Insurance companies pulling out of risk areas

[NW-Bound]

If you live in a low risk area, how do your feel about your insurance premiums being 20-30 percent higher than they might otherwise would be because the insurer is spreading some of the risk/exposure from high/ultra high risk customer policies to low risk customers?

I believe that it is too easy to blame the insurers. They are protecting their business and their shareholders.

This is a much greater and more complicated problem than simply blaming the insurance industry IMHO.

News flash: how do you think insurance companies work. It is called risk pool for a reason.

Well, not too many home owners in other states want to be in the same risk pool with the Floridian coastal dwellers.

 

[NW-Bound]

I was born in Fairfield County (Bridgeport) and we were poor (very much so). So I can verify that poor people lived in Fairfield County . Now it's got some real nice areas..

I would bet that New Haven County is now the "poor" county since many of the towns there lost all the heavy industry companies and thousands of associated jobs over the last 40 years. For instance, the largest employer in Waterbury (once the Brass Center of the World) is now the City, then followed by the two hospitals (one of which is in financial trouble) . That town has 100+ K residents.

Yes, coastal CT is exposed to hurricanes and other bad weather more so than inland.

Now you arouse my curiosity and I will have to look around on the Web about Fairfield County, a place I did not know about until yesterday.

Some years ago, when I was really sick and stayed in bed during convalescence, I spent a lot of time surfing the Web to look at images and videos of streets and homes in Detroit. Quite interesting.

 

[rodi]

Well, to be technical, "everything" would include moving to somewhere that is statistically safer.

I see your point. But using the Fema link posted below, by census track the overall risk index is "Very low 21.87" with three only risk factors being wildfire and earthquake.... which we are mitigating our risk. I could nice someplace else but would probably have a hard time getting that low a risk.

 

[JoeWras]

I see your point. But using the Fema link posted below, by census track the overall risk index is "Very low 21.87" with three only risk factors being wildfire and earthquake.... which we are mitigating our risk. I could nice someplace else but would probably have a hard time getting that low a risk.

I know this is an insurance thread, but I want to mention the cost to the homeowner is more than insurance. Living in a high risk area entails costs that are off the insurance company's list of covered hazards.

For instance: in the southeast, our homes are constantly being attacked by rot, mold, moisture, animals and plants. None of this is covered by insurance. It's a real cost. Someone once opened a thread about it. We have to replace siding and roofing more frequently. We have to cut trees, which grow like weeds.

If you live at the coast, your HVAC is being attacked by salt air.

If you live in San Diego, you have earthquake risk mitigation.

If you live in Topeka, you may build a shelter closet or external shelter.

And so on.

I don't live in earthquake country, but it seems to me this is the one thing that can be mitigated the easiest. Well at least for the standard 5 or 6 tremor. The rest of us just watch our stuff blow or rot away no matter what we do.

 

[NW-Bound]

 

[athena53]

News flash: how do you think insurance companies work. It is called risk pool for a reason.

Yes, but how much do you subsidize between classes? Back when I was a little actuary they started "flattening" the rate structure for car insurance in the inner city. They had higher claim costs but were generally less well-off and they wanted to keep it affordable for people in poor areas. The industry later did get more sophisticated and allocated some of the cost to people who lived in the suburbs but commuted to work in the inner city but the stats showed that people who lived and garaged their cars there had higher claim costs. Regulators generally didn't allow premiums to be any more than X% higher in the inner city than the average, meaning the rest got spread to everyone.

Same thing with Homeowners. The cost of these catastrophes has to be paid through premiums (and investment income) somehow. Should it be the people who live in those areas or the general insured population? If the latter, aren't we just encouraging the building of houses in endangered areas?