Florida Faces Insurance Crisis From Hurricane Ian - The 11th Hour - MSNBC

[Rhiannon12866]

Early estimates show Hurricane Ian will cost Florida up to $47 billion in damage. But many don’t have the insurance needed to rebuild. Alex Harris and David Jolly weigh in on how complicated insurance is in Florida and how the state can fix it. - Aired on 09/29/2022.

[Roy Rolling]

1. Insurance is a (Cutthroat) Business

They exist to make a profit mostly, not be a knight in shining armor to its customers.

I live in Louisiana. Since Katrina and other climate change-fueled hurricanes, insurers have left or gone belly-up in droves. It’s a gigantic insurance crisis in Louisiana.

It stuck me in the midst of Hurricane Katrina cleanup that the country can only afford one crisis like this. Others will go begging until the system collapses.

Why? The false promises by insurers they can replace your lifestyle not your essential possessions at the same premium. And insurance commissioners who let them get away with it because they have faith in business promises. Except that business always has a Trump card, to use a phrase—insurance businesses just go bankrupt and leave their customers fu*ked.

End of story, except it will be impossible to purchase affordable homeowners insurance in most of Florida. Insurance companies are calculating how much “impossible” is, and convincing Florida insurance officials they have assets to cover those situations. Hint: they can’t and won’t.

[Rhiannon12866]

2. Thanks for all the information, I had wondered about that

With such widespread devastation, how could they afford it? And it's not like this will be the only time, perhaps not as widespread or severe, but Florida has a history of hurricane damage so they'll find themselves in the same position. And even if some of the homes rebuild, so many are in vulnerable areas. I see what you mean, insurance - either reliable of affordable - will be impossible to get.

[Old Crank]

4. Regular homeowners insurance

Doesn't normally cover floods or high wind damage.
So you need separate insurance for that.
The upshot is that then the companies fix the blame on the other. House flooded. Wind driven storm surge, not a flood.... Talk to your wind insurance. And so on.

Homeowners insurance has fairly predictable loss rates for houses in areas.

These types of events don't. Same with tornadoes, earthquakes and wild fires.

Normally you might expect a certain loss rate over the properties you insure. Divide expected losses by houses, add in costs and profit and there is your rate.

These types of events mean you could have all the houses you are insuring get totalled. But will that be every 5 years? 10? Or longer. How do you factor the cost?

[Old Crank]

3. Private property with socialized risk

I understand the insurance companies problems. With this type of insurance. Normal household insurance has fairly predictable risk. Every year a certain number of the housed you insure will have some damage claims up to a complete loss. One in a tract of a thousand will burn down.
Here the whole thousand can get destroyed in one event. Like earthquakes or wild fires. How do you price that?
So we need to backstop some risk. But we, as the government, need to put demands on the people building in high risk areas.
Build in high wind areas? Must construct for that. Flood areas?. Sacrificial ground floor. Fire zones? Build with concrete, brick and tile.
And raise the insurance rates which will price many people out of their former homes.

[3Hotdogs]

5. The fallout from this....

Fewer insurance companies willing or able to write in coastal areas. Banks will not issue mortgages to property that can't be insured.

= property values in parts of Florida are in the shitter.

[Phoenix61]

6. Some of these areas should never have been allowed

to be developed. Fingers crossed FEMA refuses to insure them. If they won’t no private company will and they are unsellable.

[Chainfire]

7. Florida had an insurance crisis before this storm.

[The Jungle 1]

8. You don't buy real estate in Florida.

You rent.