[JimMe]

This thread was started 3.5 years ago so I don't know how relevant it is today, particularly in light of the fact that Florida has not been hit by a major hurricane in 5 years. So for 5 years the insurers have been collecting premiums with very little pay out. Hopefully they will have built up their reserves and not put all their profits into dividends.

[Mathguy]

Originally Posted by JimMe

This thread was started 3.5 years ago so I don't know how relevant it is today, particularly in light of the fact that Florida has not been hit by a major hurricane in 5 years. So for 5 years the insurers have been collecting premiums with very little pay out. Hopefully they will have built up their reserves and not put all their profits into dividends.

This is a really good time to dust off this thread.

Let's start by hoping that Irene stays FAR out to sea.

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1) Insurers cannot accrue for future events and keeping excess capital around is acutally bad for everyone including the rates at the primary level. At the REINSURANCE level what happens is that it tends to push down rates a bit and open up availability as they have extra capital to "invest" by underwriting business. Besides the state regulates most everything so ironically unless you have citizens I would suspect no issues in having reserves able to pay your claims etc.

2) Citizens rates are inadequate so even in years with no big hit they are not building reserves like one might hope. They will get crushed the next time a big one hits, they will act shocked and then they will pass the hat to you via assessments and other means. They write a huge portion of the worst coastal exposures and will then make the rest of the state pick up the tab.

Really, most floridians have a hint of how much of a timebomb citizens is but the former governor and his flunkies and others have thrown up enough *smoke* and outright lies about insurance that many refuse to see the truth.

[Mathguy]

Bump.

Congratulations Florida, Citizens is now the largest property insurer in the state and they are writing the highest risk (southern coastal) exposures.

Oh, and their rates are admittedly inadequate and the government won't increase them because they don't want to anger voters.

Well guess what, when the next bad hurricane season hits, every single Floridian will start to see 10% assessment surcharges when they buy auto insurance, home insurance and stores they shop at will see increases for their liability insurance and so on and so forth.

Everyone in the state will pay for the subsidized rates of the wealthier people and businesses that are located in coastal areas in the southern part of the state. And it's all being *sold* as some sort of benefit for the "little guy". What a complete crock.

Oh well, hopefully it will be a long long time before another Hurricane but when it hits your state will have to cough up 40billion or so to bail out citizens and it will do so via years of insurance surcharges.

[boxus]

Why just mention hurricanes? What about sinkholes?

"Everyone in the state will pay for the subsidized rates of the wealthier people and businesses that are located in coastal areas in the southern part of the state."

Only the wealthy and businesses have insurance? Only the wealthy and businesses are located in coastal areas and in the southern part of the state?

[Mathguy]

Originally Posted by boxus

Why just mention hurricanes? What about sinkholes?

"Everyone in the state will pay for the subsidized rates of the wealthier people and businesses that are located in coastal areas in the southern part of the state."

Only the wealthy and businesses have insurance? Only the wealthy and businesses are located in coastal areas and in the southern part of the state?

No one said "only". It's a general assertion because we are talking about hundreds of thousands of policies written by Citizens.

In general, Citizens is insuring properties that are at higher risk of hurricane damage and within a mile or so of the water. As such these types of properties GENERALLY cost more than something a many miles in-land and since they cost more they are typically owned by wealthier people.

Are there some poorer people living 80 miles from the ocean with Citizens coverage? Absolutely. But that's more the exception than the rule.

P.S. For decades the state forced insurers to write the coastal type properties at a loss by capping rates and letting them make their profits off auto insurance and non-coastal properties. After the bad hurricane season in 2005 the insurers tired of that arrangement and so citizens was expanded to pick up the slack.

So, even before citizens grew this much the state used their complete control of what property insurance rates were allowed to subsidize coastal living and development by capping those insurance costs and letting the insurance companies make their money off the rest of the state.

Other states have done (or tried to do) similar tactics. Michigan tried this with auto insurance rates basically trying to force insurers to offer subsidy in Detroit at the expense of the rest of the state.

[boxus]

There are many people living within 80 miles of the water, the whole state is only 80 miles wide, maybe a hundred, did you mean 8 miles?

Even at 8 miles, most of the population like in Miami lives. Miami is far from being a rich area. I am sure there are much more poor people living within 8 miles of the water than rich.

Also, the houses along the coast are only worth a lot because of the property, not the house. Many million dollar houses would not even cost $150k in Tennessee. SO yes, the property on the water costs more, but that is land value, the house costs no more to build than one in the middle of Kansas, material and labor, that is all that is involved.

[Mathguy]

Originally Posted by boxus

There are many people living within 80 miles of the water, the whole state is only 80 miles wide, maybe a hundred, did you mean 8 miles?

Even at 8 miles, most of the population like in Miami lives. Miami is far from being a rich area. I am sure there are much more poor people living within 8 miles of the water than rich.

Also, the houses along the coast are only worth a lot because of the property, not the house. Many million dollar houses would not even cost $150k in Tennessee. SO yes, the property on the water costs more, but that is land value, the house costs no more to build than one in the middle of Kansas, material and labor, that is all that is involved.

The point still stands that houses near the water cost more and are thus owned by wealthier people. (Even if the value is in the land)

The highest risk of hurricane is for people living near the water.

Citizens is insuring a vastly disproportionate amount of the high risks in the state at subsidized rates.

Now follow the chain of logic.

FYI it's the properties right up near the water (1mile or less) that are the most at risk.

[sware2cod]

Originally Posted by Mathguy

The point still stands that houses near the water cost more and are thus owned by wealthier people. (Even if the value is in the land)

The highest risk of hurricane is for people living near the water.

Citizens is insuring a vastly disproportionate amount of the high risks in the state at subsidized rates.

Now follow the chain of logic.

FYI it's the properties right up near the water (1mile or less) that are the most at risk.

Your assessment is totally wrong. There are many, many normal sized/older/cheap homes within a mile of the water in every county in FL. In fact, that is the majority of housing in the areas within a mile of the coast. Houses where old retirees and blue collar construction workers live. Not wealthy folks at all. Most of the homes in state's coastal areas were built many years ago in coastal towns dotting the entire coastline of the state...many older small ranch homes from the 50s and 60s and 70s. 1500 sq ft block ranch homes.

Citizens also insure condos. Many normal (non-wealthy folks) live in 1 and 2 br condos, often in older buildings that are within a mile of the beach.

Besides, Citizens has a ton of money in reserves. We can have a few big hurricanes and Citizens will still have reserves.

[Mathguy]

Originally Posted by sware2cod

Your assessment is totally wrong. There are many, many normal sized/older/cheap homes within a mile of the water in every county in FL. In fact, that is the majority of housing in the areas within a mile of the coast. Houses where old retirees and blue collar construction workers live. Not wealthy folks at all. Most of the homes in state's coastal areas were built many years ago in coastal towns dotting the entire coastline of the state...many older small ranch homes from the 50s and 60s and 70s. 1500 sq ft block ranch homes.

Citizens also insure condos. Many normal (non-wealthy folks) live in 1 and 2 br condos, often in older buildings that are within a mile of the beach.

Besides, Citizens has a ton of money in reserves. We can have a few big hurricanes and Citizens will still have reserves.

I respect your opinion and you are correct that there are many places within a mile that are older and meet your definition.

Here is the report commissioned by the FL DOI on just how strong Citizens is.
http://www.stormrisk.org/admin/downl...ket%202011.pdf

Page 8:

The Florida Catastrophic Storm Risk Management Center submits that the State’s present system for catastrophe risk finance is sustainable only if the financial pressure on Citizens and the FHCF is substantially reduced

Page 35: Table 4

As shown in the table, a Citizens policyholder could be required to pay 85 percent of their homeowners insurance premium and 54 percent of their auto premium in the form of assessments in the year following a major hurricane striking Florida. Those assessments are in addition to the ordinary premiums paid.

Page 37 shows citizens (and the FHCF) would be 24billion short of being able to pay off a 1 in 50 year hurricane, which would then require assessments.

Page 44 shows you Citizens is writing more new policies than the next 10 carriers combined. If you haven't checked recently to see how big citizens is getting....you might be mistaken in your belief that they have plenty of money on hand.

Best of luck.

[Mathguy]

Originally Posted by sware2cod

Your assessment is totally wrong.
................
Besides, Citizens has a ton of money in reserves. We can have a few big hurricanes and Citizens will still have reserves.

Wow, I went to the trouble of showing you their own estimate that a big hurricane would likely leave them short by 26Billion and nary a peep in return?

This isn't a *maybe* type scenario either. Most of us posting here will see this in their lifetime.

I have to surmise that people just don't want to deal with the reality that the state has this looming problem that is about 40% of the size of their entire annual budget at the 1 in 50 year event level.

Hey, I'm not making this stuff up...this is what they are saying but the government won't touch the problem out of politics. So just consider it a warning that there is likely to be some major assessments tossed about after the next bad hurricane year. I guess that's just the reality because no one wants to deal with the problem up front.