Homeowners in many coastal states also raises the question: ‘Why did my insurance company drop a homeowner policy?’ Others questioned why the prices go up quickly, or be subject to surcharges.
The answers lie in the earlier losses and the fear of future losses from insurance companies and related moves in the states, coverage, often at prices that are too low in risk. The result is that people are increasingly encouraged the state-run plans.
These state plans to operate like insurance companies, but for different purposes. They often do not have sufficient reserve funds set aside for unexpectedly high losses, and sometimes less expertise in the rates of loss adjusting and handling of clients.
Because states require private companies to contribute to the loss of public plans and because, ultimately, the taxpayers will be responsible for the fears that the growing risk that shifting from private to public plans.
This shift makes the policyholders, even in areas not affected by the risks involved, and the state taxpayers to bear some risk of losses. Furthermore, because the concentration risk of these state plans is increasing, this raises the possibility of great loss following the storms in the future – the risks would be borne largely by private insurance companies in the past.
The problem was insurance, homeowner’s policy is elimination in areas that are vulnerable – especially in coastal areas. More and more companies concerned about possible losses in a large hurricanes and other severe storms and concerned that regulators do not allow them to raise prices enough to cover potential losses.
Other fast-growing coastal areas include Galveston Island, Texas, Hilton Head and Myrtle Beach, South Carolina, the Maryland shore, eastern Long Island and Cape Cod. Since private insurers limit, to reduce the risk, the state tried to fill the market need to ‘ensure the final.’ In a June 7, 2007 article in The Wall Street Journal reported that such insurers in 16 states saw a rapid increase in the number of policies and possible liability for damages since 2001.
The plans would have serious losses, the need for renovation of the existing taxpayers or the bondholders, who are not in that area, it stops the losses.
The government plans to shift typically covered by insurance for those with no other possible major insurance carriers in high-risk coastal areas.
This shift to high risk exposure away from private insurance companies a huge financial burden placed on state-run insurance plans, and leaves a substantial operating deficit, while changing a long-term risk of hurricane related losses to policyholders and taxpayers who do not live near the coast according to Dr. Robert P. Hartwig, president and chief economist of the Insurance Information Institute.
Others have represented a shift in the prevailing federal government’s efforts to assume greater risk for individuals in areas such as pensions and health care.
Just as investors should be careful that ‘all eggs in one basket’ by insurance companies to insure property is too much of a geographical area subject to the risk of losses concentrated.
The concern that climate change may exacerbate the severity of the storms only increases the possibility of heavy losses in the coastal areas.
As a result, private insurers moved to reduce the number of policy areas, they are vulnerable, and ‘the ultimate insurance’ has picked up many of the business, who declined.
States should ensure that coverage is to continue the economic growth in the area, hence the need for ‘insurance of last resort.’ In addition, often the political pressure to keep prices lower than the actuarial reality of the planned operation. In some areas, the state plans are in direct competition with private plans and exacerbate the displacement private insurance.
The rapid growth of the plans since 2001, means that the potential liability for claims has tripled to more than $ 650 billion.
Florida State’s most vulnerable coastal storms. This is 27% of the property exposed to hurricanes in the U.S. and is expected to gain nearly 13 million new residents by 2030, the United States Census Bureau.
A good example of the problems:
Florida operates one of the largest offshore ‘insurance to the final.’ The problem is to illustrate the problems of such organizations. Citizens Property Insurance Corp. started in 2002 with the idea that it is only those who could not find coverage elsewhere, and eventually shrink and perhaps disappear in the need to decrease.
But as the market reality and nature, said that the need for higher fees private policy is dropped or moved to the state. State politicians react, allowing Floridians to choose coverage nationals, if the private coverage is significantly higher than what the citizens would be responsible for, and guarantee the stability of the exchange rate for many years.
As citizens currently the largest homeowner insurer in Florida, the critics say could be another major storm in Florida, owners and ultimately the taxpayers of Florida.
Floridians already paying surcharges on its own property insurance bills to pay off deficits from 2004 ($ 516 million) and 2005 (1.7 billion dollars). If the proportion of citizens that the fees do not cover future claims, because of political considerations or misjudgments in the future, would not be a great future to cover the deficit.