In other words, it goes to show that if you don’t have competition in a place where claims will absolutely be filed, you will go broke. Smart move, but makes me feel insurance owes more to humanity than leaving people to fend for themselves.
You mean more insurance companies? There isn't competition because insurers' odds against hurricanes and floods are bad. They can't collect enough premium before a payout occurs, so there will not be insurers that will take the FL home insurance bets without higher premiums.
AAA is limiting coverage in Florida, citing natural disaster threat
41–50 of 52 posts
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#42Everyone thinks of flooding in Florida, but the real risk is wind. When a hurricane hits, a relatively small area is subject to flooding. But huge swaths of the state are hit with high sustained winds. If the winds compromise the roof and rain gets into the house, you're looking at a huge amount of damage to the home. For that reason, insurers are very strict about roof age. Roofs are very expensive to replace ($15-$…
And this might be obvious, but the failure mode is the wind dislodging/damaging a sufficient number of shingles and rainwater soaking/flooding the house. Very destructive.
Money might be better spent on replacing the pitched roof entirely in that case. Roof angle and asphalt shingles don't make a lot of sense in hurricane winds.
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#43Earlier quoted context omitted.
You mean more insurance companies? There isn't competition because insurers' odds against hurricanes and floods are bad. They can't collect enough premium before a payout occurs, so there will not be insurers that will take the FL home insurance bets without higher premiums.
Insurance companies can price that risk. The problem is of the “fuck around and find out” variety. Florida is creating a lot of new, hard to price risks. Risk managers hate unknown probability, high impact events. How many oceanfront high rises built of reinforced concrete are potential at risk of catastrophic failure due to poor regulatory environment? How will climate change and various environmental risks in Flori…
They can't price that risk. That's the whole problem of why they are "pulling out". To be able to do that in the future as there are regulations.
Nation-wide insurance companies use risk pooling. They create funds for things like hurricanes that come every 3 years. And they have reinsurance for catastrophic losses. While it is a simplification, seems like greed to me and serving shareholders, not people who actually need it in a time of need.
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#44Earlier quoted context omitted.
“In a place where claims will absolutely be filed” Insurance isn’t supposed to work like that - there isn’t a way these houses can be covered at a reasonable rate without forcing other customers to subsidize them.
Rates are much higher in tornado alley. So that argument is pretty hard to use.
Tornados are damaging but hurricanes are an order of magnitude broader
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#45Earlier quoted context omitted.
And this might be obvious, but the failure mode is the wind dislodging/damaging a sufficient number of shingles and rainwater soaking/flooding the house. Very destructive.
Money might be better spent on replacing the pitched roof entirely in that case. Roof angle and asphalt shingles don't make a lot of sense in hurricane winds.
Tile roofs are better, but much more expensive.
Especially for a lot of folks living on fixed incomes.
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#46Earlier quoted context omitted.
Florida is a battleground state so the Federal government will step in at the taxpayers' expense as usual: https://en.wikipedia.org/wiki/National_Flood_Insurance_Progr...
Florida is not a battleground state. Maybe a couple of decades back it looked like one.
The Federal government (aka the rest of us) will still pick up the bill thanks to the National Flood Insurance Program.
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#47No surprise there. Here in Florda, there are thousands of huge 2-3 story mansions on the keys and beach... including right where we are, on the left side of Ian's landfall. These places should be empty public beaches or hardened hotels, but alas they are just banks of big houses that will get flooded and torn up by the next hurricane. And there are tons of developments built in low, swampy areas next to big rivers. A…
Doesn't this boost GDP and keep people employed? Build a big house, weather knocks it down, build a bigger house, weather knocks it down...
No, that's the broken window fallacy.
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#48Earlier quoted context omitted.
> But if the mansions are getting built, which they appear to be, the workers must be getting there somehow... I did geothermal for mansions a long while back and it's mostly specialized contractors bringing in a small crew. It's not a ton of employed people and not locals. Where I've seen high numbers of local employees making good wages are in areas constructing a lot of dense housing, particularly townhomes.
There is a ton of both around here (south of Tampa)
North of Tampa, there is some dense housing construction but most housing starts are supersized, detached offerings. That cheers up the NIMBYs (a robust homeless community testifies to NIMBY successes).
There was heavy apartment building along SR54 until the county commission's moratorium. It was just for that corridor but apartment building died instead of moving north.
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#49BTW, it's not just home insurance. Auto insurance is spiking. We're seeing 30% you-suck-for-living-in-FL surcharges - this is above/beyond the existing hikes from ever-increasing vehicle repair costs. That 30% surcharge especially sucks for people who can't even afford collision/replacement coverage.
Hurricane-driven floods wreck cars too. You don't suck for living in Florida, but actuarily speaking, your most expensive assets are at significant risk.
I get that and it's reasonable for that risk to be shared among people who are insured for repair/replacement.
I don't think it's reasonable to put that risk burden on people who aren't opting into that coverage. Their vehicles don't carry that coverage, the insurance companies bear no risk.
For people who don't get the benefit of coverage, why should they be penalized and have to pay for others that do?
Re: AAA is limiting coverage in Florida, citing natural disaster threat
#50Earlier quoted context omitted.
Doesn't this boost GDP and keep people employed? Build a big house, weather knocks it down, build a bigger house, weather knocks it down...
No, that's the broken window fallacy.
Indeed. I think it is one of the biggest issues in society. Prevention is seen as wastefulness and often de-prioritized. Meanwhile heroics after a disaster capture media attention and praise. This has been observed in fields as diverse as business & management, construction & maintenance, government, and of course economics. It is a fallacy so common, we can even find it here on HN! Wish I knew of a solution, any ideas?