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[C.Ann]

........................

 

[lbgraves]

IDK about FL but here in coastal NC our rates just went up when we got our renewal notice. I think that everyone is paying for the hurricane damage.

 

[Lessa of Pern]

rate increase, probably. pulling out, probably not.

remember Hurricane Andrew in 1992?

I was working for a manjor insurance company at the time. shortly before the hurricane, the company made a business decision to cease writing homeowners coverage in florida.

after the hurricane, everyone in the industry wanted to cut and run. the state insurance commisioner wouldn't let any of the insurers stop writing homeowners insruance unless they wanted to pull out of florida for all lines of business.

even though my company made the decision before the hurricane, they weren't allowed to stop writing that line of business.

but if I rmeember correctly, we were able to raise premiums. increased risk=increased premium.

 

[MizBlu]

It has always amazed me how insurance companies cry poverty when they have to do what they are in the business of doing which is paying out claims to people who've paid them money. Geeeze, whatta concept!

 

[bicker]

Most insurance companies are in business to make profit. Their competition is all the other options their investors have for investing their money. If excessive losses make the company less profitable than the alternatives, they have two choices: Increase revenues to return to competitiveness, or cease operations.

 

[MizBlu]

Most insurance companies are in business to make profit. Their competition is all the other options their investors have for investing their money. If excessive losses make the company less profitable than the alternatives, they have two choices: Increase revenues to return to competitiveness, or cease operations.

I understand that.

My observation has to do with the fact that it seems to come as a shock to the insurance companies when they have to deliver the service, in the form of paying claims, to people who've been paying for that service.

I'm sure the insurance companies would like nothing more than to collect premiums and not pay any claims, but when you take people's money, you have to give something back.

 

[Tigger_Magic]

Insurance rates are certain to increase in FL as well as other areas hit by hurricanes this year (and some areas not hit, but that are potential targets for hurricanes). Along with rate increases, expect to see underwriting rules tightened and non-renewals increase as companies look to decrease their overall exposure in the hardest hit areas.

As bicker said, insurance companies are not charities, but in business to make money. Insurance laws require them to have money in reserve to pay claims and while it will certainly be a painful year for most of their bottom lines, they'll survive to insure another day. There'll always be rumors of insurance companies pulling out of a state, but it's never happened.

 

[froglady]

The question is, do you want to pay more now to cover the UNEXPECTED losses of the last two years (yes, insurance companies know that they will have to pay out claims, but none of them expected the UNUSUALLY high and FREQUENT number of claims due to hurricanes) to have insurance when YOU need it, or would you rather the companies go out of business altogether, and be stuck paying for everything when disaster hits YOU? Or, waiting around for the taxpayers to help you?

One way or another, the cost is going to come out of somebody's pocket.

 

[MizBlu]

So what are the insurance companies doing with the money they collected in the years when they didn't have to pay so many claims? There were quite a few years when there were few hurricanes or natural disasters? What happened to that money? Was it returned to the policyholder?

Hmmmm..................

 

[C.Ann]

For anyone who has experienced increases in the past, have they been substantial?

 

[marlasmom]

I shopped around for our insurance after the hurricanes last year and was able to get a substantial saving with a reputable company - Travelers.

 

[Tigger_Magic]

So what are the insurance companies doing with the money they collected in the years when they didn't have to pay so many claims? There were quite a few years when there were few hurricanes or natural disasters? What happened to that money? Was it returned to the policyholder?

Hmmmm..................

You pay a premium to transfer the risk of loss from you to the insurance company. In exchange for the premium, the company agrees to pay covered claims up to the limit of your policy for the duration of that policy (usually 1 year for a standard homeowners policy). If you have no claims, why should they return the money to you? You received exactly what you contracted for: a transfer of risk and guarantee to claim(s) payment in the event of a covered loss. The fact that you had no losses does not void the contract or obligate the insurance company to return anything to you.

 

[froglady]

So what are the insurance companies doing with the money they collected in the years when they didn't have to pay so many claims? There were quite a few years when there were few hurricanes or natural disasters? What happened to that money? Was it returned to the policyholder?

Hmmmm..................

It went to shareholders, and as returns into investor funds, such as annuity retirement funds, which will support many of our retirees in the future so the government won't have to. Again, you can pay now , or you can pay later.

BTW, I have insurance with a company that DOES give us back money if expenses were less than anticipated. I doubt that I'll be seeing a check this year.

 

[Lynn CC]

We had the same problem here in MA last year. After 22 years my Insurance Company dropped our Homeowners Ins. They were not writing anymore on the Cape because they say we are High Risk.
So I went into the FAIR plan with the State.
I paid $800..with a $250 deductable for $180 coverage
Now I pay $1400 with a $2500 ded. for $360 cov.

Flood Insurance is not included, it's an additional $768 for 250k coverage and another $316 if I want $50k contents coverage. Yikes, we are thinking of getting it, but haven't yet. If we do decide to get this that will put our annual Insurance bill (combined with every insurance we have) over 20K a year.

 

[In a hurry]

I don't see why they wouldn't raise the premiums in the areas most likely to sustain damage. It just makes sense. That is their income. I think there ought to be some payoff for living in an area with no ocean!

 

[C.Ann]

I don't see why they wouldn't raise the premiums in the areas most likely to sustain damage. It just makes sense. That is their income. I think there ought to be some payoff for living in an area with no ocean!

---------------

From what I heard, the increases would be "across the board" in Florida - not just the coastal and/or high risk areas..

 

[twojo21]

i work in insurance & yes rates will increase in florida for insurance, but insurance companies can not completely pull out of a state like florida due to government mandates although they can restrict new policies or non write zones. rates will actually increase for not just florida but all over the u.s. due to the hurricanes & insurance companies paying on claims down there, insurance is like a blanket covering everyone under a company.

 

[Lisa loves Pooh]

I don't see why they wouldn't raise the premiums in the areas most likely to sustain damage. It just makes sense. That is their income. I think there ought to be some payoff for living in an area with no ocean!

Our insurance company several years ago had to raise rates nationwide b/c of all the wildfires out west.

It isn't just the Ocean that is high risk.

 

[ducklite]

So what are the insurance companies doing with the money they collected in the years when they didn't have to pay so many claims? There were quite a few years when there were few hurricanes or natural disasters? What happened to that money? Was it returned to the policyholder?

Hmmmm..................

We actually got a check from our auto insurance company earlier this year. I I can't recall the eaxct working of the letter, but they had a "good year" and were rewarding their "best customers" with a rebate.

At any rate, insurance companies make money in two ways. One is premiums, and the other is investment income. They invest premiums into a variety of markets, and then use that income to fund reserves. That's where catastrophic claims payments come from. Theoretically, the reserves should equal policy's written, but it doesn't always work that way.

If you want to systematically make money from an insurance company, become a stockholder with that company. A few have had some great results this quarter, even with cat losses.

Anne

 

[DawnCt1]

It went to shareholders, and as returns into investor funds, such as annuity retirement funds, which will support many of our retirees in the future so the government won't have to. Again, you can pay now , or you can pay later.

BTW, I have insurance with a company that DOES give us back money if expenses were less than anticipated. I doubt that I'll be seeing a check this year.

I was wondering if I would see my USAA dividend this year. I do remember however getting smaller dividends during other major losses so I guess we will see.