The recent events in Florida and the exit of various insurance companies from areas surrounding the Gulf Coast have raised a lot of speculation on how to preserve competition within these states while at the same time not forcing the government’s hand to bail out in the event of a disaster. About a month ago The Florida Times-Union wrote on this topic and how drastic the decisions may be to keep a level playing field for residents.
Florida’s property insurance system is a ticking time bomb, one that could wreak havoc on the state’s economy when – that’s when, not if – the next hurricanes hit.
This is because the state-run catastrophic fund, which shares property insurance risks with companies that sell policies here, is egregiously underfunded.
In a worst-case scenario, insured homeowners might face long delays in getting money to rebuild their hurricane-damaged houses – and all Floridians could be stuck with very high taxes or “assessments” to raise the needed money.
So, what’s the solution?
Ideally, it would be to spread out some of the costs through a federal catastrophic natural disaster fund, similar to the federal flood insurance program.
It’s doubtful that either of Florida’s senators, or any of its House members, have enough clout with their colleagues to get the job done.
While there is no clear answer in sight and Florida is not alone on this issue as insurers in Louisiana and Texas have shown the same sort of reluctance and could go the way of others soon, debate on reform is essential. Without this topic being out in the public discourse, policy holders can be left shocked when a provider pulls out of a state or region.
KBMT in Southeast Texas similarly outlined issues relating to premiums and insurance agents in discussing the problems facing their viewership
According to the Insurance Information Institute, homeowners insurance premiums are up about three percent nationwide and probably more in some coastal areas where the potential for damage is greater.
Several factors are affecting premiums and coverage, including the $26 billion insurers paid out on catastrophic losses in 2008 and the impact of financial market turmoil on the companies earnings.
Changes in state regulations are also driving some premiums higher.
This outlook is not all that positive for homeowners in the region as a whole but, when combined with the first article, demonstrates how significantly important it is for some solution to be reached in the coming years to prevent residents of the Gulf Coast, in various states, from being damaged harshly by these insurance issues. By staying on top of the issue and making sure that the elected officials of the area and on the federal level are doing everything they can to keep insurance companies in the region and more money in the pockets of policy holders.