Except they are the biggest, making the most money and making the rest of the industry look bad. If we’re going to get lumped in with them, we have a right to express an opinion.
The reason that companies are non-renewing policies is not beacuse they do not want to pay claims. It’s actually exactly the opposite. Companies are non-renewing policies to ensure that they have enough money to pay the claims that are submitted. The last thing an insurance company wants to do is over extend themselves and go bankrupt and then have to tell a policyholder who has just suffered a major lost that they don’t have the money to fix there home.
The companies that are non-renewing are making a good faith effort to make due on the promises they have made. The decision to non-renew policies is very difficult. Think of the premium that State Farm will be losing when the reduce their book by 50,000. It’s not always about making more money.
And think of all the money they retain by collecting premiums on policies that may have had no losses for years and then cutting them loose to preserve the loss ratio.
It makes sense to non-renew if the claims submitted and paid are more than the premium paid in. But lets admit here that there are people in coastal areas all over the country that have NEVER had a claim and are being cut loose based on the risk. Seems to me that’s a tactic to continue growing with lower risk. Not in the best interest of anyone but the accountants.
And with all sorts of forecasts predicting increased hurricane losses in the future, do you expect all companies to just wait and see if those forecasts come true? Many other companies have been non-renewing policies along the coast all the way to Long Island and Cape Cod. Why would it surprise anyone that State Farm would non-renew 50,000 policies on the coast in Florida? None of the companies wants to be in the situation they were in after Andrew in 1992. Politicians seem to have forgotten that mess.
1. There are not hundreds of companies writing HO insurance in the state. With the January changes there are only a handful accepting new business. Few, if any, are A-rated. They are companies you probably have never heard of and would certainly not want to trust some of them with your largest asset.
2. Carriers do not make money writing HO Insurance in FL whether on the coast or not. Returns going back to 1990 are -37%.
3. The above returns are pre-January changes which have made it more difficult (impossible) to attain an actuarially justified rate.
4. The “market of last resort” was running a $1 billion deficit before the January changes. Now, inadequate rates are frozen until 2009 and there are ever-increasing assessments on non Citizens policyholders.
5. Insurance is not a non profit business. Stock companies have a fiduciary responsibility to act in the best interests of their stockholders; mutual companies like State Farm have the same responsibility toward ALL policyholders – not just FL HO’s.
6. Even states like NJ, MA, and SC have learned that creating capacity by working with the industry is in the best interests of the consumer. Instead, making an already difficult market worse through bad legislation and scape goating will only result in carriers allocating capital elsewhere.
7. Requiring that a company write one product at a loss as a condition to providing something else seems like anti-trust. Certainly it will cause the problems of one line to spill over into others as companies either withdraw or raise rates in other areas to make up the deficit. It also provides an unfair advantage to the companies that do not write HO insurance. At least State Farm is providing a market where other major players are not.
Who Cares It helps me make more money. We all know when they get non renewed they will be pissed at state farm and we can get there auto insurance as well. I think the big companies want out of florida I say go who needs you.
Agree with Concerned on Pat’s comments. They are all the points I wanted to say in a post. To whomever posted ‘dropping those that have never had a loss’ or something to that effect, who on the coast of Florida has never had a loss?
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Except they are the biggest, making the most money and making the rest of the industry look bad. If we’re going to get lumped in with them, we have a right to express an opinion.
The reason that companies are non-renewing policies is not beacuse they do not want to pay claims. It’s actually exactly the opposite. Companies are non-renewing policies to ensure that they have enough money to pay the claims that are submitted. The last thing an insurance company wants to do is over extend themselves and go bankrupt and then have to tell a policyholder who has just suffered a major lost that they don’t have the money to fix there home.
The companies that are non-renewing are making a good faith effort to make due on the promises they have made. The decision to non-renew policies is very difficult. Think of the premium that State Farm will be losing when the reduce their book by 50,000. It’s not always about making more money.
And think of all the money they retain by collecting premiums on policies that may have had no losses for years and then cutting them loose to preserve the loss ratio.
It makes sense to non-renew if the claims submitted and paid are more than the premium paid in. But lets admit here that there are people in coastal areas all over the country that have NEVER had a claim and are being cut loose based on the risk. Seems to me that’s a tactic to continue growing with lower risk. Not in the best interest of anyone but the accountants.
I’m sure Citizens would love to have ’em!!! ;)~
Thank God (or whomever) I don’t live in FL right now.
And with all sorts of forecasts predicting increased hurricane losses in the future, do you expect all companies to just wait and see if those forecasts come true? Many other companies have been non-renewing policies along the coast all the way to Long Island and Cape Cod. Why would it surprise anyone that State Farm would non-renew 50,000 policies on the coast in Florida? None of the companies wants to be in the situation they were in after Andrew in 1992. Politicians seem to have forgotten that mess.
State Farm and all other companies should be able to make a profit. Insurance is not a government service or subsidy.
A few FL facts:
1. There are not hundreds of companies writing HO insurance in the state. With the January changes there are only a handful accepting new business. Few, if any, are A-rated. They are companies you probably have never heard of and would certainly not want to trust some of them with your largest asset.
2. Carriers do not make money writing HO Insurance in FL whether on the coast or not. Returns going back to 1990 are -37%.
3. The above returns are pre-January changes which have made it more difficult (impossible) to attain an actuarially justified rate.
4. The “market of last resort” was running a $1 billion deficit before the January changes. Now, inadequate rates are frozen until 2009 and there are ever-increasing assessments on non Citizens policyholders.
5. Insurance is not a non profit business. Stock companies have a fiduciary responsibility to act in the best interests of their stockholders; mutual companies like State Farm have the same responsibility toward ALL policyholders – not just FL HO’s.
6. Even states like NJ, MA, and SC have learned that creating capacity by working with the industry is in the best interests of the consumer. Instead, making an already difficult market worse through bad legislation and scape goating will only result in carriers allocating capital elsewhere.
7. Requiring that a company write one product at a loss as a condition to providing something else seems like anti-trust. Certainly it will cause the problems of one line to spill over into others as companies either withdraw or raise rates in other areas to make up the deficit. It also provides an unfair advantage to the companies that do not write HO insurance. At least State Farm is providing a market where other major players are not.
Very well done – Pat. Many just don’t get it. They want the government to manage their lives and contol all.
Who Cares It helps me make more money. We all know when they get non renewed they will be pissed at state farm and we can get there auto insurance as well. I think the big companies want out of florida I say go who needs you.
Agree with Concerned on Pat’s comments. They are all the points I wanted to say in a post. To whomever posted ‘dropping those that have never had a loss’ or something to that effect, who on the coast of Florida has never had a loss?