Everybody complains about insurance. The medical insurance industry is awful. Car insurance is a pain. Right now I’m going to concentrate on property insurance.
If we are going to talk about property insurance problems we might as well start at ground zero: Florida.
Private insurance has pretty much completely fled Florida. What’s left is Citizens. If it wasn’t for a state run company a huge number of properties in Florida would be uninsurable. That doesn’t bode well for the future. Private companies have bailed out of Florida because they see nothing but losses. Citizens is badly underfunded considering its exposure. Unlike private companies they can always hit up the taxpayers to get an injection of funds.
The way Florida has been built up is insane. You don’t build multimillion dollar buildings on barrier islands and expect everything to be fine. It used to be there’d be nothing more substantial than shacks on those islands. After a storm would wipe them out they’d be rebuilt with debris washed from somewhere else. There wasn’t a lot of investment as people knew they’d get swept away eventually.
Insurance makes building expensive properties in bad places possible. The big question is: how long can the game be played? The last hurricane season did a number on Florida. A few bad storms this season could be the tipping point.
Then again, Florida has a long history of being able to kick problems down the road. A few more band aids on the problem could hold it together a bit longer.
For non-Floridians, why should we care? Florida is a basket case but it’s not alone. What happens in one part of the nation affects all the other parts. Heck, just think how billions in property loss will affect the national stock markets? You can’t take that much money out of the system without causing problems.
Insurance is one of the legs our economy stands on. It’s a boring part most of the time because it generally happens in the background and mostly just works. When it doesn’t work there are serious problems.
-Sixbears
Properly used insurance can be a fairly good investment into the self, and possible monetary stuff. Improperly used a way to rip off the citizens needing it. No wonder banks are dying right and left.
ReplyDeleteIn general I hate paying for insurance as it's like I'm betting against myself. However, you need it to function in the modern world. I was surprised on how well my homeowners paid off on my personal items after our shipwreck.
DeleteInsurance across the board has seen rapid increases in recent times. My property cover premiums have gone up by ~60% in 3 years. As flood & fire risks go up, and payouts increase in number, so does the risk that those insurers underwrite. It's all maths to them. Humanity is irrelevant.
ReplyDeleteI built my house by hand. My body is not longer up to doing this again. If the house burns, I will have to rely on insurance to cover a rebuild. If insurance burns, I'm screwed.
I know the feeling. I built most of my house myself and rely on insurance for replacement. Well, worse come to worse I can live in a tent. :)
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