AAA pulls back from offering insurance in Florida, following Farmers
AAA pulls back from offering insurance in Florida, following Farmers
More insurance companies are fleeing the state because of the growing threat from natural disasters.
"Unfortunately, Florida's insurance market has become challenging in recent years," the company said in a statement emailed to CBS MoneyWatch. "Last year's catastrophic hurricane season contributed to an unprecedented rise in reinsurance rates, making it more costly for insurance companies to operate."
This is hilarious and sould crushingly unsurprising. People actually ended up needing to use the insurance the companies were offering soooo they are just no longer offering it. Proving once again (for the millionth time) insurance companies have absolutely zero desire or feel any moral obligation to actually help people. It is 100% purely a money making operation. The millisecond they actually have to help any of their customers out, they will bend over backwards to get out of it and if they can't, they'll just leave entirely and not insure you. Beautiful. God I hate insurance so much.
Insurance doesn't work very well for things like hurricanes. When big events happen that cause large percentages of their policy holders to file claims at the same time, it results in large payouts which causes increases in price. When prices go up, people don't insure. This combined with the fact that florida gets hurricanes means prices for insurance are high.
Maybe the state could help by introducing laws to help combat insurance fraud, but that could lead to consumers getting fucked by their insurance companies.
There is greed at play, but there is math and economics as well.
The state could also help by reviewing building codes and infrastructure to make the losses due to hurricanes less severe but, with Florida republican votes not understanding the benefits of government helping address externalities for the benefit of everyone, there's no chance the situation will improve there...
Insurance can work just fine for things like hurricanes. Insurance companies have several methods to address it. They're all effectively variations of buying insurance policies themselves.
Re-insurance pools are a close analog. It's basically a bunch of insurance companies from around the planet getting together and agreeing to pool risks. Big companies also use a bunch of funky financial instruments to simulate insurance.
There's some risk of increased systemic correlation (eg climate change may increase the risk that major hurricanes hit multiple areas around the planet simultaneously). That's largely mitigated in that we can see it coming. Climate change is pretty prominent in their models and they can adjust premiums or stop offering policies, over time.
The bigger risk is in synthetic systemic risk. It's burned us a bunch of times already and it's gonna do it again. Those giant global re-insurance pools are almost certainly fine, and worth the risk, if we just use them for their intended purpose. But history shows that we'll end up creating derivatives contracts on them and those contracts will get leveraged. Those leveraged pools end up merging and turning into giant financial time bombs.
Are you actually surprised that an insurance company is not there for the good of the people, but to make money? They did keep their contractual obligations and paid out their customers, so you cannot fault them for that.
And what the insurance companies are doing is quite normal behavior. They analyze business risks and move out of fields that are not profitable. They are now telling you that they will no longer cover you so you can find another insurance to take over business. That those other insurance companies are more expensive is just founded in the fact that Florida is already a risky state, and the risks just skyrocket through global warming. And with the water temperatures rising as they do, I expect this year to have an interesting hurricane season.
People complain again that they cannot afford to move to safer places. Maybe now they can start thinking whether they can afford not to move to safer places instead.
If they think last year's hurricane season was bad, wait until this year with 38°C (100°F) water.
Not saying insurance companies are good but I've read a lot of the problem is with insurance scams where a roofing company will tell the homeowner they can replace their roof for free with insurance, even if it's not necessary. Then that company will sue the insurance Co if they don't pay for it.
They are a business and their business model shows they can't make profit in Florida any longer. It would be morally unjustifiable to continue operating in Florida, to their employees and shareholders.
These aren't non-profit companies.
If only the gays would stop marrying the hurricanes would stop and premiums would be lower! - Florida republican voter, probably
Not probably, they have been on record saying so.
Our Baptists in Illinois when I was a kid blamed 2000s hurricanes on "sin" such as gay marriage, so that's correct.
(In case you are wondering, I am no longer Christian— let alone Baptist. I am agnostic theist though!)
It’s the fault of the trans athletes and books that use the word “gay”!
If the hurricanes had guns this wouldn't be happening.
Wonder how DeSantis or his successor will spin things when the only option left is to make a government run single payer system for anyone to have coverage.
Unfortunately, Florida already has a socialized insurance "corporation", Citizens Property Insurance Corp. Tens of thousands of policy holders this year were forced to move to other insurance companies if those companies would offer them insurance for up to 20% higher than they would get with Citizens.
You can only get Citizens if you cant get insurance through any other provider. Citizens coverage requires you to get flood insurance regardless of if you're in a flood zone or not (arguably, this is smart for Florida, but does make insurance much more expensive), and the policy doesn't cover nearly as much as you would get with other insurance companies.
As more and more news articles come out about various home owners insurance companies leaving Florida we're seeing more companion articles about how Citizens is completely fucked up. To tl;dr some stuff, basically if Florida sees a bad hurricane and Citizens has to pay out, everyone who's on citizens is royally fucked because they just don't have the money to pay out.
I have all the confidence that if Florida lost all of the free market insurance and was forced to provide a socialized universal insurance scheme that Republicans would continue to run it as competently as they currently are.
So serious question, does the fact that insurance companies are giving up millions of potential customers prove that climate change/disaster is real?
IIRC, that’s part of why they’re pulling out of Florida. DeSantis made it law that they can’t change premiums based on climate change, so they’ve decided it makes more sense for them to pull out than risk huge payouts when they can’t change premiums.
Honestly I'm pretty sure a similar problem is happening in California.
Just look at the rising water temperatures. It will be an interesting hurricane season this year.
No fucking kidding, eh?
I hope that the wind shear from the el Nino holds up for the people in the US and parts of Canada. It seems like the NOAA are thinking that this el Nino might not be as much of a saving grace as usual. The current temperatures are worse than they were at the peak of any other hurricaine season, and this one is still just getting started. I'm concerned with how bad the temperatures will be at the peak.
From what I read, we haven't really experienced this before. This year's sea temperatures are the hottest on record. We're already getting to the point where things will become increasingly difficult to predict.
I don't think most of deniers deny the climate change is real, they moved the goalposts to "it's not caused by humans" a while ago and I'm pretty sure they're currently shifting them again to "it's too late do anything anways".
Insurance companies are about the purest form of capitalism around. If they aren't making money, they aren't going to participate. This is going to be a problem for California, Florida, Louisiana, and places in the Mountain West.
I’d say Arizona and Texas are at higher risk than California, unless earthquakes get way more frequent and bad.
The risk in CA is that they have built so many communities in areas that are prone to wild fires (and in some cases are even part of the natural eco system) that is inevitable that if they rebuild that it will burn down again. They also have high material costs, higher labor costs, and more stringent building codes (rebuilding to code can get really expensive). Lastly CA has a more highly regulated insurance market which protects consumers, but makes it less profitable for insurance companies. While IMO this is a good thing it has ripple effects on whether or not the private market wants to participate.
florida as people are stuck holding mortgages for condemned and washed away houses.
I mean what is the issue with just not paying them? For a big enough hurricane there will be too many delinquent mortgages, so it might be easy to hide or just tell the bank that the free market is harsh mistress and sucks their risk didn't pay off.
My grandfather told the family that his premiums are going up so much in September that he has decided to just sell his house and move to South Carolina. I don't know what he was paying or how much they are increasing it but it must be bad if he's moving after living there for 30+ years.
Bummer that he sold everything just to move to another future climate casualty
Even CBS does clickbait now. First sentence in article:
AAA will not renew the auto and home insurance policies for some customers in Florida, joining a growing list of insurers dialing back their presence in the Sunshine State amid a growing risk of natural disasters.
Some customers. Will that be dozens, thousands, millions?
I bet even they don't know the specific number. But certain conditions like being in a hurricane-prone area or zones not performing the maintenance on structures that help deal with natural disasters would probably cause those people to no longer be insurable as it predictable that they would pay out more money to more people when things go sideways. This is information for their stockholders, so they don't get sued for not maximizing profit.
Can we see an article with which insurance is left? Will there only be smaller companies that just claim bankruptcy after the next hurricane and then Florida asks taxpayers to bail them out? Fuck that.
All the insurance companies have insurance too (reinsurance) amd there is a state-run insurance company so it's not big a deal that they'll go out of business, it's that costs are just rising ridiculously fast. They just passed a law full of legal changes the insurance companies wanted (like making it harder to sue insurance companies) just to keep costs rising at "only" 40% in a year.
To apply for the state-run insurance it has to be 20% cheaper than any plan you can find with comparable coverage, and they can arbitrarily kick you off of it for no reason.
Yes, exactly. I read an article that said Farmers Insurance is pulling away but will still do new business in Florida under some of their smaller subsidiaries.
CA is also having some issues I believe, for partially related reasons
Is all of Florida a risk, or only down state?
Take away their ability to offer car insurance in Florida too then.
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I shit you not Florida's CFO blames corporate wokeness
Also I didn't know florida has a CFO
Running government like a business = bad at capitalism
I mean, in their defense the insurance companies finally “woke” up to what a terrible business idea it is to operate in Florida.
Chief Florida Officer?
It's their Comptroller/ Treasurer but it just got merged in 2002 so it has a catchier name.
No worries, now the Florida government will offer their own insurance in retaliation, to show them corporates who's boss.
And that's how, children, the capitalists became socialists.
It already exists. It's called Citizens Property Insurance and I'm one of over a million subscribers to it. Every private company is at least 20% more expensive or the state could sell my policy to the private company.
They already do.