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Florida's Insurance Crisis
- Thread starter Uncle Timmy
- Start date
hi n dry
Beach Lover
Coastal insurance crisis is also in Northeast.
Also, note the Newsweek survey:
Should the government help provide insurance to homeowners in coastal areas?
Yes
No
Not sure
http://www.msnbc.msn.com/id/16720746/site/newsweek/
The Insurance Climate Change
Coastal homeowners in the East are losing their policies or watching premiums skyrocket. Carriers say that global warming is to blame.
By Karen Breslau
Newsweek
Jan. 29, 2007 issue - During the nine years she's lived in her historic sea captain's house on Cape Cod, Mass., Paula Aschettino never filed a claim against her homeowner's insurance policy. But last year she received a letter from her insurer, Hingham Mutual Group, canceling coverage on her nine-room, $600,000 oceanfront home, which has withstood its share of hurricanes since 1840. She and her husband, Michael, scrambled to find other insurance but were repeatedly denied. "They just said we are in a high-risk area," she says. A spokesman for Hingham, which canceled 9,000 Cape Cod policies, says that the company's own coverage?known as "reinsurance"?had doubled in the past year, making it necessary to withdraw from the coastal market.
The Aschettinos finally found other insurance, but only for nearly double their old premium of $1,800, and with a sky-high deductible of $12,000 against wind damage. Incensed, Aschettino circulated a petition among her neighbors demanding price reform from industry regulators. "People feel they are being totally ripped off," she says. "People are afraid to even make claims, because they are afraid they're going to be dropped."
Up and down the Eastern Seaboard, hundreds of thousands of policyholders like the Aschettinos are being dropped by their insurers; many more have had to swallow double-, even triple-digit increases in premiums and deductibles. While discontinued policies and rate hikes are nothing new in hurricane-battered Florida and the Gulf Coast, insurers are now dinging homeowners in the Northeast and mid-Atlantic states. Allstate Insurance recently announced it wouldn't take new homeowner policies in New Jersey, Connecticut and Delaware?or the five boroughs of New York City. The company also won't renew 30,000 of more than 600,000 policies it carries in and around New York City. A host of other firms are refusing to insure properties along the Atlantic coast from Maine to the Carolinas.
Why the sudden rash of cancellations? An increase in "extreme weather events" that many scientists?and now insurers?believe are linked to climate change. It's not just Category 4 hurricanes that have insurers worried. Around the country, companies have been racking up record property losses from freakish weather, such as the ice storms last week that paralyzed much of the Great Plains and froze California's citrus crops. In recent years, wildfires in the Northwest, drought and hail in the Midwest, windstorms, lightning strikes on power grids, soil subsidence and other calamities of nature have led to cumulative property losses that exceed those caused by hurricanes. "There's a shift going on to more frequent, extreme weather events," says Evan Mills, an environmentalscientist at the U.S. Department of Energy's Lawrence Berkeley National Laboratory. "It's as much an issue in the heartland as on the coast."
Global warming is the culprit, claim many?including several insurers who are canceling policies. While scientists cannot determine whether a single weather event is caused by a natural cycle, or is evidence of more permanent, malignant climate change, the pattern of mounting losses is clear. According to Mills, weather-related catastrophe losses have increased from about $1 billion a year in the 1970s to an average of $17 billion a year over the past decade. In 2005, the year of Katrina, that figure reached $71 billion.
Even before Hurricane Katrina?an event that has yet to be conclusively linked to climate change?catastrophe modelers had begun to look at the probability of a Category 3 or higher storm hitting the Eastern Seaboard. What they found was terrifying: because of increasing temperatures in the Atlantic, along with changes in air and sea currents, a major storm in the densely populated and highly priced Northeast would dwarf the $45 billion in insured losses wrought by Katrina. One study found that a repeat of the "Long Island Express," the Category 3 storm that plowed through New England in 1938, killing 600 people, would cause $200 billion in damage today. (For the record, the Aschettinos want it known that their house survived the Long Island Express.) The damage from a Category 5 storm directly hitting a major city, could, researchers say, "exceed the total capacity" of the U.S. insurance industry. Before he retired earlier this year, National Hurricane Center director Max Mayfield issued a final warning: "We're setting ourselves up for a major disaster."
Also, note the Newsweek survey:
Should the government help provide insurance to homeowners in coastal areas?
Yes
No
Not sure
http://www.msnbc.msn.com/id/16720746/site/newsweek/
The Insurance Climate Change
Coastal homeowners in the East are losing their policies or watching premiums skyrocket. Carriers say that global warming is to blame.
By Karen Breslau
Newsweek
Jan. 29, 2007 issue - During the nine years she's lived in her historic sea captain's house on Cape Cod, Mass., Paula Aschettino never filed a claim against her homeowner's insurance policy. But last year she received a letter from her insurer, Hingham Mutual Group, canceling coverage on her nine-room, $600,000 oceanfront home, which has withstood its share of hurricanes since 1840. She and her husband, Michael, scrambled to find other insurance but were repeatedly denied. "They just said we are in a high-risk area," she says. A spokesman for Hingham, which canceled 9,000 Cape Cod policies, says that the company's own coverage?known as "reinsurance"?had doubled in the past year, making it necessary to withdraw from the coastal market.
The Aschettinos finally found other insurance, but only for nearly double their old premium of $1,800, and with a sky-high deductible of $12,000 against wind damage. Incensed, Aschettino circulated a petition among her neighbors demanding price reform from industry regulators. "People feel they are being totally ripped off," she says. "People are afraid to even make claims, because they are afraid they're going to be dropped."
Up and down the Eastern Seaboard, hundreds of thousands of policyholders like the Aschettinos are being dropped by their insurers; many more have had to swallow double-, even triple-digit increases in premiums and deductibles. While discontinued policies and rate hikes are nothing new in hurricane-battered Florida and the Gulf Coast, insurers are now dinging homeowners in the Northeast and mid-Atlantic states. Allstate Insurance recently announced it wouldn't take new homeowner policies in New Jersey, Connecticut and Delaware?or the five boroughs of New York City. The company also won't renew 30,000 of more than 600,000 policies it carries in and around New York City. A host of other firms are refusing to insure properties along the Atlantic coast from Maine to the Carolinas.
Why the sudden rash of cancellations? An increase in "extreme weather events" that many scientists?and now insurers?believe are linked to climate change. It's not just Category 4 hurricanes that have insurers worried. Around the country, companies have been racking up record property losses from freakish weather, such as the ice storms last week that paralyzed much of the Great Plains and froze California's citrus crops. In recent years, wildfires in the Northwest, drought and hail in the Midwest, windstorms, lightning strikes on power grids, soil subsidence and other calamities of nature have led to cumulative property losses that exceed those caused by hurricanes. "There's a shift going on to more frequent, extreme weather events," says Evan Mills, an environmentalscientist at the U.S. Department of Energy's Lawrence Berkeley National Laboratory. "It's as much an issue in the heartland as on the coast."
Global warming is the culprit, claim many?including several insurers who are canceling policies. While scientists cannot determine whether a single weather event is caused by a natural cycle, or is evidence of more permanent, malignant climate change, the pattern of mounting losses is clear. According to Mills, weather-related catastrophe losses have increased from about $1 billion a year in the 1970s to an average of $17 billion a year over the past decade. In 2005, the year of Katrina, that figure reached $71 billion.
Even before Hurricane Katrina?an event that has yet to be conclusively linked to climate change?catastrophe modelers had begun to look at the probability of a Category 3 or higher storm hitting the Eastern Seaboard. What they found was terrifying: because of increasing temperatures in the Atlantic, along with changes in air and sea currents, a major storm in the densely populated and highly priced Northeast would dwarf the $45 billion in insured losses wrought by Katrina. One study found that a repeat of the "Long Island Express," the Category 3 storm that plowed through New England in 1938, killing 600 people, would cause $200 billion in damage today. (For the record, the Aschettinos want it known that their house survived the Long Island Express.) The damage from a Category 5 storm directly hitting a major city, could, researchers say, "exceed the total capacity" of the U.S. insurance industry. Before he retired earlier this year, National Hurricane Center director Max Mayfield issued a final warning: "We're setting ourselves up for a major disaster."
TooFarTampa
SoWal Insider
:shock:
Bob
SoWal Insider
Logic 101 is challenging I guess. Hold your wallet open, so that I can afford my insurance needs. How does that feel? Check the street sign, as I think that reads one-way street.
Many coastal properties are owned by those who cannot vote in Florida. We pay far higher property taxes because we do not have homestead exemption status. Many of us rent our properties part of the year, which translates into very healthy revenues to local government in the form of bed tax. And we use very few services because we do not have children in schools, etc. The absentee owner is the best thing that ever happened for locals. We are paying our taxes as well as augmenting ownership for those who live and vote here, who pay disproportionately lower taxes and incur no bed tax. Not to mention the obscene taxes that out-of-towners pay to rent a car in the State of Florida. Jeez...what is with all that?
Treat us like we were your neighbors, folks, because...we are the best neighbors you'll ever have. And had the Florida Legislature not done something about the robbery that insurance rates has been, the real estate market would never have recovered. I have had more concern about insurance rates than the question of home values, property taxes, and hurricanes combined. I salute this action and just in time!
Treat us like we were your neighbors, folks, because...we are the best neighbors you'll ever have. And had the Florida Legislature not done something about the robbery that insurance rates has been, the real estate market would never have recovered. I have had more concern about insurance rates than the question of home values, property taxes, and hurricanes combined. I salute this action and just in time!
TooFarTampa
SoWal Insider
Everybody in Florida ('cept maybe those Orlandians ;-) ) seems to need insurance relief -- residents, secondhomeowners, businesses. There is debate about how much the new laws will actually reduce rates right away, but at least they will stay under control. For now. Property taxes is next on the agenda, an issue that seems even more complex than insurance.
They're talking about somehow capping what municipalities and counties can tax, which makes some sense because everyone wonders where this influx of money is going. This state is just in a pickle, no two ways about it. I am glad that Tallahassee is at least trying -- truly, honestly trying. That's something.
seacliffes
Beach Lover
Well that is your perspective, as a coastal homeowner I have mine. The one way street also leads from the coastal home owner's wallet when it comes to the taxes paid to both the Federal and the State treasuries. The Government knows this and they do not want to kill the goose that lays the Golden eggs via lucrative tourist tax revenue and high property taxes coastal properties generate. Also known as Economics 101, which may be challenging for those who claim the logical high ground. Making it simple, invest $1 to generate $2 in revenue that will "go to the common good" as some policticians would call it, so that all state residents benefit. Arguable, I know, but that is from my perspective.
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TooFarTampa
SoWal Insider
There's a great deal of truth to this. Bob I know that you don't want all of Florida's coastal residents to decide to move to Orlando. The fact of the matter is that Orlando, Gainesville, Tallahassee and Ocala are the only four main cities not on or right by the coast, and the last three aren't very big. It is what it is as they say. I have heard that wind insurance is much less expensive and easier to obtain in at least two of those cities. And all four cities have and will continue to benefit from Florida's coastlines.
Bob
SoWal Insider
This year my insurance company requested a 40 percent increase on my Orange County residence homeowners policy. I am 93 feet above sea level and about 40 miles from the coast. I weathered 3 hurricanes in '04 , and luckily had no claims[because of the state mandated wind deductible]. My point before is that, as an inland owner, I have my hands full dealing with my own insurance company[USAA]. Now the state wants to bill me through my homeowners and auto policy for Citizens shortfalls. They have already twice billed me for the '04 and '05 storm season shortfalls. If we are to adapt insurance socialism here with asessments, be fair about the money grab and let the dollars come out of the state general fund. The cost would be spread out to the total population, not just homeowners. Is this unreasonable? The Citizens bailout plan leaves the company exposed to more storm claims and shifts lack of funding to inland owners.Everybody in Florida ('cept maybe those Orlandians ;-) ) seems to need insurance relief -- residents, secondhomeowners, businesses. There is debate about how much the new laws will actually reduce rates right away, but at least they will stay under control. For now. Property taxes is next on the agenda, an issue that seems even more complex than insurance.