cost of providing coverage must be weighed against the propriety of providing coverage. Every situation is not insurable nor should this be the case.
That we have the capability, capacity and contruction equipment to build mansions and buildings on the shore does not imply that the public or private sector should insure the structures from natural disasters that strike the beach.
In 2004 the insurance industry sponsored legislation in MA to lift the premium caps in the MA Fair Plan’s large share territories-then set about non-renewing thousands and thousands of coastal homeowners who had no choice but the UnFair Plan for coverage, turning coastal areas into “large share” territories-no longer subject to rate caps thanks to the 2004 legislation.
The premiums for coastal homeowner insurance coverage have skyrocketed over the past three years.
The coastal homeowner crisis is is a very cleverly crafted crisis orchestrated by the insurance industry.
For the record-I didn’t decide to move to Cape Cod, I’m a 12th generation native Cape Codder. I’m a licensed insurance broker and a CPCU. – the insurance industry is guilty of collusion and price fixing based on hurricane modeling data they refuse to disclose for public scutiny. At least one of the hurricane modeling companies (A.I.R) is owned by the insurance industry (ISO). The other hurricane modeling company, RMS, is now officially run by a reinsurer insider-Robert Bently formerly of AON Re and Guy Carpenter Reinsurance Brokerage.
If you’re interested is NOT SEEING the hurricane modeling data, I have the UnFair Plan’s latest 3,200 page rate filing on a CD with critical hurricane modeling data “redacted”.
The insurance industry should be ashamed of itself and investigated by the authorities.
In addition to being born on the coast. I do not live in a waterfront mansion. I have an 864 square foot ranch set on a street between two hills – I am protected from the wind on two out of four sides of my house, am in no danger of flood (excluded on HO policy anyway). The huge wind deductibles take care of a large portion of wind exposure. The number of sesaonal homes on Cape Cod eliminates much of the Additional Cost of Living exposure. Carriers, including the MA Fair Plan are doing just fine financially and don’t have as much as exposure as they would like us all to believe.
And for the record, insurance has always had an element of socialism and without insurance captialism would not exist, but obscene captialism at the expense of individuals and the local economy just is not right – Jane Logan, CPCU Cape Cod, MA
While we can agree to disagree on specific details of pricing, reinsurance and arcane cat models, if Rita and Katrina has not taught everyone, those employed in the insurance industry and those not, that coastal exposure is problematic, how can a rational, not necessarily reasonably priced, solution be developed?
I know nobody likes facts, but here are a couple…
1. Florida’s population increased from 4.8 million in 1960 to 12.8 million in 1990
2. Florida’s coastal population increased by 169% (national average is 38%)
3. Large numbers of Florida residents are retired: they are older, generally wealthier (larger homes)
4. Florida’s Insured Coastal Residential Exposure as of 2004 was 942.5 billion
5. 7 of the 10 most expensive hurricanes in US history have occurred since 2004
6. 9 or of 10 of these have affected Florida
Even if Florida would stop all coastal development now, it is probably too late to positively impact their insurance climate. There is just too much exposure on the coast and based on the facts we have, they will have substantial hurricane losses, if not this year, then the next or maybe the year after that.
As the assigned risk type plans increase in population, fewer insurance companies will market in the state.
Assigned risk plans allow an opportunity for loss but no opportunity for profit. This does not add to a healthy insurance climate to help with other market problems.
The MA Fair Plan articles of organization allow for “profits, if any”. Nothing in the documents prohibit the MA Fair Plan from making a profit and they made 32 million and 48 million in the past two years. Non-renewing in the voluntary market and writing the same insured through the Fair Plan saves the carriers about 50% of commision expense and that’s not counting contingency commission! Not to mention the change in coverage going from broad coverage provided in voluntary market to limited coverage through Fairn Plan and limited Additional Living Expense exposure due to large number of seasonal second homes here. Finally, it is much more difficult to get financial information on the MA Fair Plan than most carriers. So to sum it all up, the carriers are making more money with less exposure and less financial disclosure!
Some believe the government exists to protect the stupid (also known as the public) and therefore believe that it is government that must step forward to aid the stupid (the public) from rapidly growing insurance premiums. Its not a question of communism/socialism versus capitalism. Honestly I don’t know why some otherwise intelligent people are wasting their time with this economic existentialism when they could be spending their time discussing the problem. Assuming frustration is gaining the upper hand, I recommend doubling efforts to focus. People can’t afford the sharply rising rates will either have to vacate their homes and move inland (or leave the state entirely) or they will flee private enterprise and seek the nurturing bosom of a government bureacracy that basically doesn’t have a clue. There is no easy solution unfortunately. But the status quo is doomed to failure. One policy is rate setting free of government intervention. If the government decides to let that power go, the insurance industry better hope that they are able to find a solution that the public finds acceptable. If not, the public will pressure politicians who don’t know what to do to take rash decisions which will come to bite the industry on its rear. And could even lead to a distruction in public trust in insurance altogether.
What’s stupid is the regultors not controlling this industry. What’s stupid is moving away from your home without even TRYING to do something about the issue. C’mon Kenney, you can’t write and you can’t debate the facts so you just sling insults. NICE. Study the issue for 3.5 years as I have and write when you have something intelligent to add the discussion. If I were to decide to leave (yielding to corporate greed) without a fight I’d have to move so far I’d end up in Tornado Alley. At least hurricane don’t arrive without any warnimg.
Come back to the discussion when you grow up and get your CPCU.
I think most of us reading the comments on this string would agree that the only “stupid” and certainly unprofessional comments that I have read are the ones from Jane and RAL. Jane, your CPCU studies were wasted. It proves that passing a course of study isn’t proof of common sense. Jane, I know you will find some childish and insulting thing to say back. Don’t waste your time. When I see your name and RAL from now on, I will skip the comments. GROW UP!
We are supposed to be an industry focused on facts and figures, not name calling and finger-pointing. This dialogue appears to have gotten off track.
The State of Florida Office of Insurance Regulation, as virtually all other DOIs, does not have the authority to review and revise reinsurance rates. Accordingly, it is a difficult expense component to address. Through the FHCF, they are trying to take control of the impact of reinsurance costs on premiums.
It seems to me that they are regulating to the full extent of their authority. Cost-based pricing is unpopular when costs are high. Get over it.
First of all Jane, kudos on your certifications. Its unfortunate that you took my comments as an insult. It was my mistake that my subject line made it seem that I was replying to your posts when in fact I was replying to someone who had posted on June 8th. I had read every post and simply clicked on add comment and started typing. A gentleman on June 8th had forcefully stated his distaste for socialism and stated he wished that government would stop protecting stupid people. My response was directed at him. Incidentally, I recommend using aliases. All criticism people make in my direction seems to bounce right off. I’m not at all offended by your comments. I have a joke; its pure gold: Why do they call it “Ovaltine?” The mug is round; the jar is round; they should call it “Rountine!”
To Joe, I attempted to make some commentary on state rate setting. I’m no expert, but if New Jersey auto rates are a guide in any sense, a free market to rate setting may not be such a horrible idea. If the New Jersey auto market continues to feel favorable results, more states are sure to follow. However the downside to McCarran Ferguson, and correct me if I’m mistaken, is that if Congress feels that the Industry is colluding to price gouging its policyholders in a free market pricing environment, it will simply repeal the act. I tend to think (but am open to be educated on the matter) that states may be holding on to the power to set rates in order to counter the potential collusion that could take place in the insurance market. States want the best rates for their citizenry but by allowing rate setting unfettered by government intervention is probably risky in their eyes as a result of the potential downfalls–the occurence of which could undermine the state-based regulatory structure entirely. Voters and Congress look to the bottom line of insurance premium rates and consumer protections and claims payout satisfaction. If the fiasco after hurricanes Katrina and Rita are any guide, many voters feel that the FL, MS, and LA Departments of Insurance failed them and their neighbors by allowing insurance companies to “step all over the little guy” in rejecting claims or referring some to NFIP and then increasing rates [as per catastrophe modeling].
I’m amazed at the negative reaction to the CPCU designation. The purpose of any eduction is to create people who want and can learn about anything they set their mind to learn. I’ve spent an incredible amount of time researching hurricanes and as far as the water here being different than Florida-it is different, it’s colder! Cold water has a huge effect on hurricanes-reducing their impact. We’ve only had a handfill of hurricane’s here(6)over the past 100 or so years (not 4 in one year like in FL)and the hurricanes that did make it did as much if not more damage inland than on the coast. If you look at maps of projected damage from a CAT 5 hurricane, Everyone on the East coast would have to move to the Mid West to escape potential hurricane damage. Again if we all moved West one of those pesky tornado’s would get us instead. I’m not about to move away from where 12 generations of my family have lived over my homeowner insurance premiums! I’ve also spent a lot of time researching the MA Fair plan (MPIUA), the board of Directors, the financials of the companies involved, MPIUA’s financials and testified at the MA Division of Insurance MPIUA rate hearing. MA and FL hurricane exposures are completely different!! Our building codes are different and we don’t build skyscraper’s on the beach which are esentially just giant sails to catch the wind! All I can say to anyone who compares the hurricane exposure of FL to MA is are you kidding me?!
Excuse me? COMPLETELY Different? A water molecule is about the same in Florida as it is in Massachusetts, as is the force of wind. Maybe you might be giving us a hidden meaning of the type of people that reside in the residences? What exactly do they teach you to get this so called See Pee See You grandiose ‘holier than thou’ letters?
Oh for Pete’s sake !
This is a good example of why we have so much legislation by superstition.
People deciding the way things are because they seem that way.
The ancient Greeks “knew” the wind was caused by trees waiving their branches.
There was never wind when the trees didn’t waive their branches.
So they knew they were right.
YaY Jane.
Moving because you don’t like something where you are is like changing from one cheap apartment to another.
The reality is that every place has an issue. Except for us here in North Texas, of course. Tornados and softball sized hail? No big deal. Texas is God’s country because it gets too hot for the devil.
Out of the forest or build some sort of fire proof bunker for a house. I don’t know that there is such a structure. The MGM Grand Hotel fire taught us that lesson.http://www.co.clark.nv.us/fire/ccfd_mgm.htm
Every place has its own hazards and applicable perils. It pays to pay attention to them. It’s why life insurance needs a seller.
So those of us who choose not to or can’t afford to live on the coast will have to pay for the people that choose to live on the coast.
Gotta take cae of this rich guy.
When was a state run agency ever better than the private market ? Even Nevada & West Virginia work comp figured that out.
Big government socialist minds never see successful private enterprises it doesn’t desire and can’t ruin. Ask Hillary or Michael about health care.
But no one seems to mind that rates in non-coastal areas are going down. Higher profits for insurance companies – higher rates in coastal communities has contributed to a softer insurance market – reducing rates in non-cat sections of our country. If the insurance companies would deal with coastal areas better and stop dropping rates elsewhere to write business there and not on the coast – then maybe the private industry would handle insurance better than the state funds. Believe those in coastal areas PAY LOTS MORE for insurance. The problem now is the LOTS MORE has become LOTS AND LOTS MORE. Recent article stated the average cost for HO insurance had reduced – well keep in mind that is average – and the coastal areas have increased substantially – so I guess the coastal areas are really subsidizing rates for the rest of the country. Yet everyone says they don’t want to help because they do live on the coast. Everyone on the coast is not rich. The coastal areas also provide substantial revenues to the entire country. Too bad we can’t all be in this together – and ultimately EVERYONE would be better off.
If everyone in America would learn to lie back and enjoy a little more socialism and communism then we all could support the idea of helping out our comrades who are forced to live on the coast. Vote for Hillary and let’s fix this and health insurance too!
why do you think that people on the coast pay more??? Look at New Orleans where we think its ok to build several feet below sea level. There are parts of our country where we just should not build, period. But in the name of economic growth local planning and zoning boards allow it. Get that tax base up there. And everybody else pays when there is a disaster. Some how I don’t think that I want to get on the track when I know that sooner or later there is going to be a train coming. Make that sooner then later. It is unbelievable that some people we should keep paying for disaster after disaster whether it be on the coasts or inland.
Wha?? Must be a NY-er… Clinton and Bloomberg, I presume? It’s not socialism that drives Texas to insure these people; it’s capitalism!! (Or the failure of insurers to venture into this kind of risk.)
Let’s re-visit high school history, shall we? And maybe learn a few things about communism and socialism? Good idea.
So trying to keep insurance in thr private sector rather than with the government is communism – you do need to go back to school.
The country has embarked in a massive 50 year project to transfer large portions of its population from areas that have relatively temperate climates and few natural disasters (ie. the oft disparaged “rust belt”) to parts of the country prone to hurricanes, floods and earthquakes and that have little water resources. Can we really complain now that the bills for this ill-advised move are staring to come due?
Being in good health is a right for all. Not a luxury only for those in society who can afford private health care coverage. The analogy of public health care to state run insures in misleading. The amount of Americans with out health care coverage is climbing, while apparently the amount of Americans with out property insurance (thanks to state run property insurers) is remaining flat. I agree with Bruce that states should stay out of insuring property. However it is our duty as a civilized nation to make sure that health care coverage is available to all.
There was a similar article in yesterday’s Wall Street Journal that stated that as a result of the 2004 & 2005 hurricanes Citizens in FL hit its own policyholders, as well as those insured by other companies in the state for $2.7 billion in premium surcharges. Citizens is the largest property insurer in the state of FL writing 15,000 to 20,000 new policies a week.
The article quoted Dr. Hartwig who put it very well…”The system shifts the risk literally from those who are most at risk to individuals who are at less risk, or even at no risk.”
By the way I agree with Heath. LOL
Chruch,s need to step in.No more giving the piper a free ride. This is the U.S .We need to wake up. This greed well come back on all of us.
The state has a new $71.5B budget to go along with the $433B in property exposure insured by Citizens. A couple bad storms and the Governor will be hitting the federal government for a bail out. You have to appreciate how Crist isn’t even attempting to fake financial accountability. As Popeye used to say, “Blow me down!”
Heath, I suggest you try living in a country with a government health plan for a few years. I have lost three family members back in England because they had to wait in a long line to get life saving surgery. They died waiting. If they had the money, they would have come to the US for treatment.
Ted Kennedy and his cronies created our HMO system in the 1970’s with the expectation that it would destroy private health care and bring about socialized medicine in the US. This is SOCIALISM which is a step towards COMMUNISM. Read Marx’s Communist Manifesto. I read it, have you? He explains it all.
Everyone enjoy your weekend!
Hey Heath-What a brilliant wit you possess. I stand in awe of your debating skills and command of the English language as well as your social skills.
Heath is a might brave one hiding behind his keyboard. I think he(??) accidentally jumped the link from his MySpace browse.
What are you talking about, coastal areas are subsidizing the rest of the country? Rates are set in each state. High rates in LA or MS or Florida have nothing to do with rates in the Midwest. The state-run pools are individual animals in each state. If Citizens in Florida wants to compete with the private market in Florida, that’s their problem.
The insurance industry is committed to working in partnership with public policymakers, No no this is a big NO. Get Policymakers out of the insurance industry. Tell Policymaker do not look at all the money-work for the people not all the boys with the $$$$$$$$$$$$$$. make laws that stop all the waste. You do not have to be a insurance agent be a policymaker to do things right.
Heath, please quit posting as your comments are crude and disgusting. While everyone is entitled to their opinion, you have not given much opinion, and have been crudely insulting.
Comment:
The insurance industry is committed to working in partnership with public policymakers, No no this is a big NO. Get Policymakers out of the insurance industry. Tell Policymaker do not look at all the money-work for the people not all the boys with the $$$$$$$$$$$$$$. make laws that stop all the waste. You do not have to be a insurance agent be a policymaker to do things right.
Heath, you are disgusting. Feel free to leave.
If the private insurer sector will not provide insurance coverage when and where it is most needed, then it is the role of government to meet the need and fill the void. The insurance industry has no grounds to complain….they chose to abandon certain high risk areas such as flood and coastal exposures.
What I find disturbing is that the insurance industry has collected higher rates in places like Florida and other coastal areas for decades for the very reason that they have this added exposure. Insurers were lucky for more than 30 years that they did not get blown out of the water (no punn intended) years ago but in the meanitime they collected billions in premiums and pocketed billions in profit. Finally they get whalloped and now they want to take their marbles and go home.
No doubt some would suggest that those living in coatal areas pay 100% of the cost to insure against this exposure. That would be no more realistic than saying people in the midwest should bear full cost of torndoes which are prevelant in that part of the country. Insurance is intended to spread the risk among a large number of insureds.
I just find it ironic that the insurance industry would complain that the public sector is filling a void they created. But I should not be surprised as they have done the same in health insurance where the cronically ill and those most at risk cannot buy health insurance or can’t afford it but hen they rail against universal health care or other similar programs.
The insurance industry has powerful lobbyists and contributes millions to the elected officials. They are truly a favored business in this country and receive including tax laws that greatly encourage the purchase of their products and allow them to deuct resrves long before they ever pay the loss.
Thank you, rolfneu, for posting at least what is a classy and intelligent response – whether people agree or not – you at least have something worthwhile to say – and by the way – and I do agree with you
Rolfneu you hit the nail on the head! I totally agree with you.
Linda, while I don’t necessarily agree with your opinion on the topic at hand, I do enjoy reading a good debate/discussion. That said, I whole-heartedly agree with your last comment on IJ pulling Heath’s posts.
Thoughts from the consumer perspective, which are based on individual responsibility and the acceptance of the consequences of your decisions:
Risks should be stratified and spread within like classes and premiums priced accordingly. For example, all coastal properties would be in one class. It is not fair for someone with little or no risk to have to bear the premium burden of those subject to high risk. This still spreads the risk, but among similar properties. If someone chooses to live in a high risk area, one of the consequences is risk and comensurate insurance premiums. Automobile insurance is priced this way. Those drivers most likely to have accidents are charged at higher rates.
The issue with the state run insurers of last resort is that they are established by politicians who are not fiscally responsible. The coverage is priced to win votes and has no relationship to the associated risk. As a result, the costs of a catastrophe will then be assessed among all policy holders, and likely all taxpayers. On a federal level, the results of the actions of inept politicians of one state should not be borne by other states.
The private sector will provide insurance coverage. It is just that the pricing, while comensurate with the risk, may be deemed unacceptable. This is where the politicians step in and do not let the markets operate efficiently. Insurers want to abandon some markets because politicians will not let them charge a rate comensurable to the risk.
Again, it goes back to responsibility. People should bear the consequences, fiscal or otherwise of their decisions.
They typically emerge for two reasons: (1) States consider it too much of a public policy issue to permit carriers to charge the correct price for individual risks, therefore suppressing rates, and (2)Companies find it impossible or prohibitive to secure the necessary risk transfer mechanism, aka reinsurance, to spread their business risk. The interesting thing is that the state-run mechanisms fail in these areas as well, leaving them to assess residents, insurers and a variety of businesses in the event of catastrophic events they can’t financially cover.
The ultimate failing of these mechanisms is that, unlike the insurance industry, they invariably and dangerously concentrate (as opposed to spreading) financial risks, placing a large toll on a state’s populace and the federal government. Alas, when one commits to live on the coast, there tends to be little to no guilt associated with the fact the risk cost is being subsidized by someone else. It’s this state government-enabled point of view that sends the voluntary market packing.
Of course, one day someone will be able to point to a successful state-run property insurer. I doubt that anyone in this thread, however, will live to witness it.
Rolfneu, well put!
Most fishermen I know will not live right on the water……we know what the ocean will do, emphasis on will. However, we live in coastal communities and supply the entire country with all that delicious fish they so enjoy. I’ve seen the million dollar mansions swept away in my community. In 30 years as an adult and 20 in my parent’s home, I’ve yet to suffer a weather loss. My house is in a sensible location, although about 1k ft away from the ocean. My insurance bill has tripled. It’s not the entire coastal community. It’s just the idiots who build on sand bars and across from rocky shores who act irresponsibily that have caused this problem.
I live approximately 100 miles from coast, 12 feet above sealevel and my HO insurance has also tripled!
For sure if you are in FL, one of reasons that your insurance has tripled is because of the surcharges being assessed by Citizens on everyone that has coverage, regardless of carrier, to cover their losses from 2004 & 2005. I share ownership of a condo in FL and our agent says that 30% of our current premium is due to surcharges.
You need to look at your Policy…your assessment is only about $100 to $150 and if that is 30% of your insurance premium then your premium is lower than anyone else I know in Florida,
June 4th 2007: Time magazine reports that 153 million people in the United States live within 50 miles of the Coast, this is more than HALF of the total US population.
I guess we should all move to Nebraska so we can afford our insurance!
If you go to this link, you will see where all the natural disasters are. Not just coastal flooding are hurricanes!
http://www.usatoday.com/life/graphics/natural_disasters/flash.htm
Great logic, but people like Kathy and RAL don’t understand the business so your logic falls on deaf ears. The surcharges on non-Citizens policies won’t really be a factor in Florida until the first big blow. Then listen for the whining when the surcharges (up to potentially 74%) start hitting the non-citizens policyholders. The governor and people like Kathy will probably still find a way to blame this in the insurers too since facts and logic don’t enter their thinking. Sad state (Florida) of affairs.
Oops, on the insurers, not in the insurers.
I take exception to some of Rolfneu’s comments although well written.
Where does it say that the government must step to help the stupid. Why, just because I have money and can build on the coast should I expect anyone to pay for my loss.
As for the midwest paying for tornados, we do. We do not expect the coastal states to jump in. Many of the companies in our area are only midwest companies.
All of us have had “too cheap” home insurance and when areas like Florida have to pay more for the risk they are unhappy.
I wish I could afford to live in Florida I will just have to dodge our midwest tornados.
jj
THere is a real Life example of the dangers of government insurance on an economy.
In the mid 70s….dang memory…..Brazil or Argentina had a federal reinsurance program. Federal reinsurance has been mentioned in the news for the US lately. The rule in whichever country it was that to be fair the only reinsurer their companies could use the the federal re.
If you know anything about the reinsurance market and the wide variance in types of cover needed, you can imagine what kind of box that put the companies in.
It lasted only a few years before the economy was so tied up because of the lack of full coverage that, in addition to the rest of the socialist programs at the time – it was a total disaster.
It’s too long a story here, but do your own research on the subject.
‘The insurance industry has no grounds to complain….they chose to abandon certain high risk areas such as flood and coastal exposures.’
I wasn’t aware the insurance industry was complaining. Who in the insurance industry is complaining. The complaints listed here are not by the insurance industry – they are by taxpaying citizens who know whats coming next in Florida. That would be of course Florida taxpayers subsidizing those who live on the coast.
Rolfneu must be new to insurance…. carriers who pull out do so because the losses they are suffering are unacceptable to stockholders or members.
Now everyone is happy. Well almost. Socialists are happy to have government in the insurance business. Insurers are happy because, instead of forcing them to stay and take a beating, the elected government stupidly took it on themselves instead of negotiating on behalf of the citizenry. Taxpayers will be chapped in a year or three when losses exceed revenue with the too low premiums and taxes triple. I cannot believe how little posters here know about the business of insurance. Socialism indeed!
At some point, the cost of providing coverage must be weighed against the propriety of providing coverage. Every situation is not insurable nor should this be the case.
That we have the capability, capacity and contruction equipment to build mansions and buildings on the shore does not imply that the public or private sector should insure the structures from natural disasters that strike the beach.
Some balance and judgment must be utilized.
In 2004 the insurance industry sponsored legislation in MA to lift the premium caps in the MA Fair Plan’s large share territories-then set about non-renewing thousands and thousands of coastal homeowners who had no choice but the UnFair Plan for coverage, turning coastal areas into “large share” territories-no longer subject to rate caps thanks to the 2004 legislation.
The premiums for coastal homeowner insurance coverage have skyrocketed over the past three years.
The coastal homeowner crisis is is a very cleverly crafted crisis orchestrated by the insurance industry.
For the record-I didn’t decide to move to Cape Cod, I’m a 12th generation native Cape Codder. I’m a licensed insurance broker and a CPCU. – the insurance industry is guilty of collusion and price fixing based on hurricane modeling data they refuse to disclose for public scutiny. At least one of the hurricane modeling companies (A.I.R) is owned by the insurance industry (ISO). The other hurricane modeling company, RMS, is now officially run by a reinsurer insider-Robert Bently formerly of AON Re and Guy Carpenter Reinsurance Brokerage.
If you’re interested is NOT SEEING the hurricane modeling data, I have the UnFair Plan’s latest 3,200 page rate filing on a CD with critical hurricane modeling data “redacted”.
The insurance industry should be ashamed of itself and investigated by the authorities.
– Jane Logan, CPCU
harborsidejl@hotmail.com
So…..perhaps my suspicion that Al Gore’s “we’re all gonna die” movie was funded by certain reinsurers is correct.
In addition to being born on the coast. I do not live in a waterfront mansion. I have an 864 square foot ranch set on a street between two hills – I am protected from the wind on two out of four sides of my house, am in no danger of flood (excluded on HO policy anyway). The huge wind deductibles take care of a large portion of wind exposure. The number of sesaonal homes on Cape Cod eliminates much of the Additional Cost of Living exposure. Carriers, including the MA Fair Plan are doing just fine financially and don’t have as much as exposure as they would like us all to believe.
And for the record, insurance has always had an element of socialism and without insurance captialism would not exist, but obscene captialism at the expense of individuals and the local economy just is not right – Jane Logan, CPCU Cape Cod, MA
Perhaps or some “private equity group” …
While we can agree to disagree on specific details of pricing, reinsurance and arcane cat models, if Rita and Katrina has not taught everyone, those employed in the insurance industry and those not, that coastal exposure is problematic, how can a rational, not necessarily reasonably priced, solution be developed?
Creating DOMESTIC competition for the reinsurance industry would be a nice start like State and Federal CAT Funds.
“the insurance industry is guilty of collusion and price fixing”
Suggest you forward that evidence to the SEC.
I know nobody likes facts, but here are a couple…
1. Florida’s population increased from 4.8 million in 1960 to 12.8 million in 1990
2. Florida’s coastal population increased by 169% (national average is 38%)
3. Large numbers of Florida residents are retired: they are older, generally wealthier (larger homes)
4. Florida’s Insured Coastal Residential Exposure as of 2004 was 942.5 billion
5. 7 of the 10 most expensive hurricanes in US history have occurred since 2004
6. 9 or of 10 of these have affected Florida
Even if Florida would stop all coastal development now, it is probably too late to positively impact their insurance climate. There is just too much exposure on the coast and based on the facts we have, they will have substantial hurricane losses, if not this year, then the next or maybe the year after that.
The coastal exposures of Cape Cod and Florida are completely different. I’m talking about Cape Cod, not Florida.
Jane,
Sorry but my comment was not directed towards you or Cape Cod.
As the assigned risk type plans increase in population, fewer insurance companies will market in the state.
Assigned risk plans allow an opportunity for loss but no opportunity for profit. This does not add to a healthy insurance climate to help with other market problems.
The MA Fair Plan articles of organization allow for “profits, if any”. Nothing in the documents prohibit the MA Fair Plan from making a profit and they made 32 million and 48 million in the past two years. Non-renewing in the voluntary market and writing the same insured through the Fair Plan saves the carriers about 50% of commision expense and that’s not counting contingency commission! Not to mention the change in coverage going from broad coverage provided in voluntary market to limited coverage through Fairn Plan and limited Additional Living Expense exposure due to large number of seasonal second homes here. Finally, it is much more difficult to get financial information on the MA Fair Plan than most carriers. So to sum it all up, the carriers are making more money with less exposure and less financial disclosure!
Some believe the government exists to protect the stupid (also known as the public) and therefore believe that it is government that must step forward to aid the stupid (the public) from rapidly growing insurance premiums. Its not a question of communism/socialism versus capitalism. Honestly I don’t know why some otherwise intelligent people are wasting their time with this economic existentialism when they could be spending their time discussing the problem. Assuming frustration is gaining the upper hand, I recommend doubling efforts to focus. People can’t afford the sharply rising rates will either have to vacate their homes and move inland (or leave the state entirely) or they will flee private enterprise and seek the nurturing bosom of a government bureacracy that basically doesn’t have a clue. There is no easy solution unfortunately. But the status quo is doomed to failure. One policy is rate setting free of government intervention. If the government decides to let that power go, the insurance industry better hope that they are able to find a solution that the public finds acceptable. If not, the public will pressure politicians who don’t know what to do to take rash decisions which will come to bite the industry on its rear. And could even lead to a distruction in public trust in insurance altogether.
What’s stupid is the regultors not controlling this industry. What’s stupid is moving away from your home without even TRYING to do something about the issue. C’mon Kenney, you can’t write and you can’t debate the facts so you just sling insults. NICE. Study the issue for 3.5 years as I have and write when you have something intelligent to add the discussion. If I were to decide to leave (yielding to corporate greed) without a fight I’d have to move so far I’d end up in Tornado Alley. At least hurricane don’t arrive without any warnimg.
Come back to the discussion when you grow up and get your CPCU.
Jane, you are right, where are the regulators? To call the public “stupid” because they can’t vacate their homes and relocate is just plain “stupid”!
I think most of us reading the comments on this string would agree that the only “stupid” and certainly unprofessional comments that I have read are the ones from Jane and RAL. Jane, your CPCU studies were wasted. It proves that passing a course of study isn’t proof of common sense. Jane, I know you will find some childish and insulting thing to say back. Don’t waste your time. When I see your name and RAL from now on, I will skip the comments. GROW UP!
Aunti, I guess your comments are not childish & insulting! lol
As an agent for 35 years there is one thing I learned.
Don’t piss off the underwriter….they may show up underwriting your app some day.
Think more that a few people posting on here need to take a deep breath and more than one or two zannex.
I wholeheartedly agree with autie re: alphabet soup after one’s name. It’s never impressed me and the poster’s on this blog confirm that fact.
We are supposed to be an industry focused on facts and figures, not name calling and finger-pointing. This dialogue appears to have gotten off track.
The State of Florida Office of Insurance Regulation, as virtually all other DOIs, does not have the authority to review and revise reinsurance rates. Accordingly, it is a difficult expense component to address. Through the FHCF, they are trying to take control of the impact of reinsurance costs on premiums.
It seems to me that they are regulating to the full extent of their authority. Cost-based pricing is unpopular when costs are high. Get over it.
First of all Jane, kudos on your certifications. Its unfortunate that you took my comments as an insult. It was my mistake that my subject line made it seem that I was replying to your posts when in fact I was replying to someone who had posted on June 8th. I had read every post and simply clicked on add comment and started typing. A gentleman on June 8th had forcefully stated his distaste for socialism and stated he wished that government would stop protecting stupid people. My response was directed at him. Incidentally, I recommend using aliases. All criticism people make in my direction seems to bounce right off. I’m not at all offended by your comments. I have a joke; its pure gold: Why do they call it “Ovaltine?” The mug is round; the jar is round; they should call it “Rountine!”
To Joe, I attempted to make some commentary on state rate setting. I’m no expert, but if New Jersey auto rates are a guide in any sense, a free market to rate setting may not be such a horrible idea. If the New Jersey auto market continues to feel favorable results, more states are sure to follow. However the downside to McCarran Ferguson, and correct me if I’m mistaken, is that if Congress feels that the Industry is colluding to price gouging its policyholders in a free market pricing environment, it will simply repeal the act. I tend to think (but am open to be educated on the matter) that states may be holding on to the power to set rates in order to counter the potential collusion that could take place in the insurance market. States want the best rates for their citizenry but by allowing rate setting unfettered by government intervention is probably risky in their eyes as a result of the potential downfalls–the occurence of which could undermine the state-based regulatory structure entirely. Voters and Congress look to the bottom line of insurance premium rates and consumer protections and claims payout satisfaction. If the fiasco after hurricanes Katrina and Rita are any guide, many voters feel that the FL, MS, and LA Departments of Insurance failed them and their neighbors by allowing insurance companies to “step all over the little guy” in rejecting claims or referring some to NFIP and then increasing rates [as per catastrophe modeling].
I’m amazed at the negative reaction to the CPCU designation. The purpose of any eduction is to create people who want and can learn about anything they set their mind to learn. I’ve spent an incredible amount of time researching hurricanes and as far as the water here being different than Florida-it is different, it’s colder! Cold water has a huge effect on hurricanes-reducing their impact. We’ve only had a handfill of hurricane’s here(6)over the past 100 or so years (not 4 in one year like in FL)and the hurricanes that did make it did as much if not more damage inland than on the coast. If you look at maps of projected damage from a CAT 5 hurricane, Everyone on the East coast would have to move to the Mid West to escape potential hurricane damage. Again if we all moved West one of those pesky tornado’s would get us instead. I’m not about to move away from where 12 generations of my family have lived over my homeowner insurance premiums! I’ve also spent a lot of time researching the MA Fair plan (MPIUA), the board of Directors, the financials of the companies involved, MPIUA’s financials and testified at the MA Division of Insurance MPIUA rate hearing. MA and FL hurricane exposures are completely different!! Our building codes are different and we don’t build skyscraper’s on the beach which are esentially just giant sails to catch the wind! All I can say to anyone who compares the hurricane exposure of FL to MA is are you kidding me?!
Excuse me? COMPLETELY Different? A water molecule is about the same in Florida as it is in Massachusetts, as is the force of wind. Maybe you might be giving us a hidden meaning of the type of people that reside in the residences? What exactly do they teach you to get this so called See Pee See You grandiose ‘holier than thou’ letters?
Oh for Pete’s sake !
This is a good example of why we have so much legislation by superstition.
People deciding the way things are because they seem that way.
The ancient Greeks “knew” the wind was caused by trees waiving their branches.
There was never wind when the trees didn’t waive their branches.
So they knew they were right.
YaY Jane.
Moving because you don’t like something where you are is like changing from one cheap apartment to another.
The reality is that every place has an issue. Except for us here in North Texas, of course. Tornados and softball sized hail? No big deal. Texas is God’s country because it gets too hot for the devil.
Where do you think the CA wildfire victims should move to get away from wild fires…?
Just kidding……..
Out of the forest or build some sort of fire proof bunker for a house. I don’t know that there is such a structure. The MGM Grand Hotel fire taught us that lesson.http://www.co.clark.nv.us/fire/ccfd_mgm.htm
Every place has its own hazards and applicable perils. It pays to pay attention to them. It’s why life insurance needs a seller.