Can’t wait until the government tell’s McDonalds how much they can charge for a cheese burger. You know iPOD are expensive too, I wish the government would get involved!
Bob…The article indicates that the requested rate increases were denied b/c Allstate did not furnish adequate evidence that the double digit increases were actually necessary.
You don’t think insurers should provide proof of need?
What the article failes to explain, is that the proposed rate changes would have been considerably less had the state not required the companies to take an un-justifiable rate decrease earlier this year. Allstate is actually doing exactly what Christ ordered. Take a rate percentage decrease of what Gov. Christ feels you should be charging, and then later submit a filing based on loss experience (rather than politics) to prove that Christ has no idea what he is talking about.
Actuary….Don’t get me wrong, I’m not living in never never land…How do you explain this statement that came directly from the article?
“The rates proposed by the Allstate companies do not pass along all the savings reasonably available as a result of the expansion of the Florida Hurricane Catastrophe Fund.”
I found an interesting comment in another publication…. McCarty said he turned down the request because the insurer did not pass along enough savings to customers when it cut its rates by 14.2 percent earlier this year.
It seems like a case of making up the rules as you go. The other article also pointed out that Allstate Floridian has dropped 321k policyholders since 2005. I wonder if this latest rate rejection will lead them to drop a few more.
The legislature expanded the cat fund (subsidized state-provided reinsurance) this year and required all companies to reflect resulting savings. Unfortunately, they hired a notorious industry hater to estimate the savings for the OIR, and as you would expect, he grossly over-estimated the savings companies would see.
When companies show that their actual savings is less than this estimate, they are accused of not passing along enough savings.
The solution is to get government OUT of the insuranc business; no national cat fund, no FL risk pool. Florida regulating home insurance is the poster child of gov’t interference in the free market. Let the companies set rates based on risk fairly. Yes Floridians are going to get hammered on costs proportionate to the risk they assume by living where they do. Kansas pays Kansas rates, Oregon pays Oregon, etc.
Does anyone remember doing auto insurance business in Massachusets?
Tink, I’ll see if I can find the article again but I believe there was some research done in regards to the expansion of the Cat fund. In essence Florida is setting itself up as a reinsurer.
The biggest problem with this is that if one or more Cat 3+ hurricanes hit Florida in the next few years; policy-holders will see an assessment added to their property & casualty policys up to 10% for 5+years to recover from such a loss.
The legislature in Florida is basically gambling with mother nature, saying we don’t believe a storm will hit.
Caffiend…the FL CAT fund solution seems flawed at best. What happens if there are one or more 3+ hurricanes in consecutive years, as in 04 – 05? (In my opinion, this is not an ‘if’ but a ‘when’ situation). Will there be stacked assessments?
Given this potential scenario, it seems that a National CAT fund would be a superior alternative.
Why should the rest of the country assume the risk for coastal development in Florida? I can’t wait to hear Florida’s response to helping pay to restore the homes of southern Californians.
What if you reside in a state that has disproportionately low exposure to any catastrophe? Why should you pay in to something in which Florida represents 49% of the national hurricane cat exposure?
Again, good point, but what is the solution? Anyone out there have any suggestions?
Insurance is a risk pooling mechanism. Everybody pays a little so it’s affordable. If some of us experience losses, there is enough $ in the pot to make us whole again.
The problem is that if there isn’t sufficient pooling of resources, the cost to insure becomes prohibitive.
I just don’t see an alternative to a national catastrophe plan.
Maybe the entire east coast should devise a catastrophe plan. This may work. The problem w/individual state plans is that there aren’t enough resources, it has to be bigger than individual states.
But, Good Hands, you are forgetting something very important. The citizens of Florida have a right to our money. We owe them to pay for the choice in where they live. Obviously its just as much my responsibility for covering their assets as it is their’s. Thankfully this is a place where personal responsibility is thrown out the window in favor of policitians sticking there noses in an industry it doesn’t belong. I guess we don’t need underwriters anymore either which should bring down the rates even more!! Soon enough Florida will have free insurance. Don’t you love government?!? Yippee!!
Can’t wait until the government tell’s McDonalds how much they can charge for a cheese burger. You know iPOD are expensive too, I wish the government would get involved!
Bob…The article indicates that the requested rate increases were denied b/c Allstate did not furnish adequate evidence that the double digit increases were actually necessary.
You don’t think insurers should provide proof of need?
What the article failes to explain, is that the proposed rate changes would have been considerably less had the state not required the companies to take an un-justifiable rate decrease earlier this year. Allstate is actually doing exactly what Christ ordered. Take a rate percentage decrease of what Gov. Christ feels you should be charging, and then later submit a filing based on loss experience (rather than politics) to prove that Christ has no idea what he is talking about.
Don’t fall for that line. It’s not possible for any company to convince the FL OIR that rate increases are necessary.
Mike,
Crist or Christ? Freudian slip or Charlie’s perception of himself?
Oops my apologies.
Actuary….Don’t get me wrong, I’m not living in never never land…How do you explain this statement that came directly from the article?
“The rates proposed by the Allstate companies do not pass along all the savings reasonably available as a result of the expansion of the Florida Hurricane Catastrophe Fund.”
What’s the deal w/the cat fund?
I found an interesting comment in another publication…. McCarty said he turned down the request because the insurer did not pass along enough savings to customers when it cut its rates by 14.2 percent earlier this year.
It seems like a case of making up the rules as you go. The other article also pointed out that Allstate Floridian has dropped 321k policyholders since 2005. I wonder if this latest rate rejection will lead them to drop a few more.
The legislature expanded the cat fund (subsidized state-provided reinsurance) this year and required all companies to reflect resulting savings. Unfortunately, they hired a notorious industry hater to estimate the savings for the OIR, and as you would expect, he grossly over-estimated the savings companies would see.
When companies show that their actual savings is less than this estimate, they are accused of not passing along enough savings.
The solution is to get government OUT of the insuranc business; no national cat fund, no FL risk pool. Florida regulating home insurance is the poster child of gov’t interference in the free market. Let the companies set rates based on risk fairly. Yes Floridians are going to get hammered on costs proportionate to the risk they assume by living where they do. Kansas pays Kansas rates, Oregon pays Oregon, etc.
Does anyone remember doing auto insurance business in Massachusets?
Tink, I’ll see if I can find the article again but I believe there was some research done in regards to the expansion of the Cat fund. In essence Florida is setting itself up as a reinsurer.
The biggest problem with this is that if one or more Cat 3+ hurricanes hit Florida in the next few years; policy-holders will see an assessment added to their property & casualty policys up to 10% for 5+years to recover from such a loss.
The legislature in Florida is basically gambling with mother nature, saying we don’t believe a storm will hit.
Caffiend…the FL CAT fund solution seems flawed at best. What happens if there are one or more 3+ hurricanes in consecutive years, as in 04 – 05? (In my opinion, this is not an ‘if’ but a ‘when’ situation). Will there be stacked assessments?
Given this potential scenario, it seems that a National CAT fund would be a superior alternative.
Why should the rest of the country assume the risk for coastal development in Florida? I can’t wait to hear Florida’s response to helping pay to restore the homes of southern Californians.
Steve, point well taken. However, where in the country can you go & not be exposed to some natural catastrophe?
Hurricanes on the east coast, wildfires & earthquakes on the west coast, tornadoes in the midsection.
Why not a national cat fund for all these exposures?
What if you reside in a state that has disproportionately low exposure to any catastrophe? Why should you pay in to something in which Florida represents 49% of the national hurricane cat exposure?
Again, good point, but what is the solution? Anyone out there have any suggestions?
Insurance is a risk pooling mechanism. Everybody pays a little so it’s affordable. If some of us experience losses, there is enough $ in the pot to make us whole again.
The problem is that if there isn’t sufficient pooling of resources, the cost to insure becomes prohibitive.
I just don’t see an alternative to a national catastrophe plan.
Maybe the entire east coast should devise a catastrophe plan. This may work. The problem w/individual state plans is that there aren’t enough resources, it has to be bigger than individual states.
But, Good Hands, you are forgetting something very important. The citizens of Florida have a right to our money. We owe them to pay for the choice in where they live. Obviously its just as much my responsibility for covering their assets as it is their’s. Thankfully this is a place where personal responsibility is thrown out the window in favor of policitians sticking there noses in an industry it doesn’t belong. I guess we don’t need underwriters anymore either which should bring down the rates even more!! Soon enough Florida will have free insurance. Don’t you love government?!? Yippee!!