State Farm pulls out of Florida

[Toro]

The taxpayers can pay to fix Florida. Just the way they were forced to pay for New Orleans.

That's what Crist is counting on.

I can tell you unequivocally that the insurance industry has to raise rates here in Florida. But Crist is a populist who ran on keeping rates low. His strategy is to deny the insurance industry as much as possible but several big insurers have pulled out. This has forced many homeowners into the arms of Citizens Insurance, the government-run insurance and now the biggest insurer in the state. And Citizens is under-reserved!

Florida taxpayers are fucked if a cat 3 hits south Florida or Tampa Bay. Property taxes will soar and the state will be broke, and Crist is relying on a bailout from Washington if it happens.

 

[Toro]

Did State Farm and Allstate post a negative balance sheet? Or were they making money hand over fist? They collected billions and billions and billions before Andrew hit. And then 2005. Sure they had it rough, but that's what insurance is. It's a gamble that more will go right than will go wrong. An insurance company becomes a preadator when all they want is yer money and none of the responsibility they contracted for.

Willow

I am no friend to the insurance business. However, Florida is a sinkhole for the insurance industry. I sit on a government committee involved with insurance in the state, and I can tell you that the cost of insuring in Florida is through the roof and completely uneconomic. The state is starved of insurance capital but Crist and the legislature are offering meager band-aid solutions when the solution is to allow the market set the price, which is not being allowed to happen.

 

[Toro]

In Andrew, Insurance companies got wiped out because people were paying 400 bucks a year for a condo policy and 1200 for a homeowners

Hurricane Andrew bankrupted Lloyd's of London, a storied 300-year old insurance market. Andrew led the state to offer catastrophe reinsurance to insurance carriers writing in Florida.

Insurance has been underpriced here for years.

And the government is playing a giant game of Russian Roulette with Mother Nature it is likely to lose.

 

[Ravi]

Did State Farm and Allstate post a negative balance sheet? Or were they making money hand over fist? They collected billions and billions and billions before Andrew hit. And then 2005. Sure they had it rough, but that's what insurance is. It's a gamble that more will go right than will go wrong. An insurance company becomes a preadator when all they want is yer money and none of the responsibility they contracted for.

Willow

I am no friend to the insurance business. However, Florida is a sinkhole for the insurance industry. I sit on a government committee involved with insurance in the state, and I can tell you that the cost of insuring in Florida is through the roof and completely uneconomic. The state is starved of insurance capital but Crist and the legislature are offering meager band-aid solutions when the solution is to allow the market set the price, which is not being allowed to happen.

I don't know if that's entirely true. My insurerer (Met Life) decided to pull out and not renew...and I didn't make a claim, ever. I went with a different company, not a national name, and my rate doubled. Haven't had to go to Citizens yet...but I've no doubt it will happen.

What I don't understand is why there is no national catastrophic insurance, like flood insurance. Anywhere in the country could be hit by an unusual event...so why not spread THAT risk and let the insurance companies take the mundane risks.

 

[Andrew2382]

The taxpayers can pay to fix Florida. Just the way they were forced to pay for New Orleans.

That's what Crist is counting on.

I can tell you unequivocally that the insurance industry has to raise rates here in Florida. But Crist is a populist who ran on keeping rates low. His strategy is to deny the insurance industry as much as possible but several big insurers have pulled out. This has forced many homeowners into the arms of Citizens Insurance, the government-run insurance and now the biggest insurer in the state. And Citizens is under-reserved!

Florida taxpayers are fucked if a cat 3 hits south Florida or Tampa Bay. Property taxes will soar and the state will be broke, and Crist is relying on a bailout from Washington if it happens.

exactly.

Also when Citizens runs out of money they can jus do what they do every eyar...add another assessment.

I work for a company called Aon, one of the largest insurance brokers in the world and I have a lot of high rise condos in my book and sometimes the surcharges and fees on a Citizens policy is as high as 70-80 thousand dollars.

And there is nothing anyone can do about it...they can assess whenever they want.

In florida, Citizens now has an 1% assessment on your auto policy...every auto policy in florida gets a 1% increase that goes right to a property insurance company.

Thats how desperate for cash they are.

If you are lucky enough not to have citizens...guess what...look at your declaration page...you will see a Citizen assessment on it. 2 of them actually

 

[Toro]

I don't know if that's entirely true. My insurerer (Met Life) decided to pull out and not renew...and I didn't make a claim, ever. I went with a different company, not a national name, and my rate doubled. Haven't had to go to Citizens yet...but I've no doubt it will happen.

It's not you per se whom they are worried about. They are worried about most of the state. You just happen to live in that state.

Most people who get dropped wind up at Citizens, and Citizens is under-reserved.

What I don't understand is why there is no national catastrophic insurance, like flood insurance. Anywhere in the country could be hit by an unusual event...so why not spread THAT risk and let the insurance companies take the mundane risks.

Hurricanes are a localized event. They don't occur in, say, Missouri. So Missourians see no need to subsidize people who live in Florida.

 

[Andrew2382]

Did State Farm and Allstate post a negative balance sheet? Or were they making money hand over fist? They collected billions and billions and billions before Andrew hit. And then 2005. Sure they had it rough, but that's what insurance is. It's a gamble that more will go right than will go wrong. An insurance company becomes a preadator when all they want is yer money and none of the responsibility they contracted for.

Willow

I am no friend to the insurance business. However, Florida is a sinkhole for the insurance industry. I sit on a government committee involved with insurance in the state, and I can tell you that the cost of insuring in Florida is through the roof and completely uneconomic. The state is starved of insurance capital but Crist and the legislature are offering meager band-aid solutions when the solution is to allow the market set the price, which is not being allowed to happen.

I don't know if that's entirely true. My insurerer (Met Life) decided to pull out and not renew...and I didn't make a claim, ever. I went with a different company, not a national name, and my rate doubled. Haven't had to go to Citizens yet...but I've no doubt it will happen.

What I don't understand is why there is no national catastrophic insurance, like flood insurance. Anywhere in the country could be hit by an unusual event...so why not spread THAT risk and let the insurance companies take the mundane risks.

Met Life was probably downsizing their book. According to insurance regulations when you decide to non-renew policies and downsize your book..you can't just nitpick and say take these customers get rid of these...cause then every company would get rid of the dead weight...it's sort of a lottery that they do...you got picked

 

[WillowTree]

The taxpayers can pay to fix Florida. Just the way they were forced to pay for New Orleans.

That's what Crist is counting on.

I can tell you unequivocally that the insurance industry has to raise rates here in Florida. But Crist is a populist who ran on keeping rates low. His strategy is to deny the insurance industry as much as possible but several big insurers have pulled out. This has forced many homeowners into the arms of Citizens Insurance, the government-run insurance and now the biggest insurer in the state. And Citizens is under-reserved!

Florida taxpayers are fucked if a cat 3 hits south Florida or Tampa Bay. Property taxes will soar and the state will be broke, and Crist is relying on a bailout from Washington if it happens.

Yep! so is everybody else.

 

[WillowTree]

Did State Farm and Allstate post a negative balance sheet? Or were they making money hand over fist? They collected billions and billions and billions before Andrew hit. And then 2005. Sure they had it rough, but that's what insurance is. It's a gamble that more will go right than will go wrong. An insurance company becomes a preadator when all they want is yer money and none of the responsibility they contracted for.

Willow

I am no friend to the insurance business. However, Florida is a sinkhole for the insurance industry. I sit on a government committee involved with insurance in the state, and I can tell you that the cost of insuring in Florida is through the roof and completely uneconomic. The state is starved of insurance capital but Crist and the legislature are offering meager band-aid solutions when the solution is to allow the market set the price, which is not being allowed to happen.

I understand where you guys are coming from. I really do. I'm just pissed as hell that people here in Florida (I am too by the way) have been paying premiums for years and years and years,, in good faith, only to have these jack ass insurance companies drop them. They would have been so much better off putting that money in the bank, but they can't cause mortgage backers insist on insurance. I think the whole damn thing is a scam.

 

[WillowTree]

Did State Farm and Allstate post a negative balance sheet? Or were they making money hand over fist? They collected billions and billions and billions before Andrew hit. And then 2005. Sure they had it rough, but that's what insurance is. It's a gamble that more will go right than will go wrong. An insurance company becomes a preadator when all they want is yer money and none of the responsibility they contracted for.

Willow

I am no friend to the insurance business. However, Florida is a sinkhole for the insurance industry. I sit on a government committee involved with insurance in the state, and I can tell you that the cost of insuring in Florida is through the roof and completely uneconomic. The state is starved of insurance capital but Crist and the legislature are offering meager band-aid solutions when the solution is to allow the market set the price, which is not being allowed to happen.

I don't know if that's entirely true. My insurerer (Met Life) decided to pull out and not renew...and I didn't make a claim, ever. I went with a different company, not a national name, and my rate doubled. Haven't had to go to Citizens yet...but I've no doubt it will happen.

What I don't understand is why there is no national catastrophic insurance, like flood insurance. Anywhere in the country could be hit by an unusual event...so why not spread THAT risk and let the insurance companies take the mundane risks.

Ravi, you can buy National Flood Insurance. It's not that expensive either.

 

[Ravi]

Hurricanes are a localized event. They don't occur in, say, Missouri. So Missourians see no need to subsidize people who live in Florida.

No, of course they don't. But disasters know no states...floods, hurricanes, earthquakes, tornadoes, terrorist attacks, Mormons gone wild...Floridians have no need to subsidize these other disasters, and yet, they do.

 

[Ravi]

Willow

I am no friend to the insurance business. However, Florida is a sinkhole for the insurance industry. I sit on a government committee involved with insurance in the state, and I can tell you that the cost of insuring in Florida is through the roof and completely uneconomic. The state is starved of insurance capital but Crist and the legislature are offering meager band-aid solutions when the solution is to allow the market set the price, which is not being allowed to happen.

I don't know if that's entirely true. My insurerer (Met Life) decided to pull out and not renew...and I didn't make a claim, ever. I went with a different company, not a national name, and my rate doubled. Haven't had to go to Citizens yet...but I've no doubt it will happen.

What I don't understand is why there is no national catastrophic insurance, like flood insurance. Anywhere in the country could be hit by an unusual event...so why not spread THAT risk and let the insurance companies take the mundane risks.

Ravi, you can buy National Flood Insurance. It's not that expensive either.

Oh, I have it, believe me. Though my house is required to have it, there is a 99.9% possibility it will never flood. So I'm subsidizing those that have a 80% probability of flooding. My point was...I HAVE NO CHOICE, why should everyone else?

 

[WillowTree]

I don't know if that's entirely true. My insurerer (Met Life) decided to pull out and not renew...and I didn't make a claim, ever. I went with a different company, not a national name, and my rate doubled. Haven't had to go to Citizens yet...but I've no doubt it will happen.

What I don't understand is why there is no national catastrophic insurance, like flood insurance. Anywhere in the country could be hit by an unusual event...so why not spread THAT risk and let the insurance companies take the mundane risks.

Ravi, you can buy National Flood Insurance. It's not that expensive either.

Oh, I have it, believe me. Though my house is required to have it, there is a 99.9% possibility it will never flood. So I'm subsidizing those that have a 80% probability of flooding. My point was...I HAVE NO CHOICE, why should everyone else?

Oh! I gotcha now! I'll have to think about that one. I bet there would be humondous opposition to that idea.

 

[Ravi]

Ravi, you can buy National Flood Insurance. It's not that expensive either.

Oh, I have it, believe me. Though my house is required to have it, there is a 99.9% possibility it will never flood. So I'm subsidizing those that have a 80% probability of flooding. My point was...I HAVE NO CHOICE, why should everyone else?

Oh! I gotcha now! I'll have to think about that one. I bet there would be humondous opposition to that idea.

Why, though? My flood insurance is about $250 a year and my regular insurance is about $5,000. Chances are I will never make a flood insurance claim. $250 a year is almost nothing. Why not have the risk spread throughout the entire country, since the entire country is prone to disaster?

 

[GHook93]

State Farm Pulling Out of Florida Property Insurance Market

Yet again we see the results of goverment interference on the private sector. The State of Florida has imposed so many regulations and denied repeated rate hikes that are needed by insurance companies to have the money needed to pay claims that it has come down to all the players are leaving the State.

Allstate did it two years ago and now State Farm has followed suit in processing the non-renewal of every property policy they have.

The majority of these policies will be forced to go to Citizens Property Insurance Corp the state run insurance company already in dire financial stress.

The policy holders will mostlikely see their rates jump 200 % in this transfer as Citizens is always more expensive, but they are "the company of last resort" and take everyone.

All the government interference in not letting companies charge what needs to be charged to cover themselves is forcing every insurance company to stop writing property.

What a shame

LOL! It's got nothing to do with rate hikes, they can't keep insuring sure losers. I can't believe Crist wants to make them quit insuring cars and health to pay them back for pulling out. Way to punish Floridians, you dope.

I think it also has to do with the fact that half the home they insure get blow away come hurricane season!

 

[Andrew2382]

I don't know if that's entirely true. My insurerer (Met Life) decided to pull out and not renew...and I didn't make a claim, ever. I went with a different company, not a national name, and my rate doubled. Haven't had to go to Citizens yet...but I've no doubt it will happen.

What I don't understand is why there is no national catastrophic insurance, like flood insurance. Anywhere in the country could be hit by an unusual event...so why not spread THAT risk and let the insurance companies take the mundane risks.

Ravi, you can buy National Flood Insurance. It's not that expensive either.

Oh, I have it, believe me. Though my house is required to have it, there is a 99.9% possibility it will never flood. So I'm subsidizing those that have a 80% probability of flooding. My point was...I HAVE NO CHOICE, why should everyone else?

Yup, flood is a national program...policies are issued by companies but all claims are paid by FEMA.

They recently wanted to add wind coverage to flood policies but it never got through Congress.

 

[WillowTree]

Oh, I have it, believe me. Though my house is required to have it, there is a 99.9% possibility it will never flood. So I'm subsidizing those that have a 80% probability of flooding. My point was...I HAVE NO CHOICE, why should everyone else?

Oh! I gotcha now! I'll have to think about that one. I bet there would be humondous opposition to that idea.

Why, though? My flood insurance is about $250 a year and my regular insurance is about $5,000. Chances are I will never make a flood insurance claim. $250 a year is almost nothing. Why not have the risk spread throughout the entire country, since the entire country is prone to disaster?

cause those snowbound folks are jealous we live in paradise!

 

[Toro]

Here is a good editorial

Want low prices? We need political-risk insurance

Dino Falaschetti and Christopher Douglass | Special To The Sentinel
January 29, 2009

On Tuesday, State Farm announced it will no longer insure property in Florida. State Farm's decision follows the Florida Office of Insurance Regulation's rejection of the insurer's 2008 request to increase rates on property policies. The increase would have been enormous; Orange County customers could have seen an average increase of $1,000 in their annual insurance premium on a $300,000 home.

There's something weird about this. Large insurers have been dropping their prices in recent years, not raising them. Usually, large insurers can offer a better deal because they can use their geographic reach to spread risks wider.

When the wind blows in Missouri from a tornado, it usually doesn't blow in Florida from a hurricane. So, in years when there is little tornado activity, but hurricanes strike Florida, premiums come to Florida to cover losses. Insurers can balance these risks for the greater good, if we let them.

But insurance isn't working in Florida. The larger companies, including State Farm, have requested the highest rates and are trying to write fewer insurance contracts in Florida. What's going on? Why aren't the large insurers offering lower insurance premiums to Floridians?

It comes down to fairness, but not the type of fairness you might think. It's not an issue of large insurers being fair to their customers after a catastrophe; the courts have seen to that. It comes down to whether we are committed to long-term, not short-term, fairness.

Insurance is never fair in the short term. In any single year, Floridians might see State Farm use their premiums to settle claims in Missouri. That's not fair.

But over the long term, it is fair. If the actuaries have done their work well, the tornadoes in Missouri (and the earthquakes in California) will balance out against the hurricanes in Florida.

Unfortunately, when politicians get involved, fairness is usually more about narrowing the benefits and spreading the costs. It's not their fault; they need to get re-elected, and denying requests from insurers to increase premiums helps. Many will vote for candidates who promise to leave other states with all of the risk -- not candidates who promise to efficiently balance those risks with other states.

Choosing a short-term solution can lead to long-term problems. We often hear that Florida's problems come from insurers not wanting to be in a risky place. But what kind of risks are they worried about? Risk of the next catastrophe or risk that politicians will change the rules after the next catastrophe?

Large insurers are pretty good at balancing the risk of wind between Missouri and Florida. But there is no way to balance against a political landscape that leaves them with almost certain losses; they can only try to get away.

Until we find a way to provide insurance against political risks, we will probably see more insurers leaving Florida. Without insurance against political risk, insurers won't be around to provide lower-priced insurance against natural risks.



Dino Falaschetti is an associate professor of law and economics at the Florida State University College of Law and a Campbell National Fellow at the Hoover Institution, Stanford University. Christopher Douglass is principal at Economic Advisors Inc., based in Colorado with offices in Florida.

Want low prices? We need political-risk insurance -- OrlandoSentinel.com

 

[Ravi]

Toro, I would happily have accepted a $1,000 hike on my homeowner's insurance. My company, Met Life, dropped me last year. None of the big companies write policies here anymore. I managed to get one quote for insurance. I now pay $2,500 more than I did previously.

 

[editec]

State Farm Pulling Out of Florida Property Insurance Market

Yet again we see the results of goverment interference on the private sector. The State of Florida has imposed so many regulations and denied repeated rate hikes that are needed by insurance companies to have the money needed to pay claims that it has come down to all the players are leaving the State.

Allstate did it two years ago and now State Farm has followed suit in processing the non-renewal of every property policy they have.

The majority of these policies will be forced to go to Citizens Property Insurance Corp the state run insurance company already in dire financial stress.

The policy holders will mostlikely see their rates jump 200 % in this transfer as Citizens is always more expensive, but they are "the company of last resort" and take everyone.

All the government interference in not letting companies charge what needs to be charged to cover themselves is forcing every insurance company to stop writing property.

What a shame

STATE FARM understands that the statistical rish of a couple major force 5 hurricanes hitting a couple major population centers would be catstropic for their bottom line.

Can't blame State Farm for that.

State Farm wants to charge to cover that risk.

The State thinks that those rates are too high..(I suspect they are too high, but then the RISK is too high, too)

I do NOT blame State Farm for pulling out.

FLA is a major disaster waiting to happen folks.

I wouldn't be selling homeowners insurance there, either.

A lot of you believed there was no global warming.

Most of you global warming deniers now want to debate whether or not it's manmade, but you now no longer deny that the event is occuring.

But the INSURANCE COMPANIES (who, let's face it aren't exactly leftie-treehuggers) KNOW that the statistical risks of major hurricanic events in FLA isever increasing.

If that doesn't prove to you global warming skeptics that something is afoot with the climate, then you are nothing but faith-based nitwits.

Insurance comapnies do NOT give up huge markets based on nonsense, folks. they are the masters of assessing risk v reward and FLA is a losing game for them.

They are right to abandon FLA because the RISK is too high.

And the risks are too high because the climate is changing.