Sunday, October 24, 2010

"Florida's Hurricane Insurance Premiums Largely Determined Overseas"

This article starts out as just silly but the picture is pretty neat.
They get to a couple important points about halfway through.

My own thoughts?
No Federal bailouts for folks who chose to live in hurricane prone areas. There is no reason for a family in Bozeman Montana to subsidize the folks in Florida. Zilch, nil, nada, zero.
From the Sarasota Herald-Tribune:

Paige Saint John | Herald-Tribune
Guests mingle at a party thrown by Guy Carpenter & Company LLC at the reinsurance industry's annual Rendez-Vous de Septembre in Monaco.
MONTE CARLO, Monaco | Never before have Floridians paid so much to protect themselves from hurricanes
And never have they received so little benefit.
A Herald-Tribune investigation shows that since the state's last spate of hurricanes, a dramatic shift has taken place. Two-thirds of property insurance premiums now leave Florida as unregulated payments to largely offshore reinsurers - companies that sell hurricane protection to insurers and that operate without rate control or consumer oversight.

They, more than state insurers and state regulators, determine how much Floridians must pay to live in the state, and whether property insurance is available at all.

Florida's growing reliance on this profit-driven market is eroding its ability to withstand the inevitable disaster.
In the past four years, Florida-based home insurers paid out $15 billion for private reinsurance.
There has been no storm to trigger payments. Most of the money is gone, pocketed by a reinsurance industry that plays by Wall Street rules, able to rack up profits no regulated insurance company would be allowed to keep.

Without a major storm before next June, Florida's lost capital will near $19 billion.
Had it remained in Florida, that money could have doubled the size of the state's publicly run catastrophe fund and lowered premiums 20 percent. It could have paid for another round of hurricanes like the eight that struck in 2004 and 2005....MORE