Too busy developing a coloring book to explain to our elected officials why this is bad. Problem is the FL Bar already made one and it has more colorful pictures & comics of DeSantis smashing “Woke Insurance Company super-villains” with a hammer.
I’m hoping big numbers and more colors do the trick..
Increased exposure of an insurer of last resort signals … uh, um, er, ‘market inefficiency’.
If rates were adequate, overall, and equitable by class according to risk/ exposure, the Florida property market would self-correct. The problem is accumulation of coastal exposures, which are likely to increase due to migration of citizens from other financially & politically oppressive states to Florida.
If the insurance industry wants to resolve this problem, they must educate the public about all costs of coastal living in a hurricane-prone area. Duh! So, how do they achieve this? I don’t have the ideal solution, but real estate agents must be the vanguard in this effort by informing home buyers of all costs of home ownership, including insurance premiums and POTENTIAL deductible payments down the road. But, that will likely result in lowered demand for coastal properties, thus lower market value of those residences. And that is contrary to the interests of agents compensated by commissions on sales prices. But, it might increase demand for homes farther inland, at lower risk of hurricane damage / destruction.
Another potential solution is legislative changes to construction codes, including coastal zones and structural damageability.
The “industry” has been pushing for building code reform for a very long time. But better building increases costs, and no one wants that when it’s easier to just wait for Air Force One Indemnity Company to come swooping in dropping cash out the doors to those who choose to build sub par structures in hurricane-prone areas. It’s just easier to blame insurers for not covering “everything” than to look inwards and realize it was your fault for buying or building in a hurricane zone. I suspect these same folks in coastal properties look at flooding stories along mid-western rivers, or fire-prone zones in the West, and ridicule the residents for building near rivers or creeks, or building near the forests. But them? No, the Lord gave them permission to build (and rebuild) on a sand bar in a hurricane zone, and no one is going to tell them any different. After all, that’s why they buy insurance…
You are correct about building code change legislation failures. But it should be stressed more, not abandoned now that the exposures will accumulate with the population increase due to migration.
Rates for the highest hazard areas need to be adjusted/ increased to better reflect the true underlying risk and ultimately discourage new construction there. Further, state government should coordinate a long-term exodus efforts from such areas… that should start ASAP. The idea of turning such areas into parks or industrial warehouses that are resistant to hurricanes and floods has only (generally speaking) been discussed. But it is the time for it to be embraced.
The rates for highest hazard areas already are increased to reflect underlying risks. That’s when insureds decide to underinsure their homes with high deductibles to save a couple hundred dollars on premium then cry about it when a storm hits. Now I don’t even want to write risks like that, I could explain the risks to these homeowners until I’m blue in the face and all they see is the premium amount, not the risks that come with having lackluster coverage and a 5% wind deductible, regardless of location. Had Florida legislators done their due diligence and realized this was a ticking time bomb YEARS ago, we likely wouldn’t be here now.
Here’s a big problem you’ve overlooked: Rates are inadequate because they are based on historical Hurr & AOP models. They don’t account for the *tremendous* litigation risk component that’s sky-rocketed in recent years. To date, nobody has developed an accurate one anywhere, let alone FL carriers.
All of those solutions you list are dead ends until the RE Industry & other “experts” incentives are aligned with the general public’s. Until then, they have every incentive to keep these warnings you recommend in the fine print.
This problem is not new, it’s been an issue in Florida since the 90’s…Maybe if someone can show DeSantis and his minions in the legislature that the problems arise as part of a conspiracy to introduce “woke” concepts into insurance, DeSantis might take some time from his pre-campaign campaigning to work on meaningful reform. Where is QAnon when you really need them??? Until then, however, it’s so much easier to blame the insurers and rating agencies than to actually do something about the issue. DeSantis likes for Florida to be a state of “firsts.” We’ll see how much he likes having Florida being first on the list of insolvent insurers in a year, or if the hurricanes blow this year or next, first in tax payer bailouts of an industry at a level not seen since the US bailed out Chrysler, with far less likelihood of being reimbursed than the US with AIG.
no one comment? Where’s the crew?
Busy writing Citizens policies of course.
Too busy developing a coloring book to explain to our elected officials why this is bad. Problem is the FL Bar already made one and it has more colorful pictures & comics of DeSantis smashing “Woke Insurance Company super-villains” with a hammer.
I’m hoping big numbers and more colors do the trick..
Unfortunate this is scarily accurate lol.
Increased exposure of an insurer of last resort signals … uh, um, er, ‘market inefficiency’.
If rates were adequate, overall, and equitable by class according to risk/ exposure, the Florida property market would self-correct. The problem is accumulation of coastal exposures, which are likely to increase due to migration of citizens from other financially & politically oppressive states to Florida.
If the insurance industry wants to resolve this problem, they must educate the public about all costs of coastal living in a hurricane-prone area. Duh! So, how do they achieve this? I don’t have the ideal solution, but real estate agents must be the vanguard in this effort by informing home buyers of all costs of home ownership, including insurance premiums and POTENTIAL deductible payments down the road. But, that will likely result in lowered demand for coastal properties, thus lower market value of those residences. And that is contrary to the interests of agents compensated by commissions on sales prices. But, it might increase demand for homes farther inland, at lower risk of hurricane damage / destruction.
Another potential solution is legislative changes to construction codes, including coastal zones and structural damageability.
The “industry” has been pushing for building code reform for a very long time. But better building increases costs, and no one wants that when it’s easier to just wait for Air Force One Indemnity Company to come swooping in dropping cash out the doors to those who choose to build sub par structures in hurricane-prone areas. It’s just easier to blame insurers for not covering “everything” than to look inwards and realize it was your fault for buying or building in a hurricane zone. I suspect these same folks in coastal properties look at flooding stories along mid-western rivers, or fire-prone zones in the West, and ridicule the residents for building near rivers or creeks, or building near the forests. But them? No, the Lord gave them permission to build (and rebuild) on a sand bar in a hurricane zone, and no one is going to tell them any different. After all, that’s why they buy insurance…
You are correct about building code change legislation failures. But it should be stressed more, not abandoned now that the exposures will accumulate with the population increase due to migration.
Rates for the highest hazard areas need to be adjusted/ increased to better reflect the true underlying risk and ultimately discourage new construction there. Further, state government should coordinate a long-term exodus efforts from such areas… that should start ASAP. The idea of turning such areas into parks or industrial warehouses that are resistant to hurricanes and floods has only (generally speaking) been discussed. But it is the time for it to be embraced.
The rates for highest hazard areas already are increased to reflect underlying risks. That’s when insureds decide to underinsure their homes with high deductibles to save a couple hundred dollars on premium then cry about it when a storm hits. Now I don’t even want to write risks like that, I could explain the risks to these homeowners until I’m blue in the face and all they see is the premium amount, not the risks that come with having lackluster coverage and a 5% wind deductible, regardless of location. Had Florida legislators done their due diligence and realized this was a ticking time bomb YEARS ago, we likely wouldn’t be here now.
Here’s a big problem you’ve overlooked: Rates are inadequate because they are based on historical Hurr & AOP models. They don’t account for the *tremendous* litigation risk component that’s sky-rocketed in recent years. To date, nobody has developed an accurate one anywhere, let alone FL carriers.
All of those solutions you list are dead ends until the RE Industry & other “experts” incentives are aligned with the general public’s. Until then, they have every incentive to keep these warnings you recommend in the fine print.
This problem is not new, it’s been an issue in Florida since the 90’s…Maybe if someone can show DeSantis and his minions in the legislature that the problems arise as part of a conspiracy to introduce “woke” concepts into insurance, DeSantis might take some time from his pre-campaign campaigning to work on meaningful reform. Where is QAnon when you really need them??? Until then, however, it’s so much easier to blame the insurers and rating agencies than to actually do something about the issue. DeSantis likes for Florida to be a state of “firsts.” We’ll see how much he likes having Florida being first on the list of insolvent insurers in a year, or if the hurricanes blow this year or next, first in tax payer bailouts of an industry at a level not seen since the US bailed out Chrysler, with far less likelihood of being reimbursed than the US with AIG.
I’m curious about your comment regarding ‘woke’ concepts being introduced. What is happening?
They have 2.5 billion in premium coming in. One nasty storm and 30 billion would be a disaster for them.