From Florida to California, dwindling insurance options

[GMDino]

Insurance has always been a scam.  But more than ever it's a scam where they can't make more money so screw you.

https://www.csmonitor.com/USA/2023/0831/From-Florida-to-California-dwindling-insurance-options?icid=rss

Quote:August 31, 2023|BAKERSFIELD, CALIF.

As Hurricane Idalia barreled through Florida Wednesday, thousands of homeowners faced the possibility of rebounding without property insurance. 

In the past few years, nearly a dozen property insurers in Florida have liquidated. More have either left the state or restricted coverage, including Farmers Insurance, which pulled out of the Sunshine State last month. Other states prone to high-risk weather events are also losing insurance options. In Louisiana, two dozen insurance companies have dissolved or left since 2020. In California, three of the five largest insurers are limiting new policies or have stopped offering them altogether.

Insurers say payouts are outpacing revenue, as housing costs rise and climate change contributes to more frequent and costly disasters. But consumer advocates push back and say insurance companies are creating a crisis narrative to better position themselves.
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As parts of the United States face extreme weather from hurricanes to wildfires, many of those same places are losing access to home insurance. We explore what’s changing and why.

Insurers are regulated by each state in which they operate, tasking insurance commissioners with balancing the needs of homeowners against the economic viability of covering losses. “There is no quick fix,” writes Michael Soller, spokesperson for California’s insurance commissioner, Ricardo Lara, in an email. He cites “entrenched interests on all sides” and says the system “is clearly not working for all Californians.” Similarly, homeowners across the country face constricting options that are growing more expensive. 

Why are insurers leaving high-risk areas?
Climate change plays a significant role, but another key, immediate factor, according to the insurance industry, is the cost of housing. As home prices have lurched upward, other associated costs also increased.

In 2022, insurers paid out about $1.03 in claims for every $1 collected in premiums, according to a report by analytics company Verisk and the American Property Casualty Insurance Association. The industry’s payments and costs increased by 14.1% while premiums grew by 8.3%. 

“The boom in home values is really the biggest cost driver impacting insurance rates,” says Robert Gordon, policy and research expert at the association.

Similarly, Verisk sees a mix of factors at play. In a 2022 report, it said insured losses from natural catastrophes during the most recent five years were roughly double those of the half-decade before that. The reasons cited in the report included climate change and shifting regulations, but listed first was “a rise in exposure values and replacement costs, represented both by continued construction in high-hazard areas as well as high levels of inflation that are driving up repair costs.”

Marco Bello/Reuters
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“So in other words,” says Mr. Gordon, “it’s just the demographic changes as people are purchasing and moving into much more expensive properties in environmentally sensitive areas.”

But the costs are no justification for abandoning homeowners, says Carmen Balber, executive director of Consumer Watchdog, a consumer advocacy organization based in California. “That’s why Californians have paid $150 billion in home insurance premiums over the last 25 years,” she says. “So the industry would be there when we need them most.”

How does climate change affect home insurance?
Climate scientists say Earth’s warming temperatures are increasing the severity of extreme weather, alongside other factors that have pushed up the cost of natural disasters.  

A recent survey by the Insurance Information Institute shows 32% of homeowners have been impacted by weather in the last five years. Weather events – from fire to wind to hail – cause the vast majority of property claims. Yet, insurers have long excluded high-risk events from policies. Congress established the National Flood Insurance Program in 1968 because most insurers excluded flood protection – and still do. 

Earthquakes are excluded from standard policies, requiring supplemental coverage. Despite the fact that six of the 10 costliest U.S. earthquakes have happened in California, only 10% of the state’s homeowners carry earthquake coverage.

“Insurance companies would like to only insure the least risky people and leave the more risky people out to the periphery so they can keep only the most profitable policies and leave the ones they might have to pay on to others,” says Ms. Balber.

Marcio Jose Sanchez/AP/File
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But the insurance industry doesn’t cause rate changes, says Mr. Gordon, nor does it tell people where to live.
The frequency of climate disasters is compounded by the migration of people moving to areas with the highest risk. National realtor Redfin reports more people are moving into disaster-prone areas than out of them. Eight of the 10 high-flood-risk counties that saw the largest net influx are on the Florida coast. And in Riverside, California, where more homes face wildfire risks than any other county analyzed, nearly 40,000 more people have moved in than out. 

The insurance industry offers valuable pricing signals in those areas – like a canary in a coal mine, says Mr. Gordon. “Those nicer homes and the inflation and climate change are making it more expensive to live in environmentally sensitive areas,” he says. “You have to realize that, as people decide where they want to live, the costs and the risks in that are part of those considerations.”

What happens when homeowners lose coverage? 
Those homeowners still have access to insurance. Their first step is to shop the remaining companies for a new policy. For consumers who are unable to find or afford a policy, each state offers its own version of a FAIR plan – Fair Access to Insurance Requirements. Some states run those plans themselves; others outsource the plans to private insurers.  

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FAIR plans have been around since 1968 and offer policies of last resort. They are generally more expensive than regular insurance policies, and coverage tends to target catastrophic events. 

Reducing risks before catastrophe strikes helps everyone. Communities can take steps to reduce harm from storms by investing in infrastructure to manage floodwaters or drought. And individuals can do things like [url=https://wildfirerisk.org/reduce-risk/ignition-resistant-homes/]home-hardening – using fire-resistant building materials – and clearing flammable debris to drastically reduce fire risks. 

About 66% of American households own their home – and 88% of homeowners carry insurance. For those 12% who either can’t afford or choose not to insure their home, fallout can be substantial. “If we can’t insure our home, then we can’t sell our home. It ripples into the real estate market. It ripples into the tourism market,” says Ms. Balber. “So the consequences of that are serious.”

Last year, California became the first state to require insurers to offer discounts to homeowners who make their properties safer from wildfires.

An insurance crisis is avoidable, says Ms. Balber. “We all know that another fire is going to hit, but that’s what the industry is here for. And we need to be investing in the meantime in reducing the risk so we don’t reach the breaking point.”

[Goalpost]

My understanding is having insurance, and having flood insurance, are two different things. I believe it's less than 20 percent that have flood insurance 'also'. Hence, a lot of home owners are preferring to just roll the dice without it.. They get their great water view but just risk it.

[Arturo Bandini]

When there is a hurricane, is there something like : Natural disaster clause where the federal government is used as an global insurance for everyone impacted ? Or state or district or something ?

[Sociopathicsteelerfan]

Not surprising to see Farmer's listed so prominently, they have a major reputation for being hot garbage. I had a slab leak at the beginning f the year and all the venders involved asked if I had Farmer's as literally their first question. When I told them I had USAA they were practically giddy. If you're eligible for it I cannot recommend USAA enough.

[GMDino]

(09-01-2023, 11:12 AM)Goalpost Wrote: My understanding is having insurance, and having flood insurance, are two different things.  I believe it's less than 20 percent that have flood insurance 'also'.  Hence, a lot of home owners are preferring to just roll the dice without it..  They get their great water view but just risk it.

It depends on where you live. 

When my parents bought their home in 1975 they were in a "flood zone" and were required to have flood insurance.  Since that time the have improved the area and it is not considered a risk anymore.  Which, IMHO is one thing that should be done to help homeowners.

But I know of others who had HAD to get special insurance or the sale would not go through.

[kalibengal]

(09-01-2023, 11:30 AM)Sociopathicsteelerfan Wrote: Not surprising to see Farmer's listed so prominently, they have a major reputation for being hot garbage.  I had a slab leak at the beginning f the year and all the venders involved asked if I had Farmer's as literally their first question.  When I told them I had USAA they were practically giddy.  If you're eligible for it I cannot recommend USAA enough.

I have Farmers as well and I had a better experience. Last month I had  slab leak as well and had to re-pipe everything above ground using pex pipe
They paid for the majority of that job including drywall, repaint etc.   In Cal BTW

[HarleyDog]

(09-01-2023, 10:50 AM)GMDino Wrote: Insurance has always been a scam.  

I somewhat agree because I used to work for a very large life, annuity insurance company headquartered in Cincinnati. Different types of insurance, same money grab. Always had an issue when they would do drives for the best salesman and send them on luxury vacations worth 10's of thousands of dollars. Then hold dinners for agents and families at zero costs. That's unfair to policyholders IMO. Plus, they always wanted me to push products. I sold more stuff by being honest about a person's needs and not trying to persuade them on things they didn't. Of course, that was 30years ago. They may be different now.

[Goalpost]

(09-01-2023, 11:30 AM)GMDino Wrote: It depends on where you live. 

When my parents bought their home in 1975 they were in a "flood zone" and were required to have flood insurance.  Since that time the have improved the area and it is not considered a risk anymore.  Which, IMHO is one thing that should be done to help homeowners.

But I know of others who had HAD to get special insurance or the sale would not go through.

And that's possible.  If your home is on the actual water Water, you might have to get flood insurance.  But if you are a street or two away, maybe not a requirement.  And I'm guessing those hurricane surges totally f'd over those without insurance in those locations.

I have a cousin like that in Clearwater.  He's not on the water facing the gulf.  But if he looks across the street, his neighbor sees Clearwater beach.  He's that close and not sure what insurance he carries to be honest with you.  

[Sociopathicsteelerfan]

(09-01-2023, 11:39 AM)kalibengal Wrote: I have Farmers as well and I had a better experience. Last month I had  slab leak as well and had to re-pipe everything above ground using pex pipe
They paid for the majority of that job including drywall, repaint etc.   In Cal BTW

I'm pleased you had a positive experience.  For some reason my sister had Farmers and they were a nightmare to deal with for her.  

[*Nately120*]

(09-01-2023, 12:36 PM)Sociopathicsteelerfan Wrote: I'm pleased you had a positive experience.  For some reason my sister had Farmers and they were a nightmare to deal with for her.  

Insurance companies spend so much on marketing, they'd have to be total shite.

[guyofthetiger]

Insurance companies are difficult to deal with for any claim. Funny how they take your premium without hesitation. Then fight you to make a claim. And up go your rates.

[*Nately120*]

(09-05-2023, 02:10 AM)guyofthetiger Wrote: Insurance companies are difficult to deal with for any claim. Funny how they take your premium without hesitation. Then fight you to make a claim. And up go your rates.

That's the ultimate secret code to winning the USA's brand of semi-free market capitalism...find every way you can to take money, and then when it comes time to give someone else money you find every reason not to do so.  You give me your money for some rainy day sort of scenario, and then when I'm supposed to give money to you, I tell you that I can't or don't have to and that you should get your money from your fellow non-corporate taxpayers.  

A more direct version of it would be for me to just say "Hi, I'm Nately120...give me all your money and then go on welfare.  People on welfare have it too good right?  Go be one of them, but you have to give me that stupid money you have now first.  The end."

[GMDino]

(09-05-2023, 02:10 AM)guyofthetiger Wrote: Insurance companies are difficult to deal with for any claim. Funny how they take your premium without hesitation. Then fight you to make a claim. And up go your rates.

My car insurance when up $1000 a year this year.  No claims last two years.

Luckily I have a company that shops for better rates and they saved me this time.

[Sociopathicsteelerfan]

(09-05-2023, 08:57 AM)GMDino Wrote: My car insurance when up $1000 a year this year.  No claims last two years.

Luckily I have a company that shops for better rates and they saved me this time.

Who do you have for auto insurance, because that's an insane hike in premium?

[GMDino]

(09-05-2023, 11:59 AM)Sociopathicsteelerfan Wrote: Who do you have for auto insurance, because that's an insane hike in premium?

It was Travelers.

When we switched to them years ago they were head and shoulder above the Nationwide policy I'd had since I was 16.

And they served us well when we did need something like a tow.

But that was crazy.

[Sociopathicsteelerfan]

(09-05-2023, 12:52 PM)GMDino Wrote: It was Travelers.

When we switched to them years ago they were head and shoulder above the Nationwide policy I'd had since I was 16.

And they served us well when we did need something like a tow.

But that was crazy.

Unless you bought a much more expensive car, and you gave no indication of this, that is an insane price hike.  Did they give you a reason or it just appeared on your bill?  I can see such a raise in premiums from a smaller insurer, but from a nationwide company that's just not excusable in any way.

[GMDino]

(09-05-2023, 12:58 PM)Sociopathicsteelerfan Wrote: Unless you bought a much more expensive car, and you gave no indication of this, that is an insane price hike.  Did they give you a reason or it just appeared on your bill?  I can see such a raise in premiums from a smaller insurer, but from a nationwide company that's just not excusable in any way.

Nothing changed.  We added a used car year and a half ago to replace one.  Same number of cars and drivers.  Our son turned 21 this year.  Maybe he's a higher risk?  

I didn't even know until the agency contacted me, then I got the payment email from Travelers for September.  No reason that I saw.

[basballguy]

(09-05-2023, 08:57 AM)GMDino Wrote: My car insurance when up $1000 a year this year.  No claims last two years.

Luckily I have a company that shops for better rates and they saved me this time.

That's incredibly stupid, i'm sorry.  

My last claim was 3 years ago and my last at fault accident was maybe 15....my insurance is over 300/mo for full coverage and I even listed my car as a leisure vehicle since I never drive anywhere.  If I drove my vehicle into the office 5 days a week i bet it would be closer to 400/mo.  

I bounce back and forth between USAA and GEICO (currently GEICO) but it might be time to go back to USAA to see if I can get lower (though I doubt it).  

Insurance is ridiculous....but there's an increasing amount of uninsured drivers on the roadway which is driving up all our costs....why is there an increasing amount of uninsured drivers?  Cause it's expensive!

[*pally*]

(09-05-2023, 01:54 PM)basballguy Wrote: That's incredibly stupid, i'm sorry.  

My last claim was 3 years ago and my last at fault accident was maybe 15....my insurance is over 300/mo for full coverage and I even listed my car as a leisure vehicle since I never drive anywhere.  If I drove my vehicle into the office 5 days a week i bet it would be closer to 400/mo.  

I bounce back and forth between USAA and GEICO (currently GEICO) but it might be time to go back to USAA to see if I can get lower (though I doubt it).  

Insurance is ridiculous....but there's an increasing amount of uninsured drivers on the roadway which is driving up all our costs....why is there an increasing amount of uninsured drivers?  Cause it's expensive!

I received notification from USAA that they are raising their rates across the board with the usual cost impact statement.  I haven't had a claim on my insurance in at least 20 years. It's hard to gauge the exact impact because the general rate increase corresponded to the expected increase when I replaced 20 year old Toyota with a 2023 Honda.  I'll have to wait and see what my homeowner's does next month

And this was in the Washington Post today

https://wapo.st/3P2Bqgp

Drivers squeezed as auto insurance costs soar across the U.S.

[Truck_1_0_1_]

Yeah, thankfully the insurers up here in Canada are much better, but we do have our horror stories as well...

... like how a company my father has had EVERYTHING insured with for over 40 years (RSA), dropped my parents' coverage because, "you have too many claims on your profile."

That was the legit reason. Because the house they bought has asbestos in it and required an insurance claim to remove. That one claim, wiped out an over 40 year relationship.

My wife and I have had the same car insurer (the Personal) since 2015 and *knocks on wood* they have been phenomenal for my wife and I, not to mention I am now at $95.00 a month for full car insurance.