Insurance companies pulling out of risk areas

[Aerides]

I think the "they rebuilt on a bad risk to begin with" is a small number of the problem claims. They do make the rounds though.

What do you do with 22M+ people in Florida? Ok, not all of them are homeowners, but still you're talking millions of policies at present.

The whole state is a hurricane risk. Sure, no storm surge worries further inland, but over half of us live within 20 miles of the coast. And many of us haven't been hit despite the spaghetti models that said we coulda shoulda every few years. And I would bet the insurance companies absolutely do not care if your cozy little florida town hasn't actually had a event in 20+ years, past performance, future results...etc.

Hurricanes can and do go cut across the state or go all the way up. Any roof in that cone is at risk. Now, in most cases, most homes won't be destroyed. But many in the eye path will have $30k-$100k damage claims (not counting flooding). I consider us lucky with no claim since 2005 (Wilma took enough of our roofing off to expose wood, and tore away our screen/cage).

If everyone in Florida woke up on Jan1 without insurance, or with annual policies over $10k, it would be absolute chaos here.

 

[Chuckanut]

It is always someone else's fault.

We need to stop building in high risk areas, or if we do, have proper methods of mitigation.

I think our society would benefit overall if we left certain areas more natural and only used them for activities that would not be a dangerous and expensive disaster if they were interrupted by a nature event.

One local city allowed new property development in an area known for flooding. Supposedly the builder mitigated the flooding issues. Time will tell. Another city put a nature park along a river that floods from time to time. It’s a lot cheaper to restore a few trails and walking paths when it does flood, rather than rebuild multiple structures.

 

[swakyaby]

my husband is president of the neighborhood fire safe council and actively working to get the city to weed/remove fuel within 100 feet of structures in the open space parks.

Every summer, our city pays a goat herder to move his herd of approximately 200 goats along a greenbelt that runs along the backyards of our homes. The goats are quiet, don’t smell, look very pastoral, and decrease the dry fuel near homes. I like them.

 

[teej1985]

I live in a very large city (San Diego), not in the forest. But it is very hard to get insurance for our home because we are in an area marked as high risk for wildfires. I laugh when people say to get quotes for home owners insurance every year... Last time I shopped there were exactly TWO companies writing policies for our address. Why? Because there is a canyon behind the homes across the street that feeds down to an open space park (read that as lots of fuel for wildfires).

We stay with the same insurer and every year keep our fingers crossed they'll renew us.

In the mean time my husband is president of the neighborhood fire safe council and actively working to get the city to weed/remove fuel within 100 feet of structures in the open space parks. We've replaced our older siding with hardee board. Even our fences are hardee board. We have no trees directly adjacent to our house - our neighbors tree gets wacked everytime it grows across the property line. We've changed out the soffet vents and roof vent to a finer mesh stainless steel (was 'bird size' now it's 'insect size' ) to help prevent burning embers getting into our rafters. We're doing everything we can to fire harden our 1960's era tract home. (And we've also done earthquake remediation).

Out of curiosity, who are the two insurers willing to insure there?

 

[brett]

There are some basics that are inescapable. And no, politicians will probably not solve this.

-insurance risk is high in areas that are susceptible to natural disasters and climate change. Cost of insurance premiums vary with that risk. We are seeing more risk, higher claims.

-inflation in building materials and labor is causing the cost of remediation to increase substantially. Cost of premiums will increase even in the event of standard risk.

Why would anyone expect a politician to address this? And if so how?

At the end of the day when the complaining has stopped the bottom line will probably remain the same....user pay. It is a mess.

 

[Zathras]

…I see no alternative to letting market forces (with or without SOME degree of government involvement) settle the matter. As insurance competition decreases, prices charged will increase. Almost certainly it will affect real estate values. But eventually an equilibrium will be reached, and insurance will be available, for a price. Residents new and old will need to decide whether it is worth the price to stay.

Bold added be me.
This, IMO, is what is broken. Prices won’t increase.
From what I have read, regulators are not allowing insurance companies to raise prices enough to cover their costs.
I would not expect an private company to remain in a state where they loose money year after year.

 

[athena53]

I guess what is happening is that a combination of pressures is slowly tightening the screws on inhabitants in these areas. This is squeezing out the less wealthy people who have lived in them, some for many years, in favor of people who can afford to rebuild from their own funds. Is this unfair? I know I'd think so if I lived there. But, at a safe distance, I can't think of any alternative other than forcing people to sell to some taxpayer-funded entity. That is happening now in the oft-flooded, interior, non-wealthy town of Manville, and it's causing fury. Inhabitants want the option of using the sum of money either for a buyout or for renovations, and they're being offered only a buyout.

Thanks for this. I worked in property-casualty insurance for my entire career. All of my employers had heavy exposure to catastrophes, including hurricanes. Even with reinsurance (insurance for insurance companies- and I worked for a few reinsurers), they were always bad news. When states or the federal government (e.g., National Flood Insurance Program) try to develop an insurance entity to cover these risks they discover what the insurers already knew- they're impossible to cover for an affordable premium unless they're somehow subsidized.

I decided years ago that the only solution was to allow rebuilding but only on the condition that no insurer would be compelled to write coverage and there would be no taxpayer funds available in the case of a disaster.

My parents eventually let windstorm coverage lapse on their little house in North Myrtle Beach about a mile from the ocean. They said the land was worth more than the house and they had the $$ to go elsewhere. I know them- they would NOT have sought taxpayer money to bail them out. Dad sold it fully intact a few years ago after Mom died.

 

[Midpack]

Bold added be me.
This, IMO, is what is broken. Prices won’t increase.
From what I have read, regulators are not allowing insurance companies to raise prices enough to cover their costs.
I would not expect a private company to remain in a state where they loose money year after year.

And that’s why they are pulling out of some high risk markets. Regulators can’t control claims, so they shouldn’t independently control increases…as happens in some areas.

 

[Taco]

... Insurance companies have been differentiating based on location risk for a long time. ....

I assume the cost map is accurate, but some of those numbers seem counter-intuitive. Kentucky costs more than North Carolina or California? Why is that??

Here is a FEMA map showing high risk areas. Based on the FEMA map, it seems like Kentucky would be way less risky. For some reason the maps of insurance cost by state and the map of risk, don't seem aligned.

 

[Chuckanut]

As somebody who does not live in a high risk area I do not wish to pay for insurance of people who choose to live in high risk areas such as canyons full of flammable brush, beach front homes subject to storm damage and houses with magnificent views located on eroding cliffs. So, yes, people need to prepare to pay more to live in dangerous areas. Just as I pay more for and earthquake insurance rider that comes with a substantial deductible over $10,000.

 

[rodi]

Out of curiosity, who are the two insurers willing to insure there?

We have farmers. Used to have AAA but they non renewed us 15 years ago. Neighbors had the same thing happen with allstate... No claims for decades then non renewed.

The other company was mid-something. (Don't remember the full name.) They were triple in price and I'd never heard of them.

Rates have been going up every year.

****

As for the other comment about goats, the fire safe council looked into them but the advocates for the open space preserves flipped out enough that the city put a kaibosh on that idea. Same advocates also don't want homeowners who live on the rim of the canyon creating defensible space on their own land!

We make sure our property is in good shape and fire hardened and hope that our house is still standing if a fire comes through.

 

[OldShooter]

... builders keep constructing homes, and people keep buying them because of the beautiful views they offer, despite the associated hazards. ...

One of life's little mysteries for me is the recurrent "Where should I move in retirement?" threads here where serious risk considerations like hurricanes, wild fires, earthquakes, etc. are not considered. Not even mentioned ?!?!?! Having seen Hurricane Michael up close and personal as a Red Cross disaster responder there is no way I would consider coastal Florida as a place to live. Ditto the well-known geological fault lines in CA and the Northwest. At this stage of our lives there's no way I want to consider starting over by courting natural disaster in a choice of where to live.

It can't happen to me. Yeah. Right.

 

[teej1985]

I assume the cost map is accurate, but some of those numbers seem counter-intuitive. Kentucky costs more than North Carolina or California? Why is that??

It's also odd to me that Hawaii is one of the cheapest on that map! You'd think literally every Hawaiian island is pretty exposed to hurricane risk.

 

[topnotcher]

Hello all, I am new to this forum and this is my first post, please let me know if I am out of line in anyway.

I am a new central FL resident as of 2021. I am insured, however my 2003 home had to go uninsured for a period of time until the hurricane risk passed for the season (this clearly means I am FI), once passed my insurer of choice (SF) was able to provide a reasonable standard policy. I have been watching the insurance market very carefully and I definitely have concerns for the future of the FL insurance marketplace. It seems clear that insurance providers are leaving and that other companies are becoming extremely selective about binding new policies. If real estate cannot be insured, bankers will not write mortgages and will possibly have to foreclose on others because mortgage requirements cannot be maintained by the mortgagees. I do not know how this will pan out.

Being an experienced FIRE person, I am starting to plan for that day. I have been researching ways to cover my personal liability holes should my homeowners be terminated. There are options that my insurance company offers. They say they can provide a personal liability policy should they be unable to write a traditional homeowners policy, this gives me some comfort. In terms of protecting my structure I have a feeling I might be on my own. For this I will have to make sure I have a home emergency plan. I will have to make sure I can make emergency repairs quickly to protect my assets. I will make sure I know how to turn the utilities off and on. Maybe its time to invest in hurricane shutters and a roofing system is not as prone to the damage of asphalt composite architectural shingles. Maybe invest in other building technology to make my structure more durable. What would your emergency plan for your home look like?

 

[bobandsherry]

It's also odd to me that Hawaii is one of the cheapest on that map! You'd think literally every Hawaiian island is pretty exposed to hurricane risk.

You would think so, but according to this source "Since 1950 five hurricanes or tropical storms have caused serious damage in Hawaii".

https://www.soest.hawaii.edu/met/Fa...50 five hurricanes or,Maui and floods on Oahu.

And this gives insight as to why. "Hurricanes in Hawaii are surprisingly rare, partly due to a quirk of geography that puts the islands just out of the worst swath of danger".

https://www.usatoday.com/story/tech...es-so-rare-hawaii-its-lucky-quirk/1088740002/

 

[bobandsherry]

One of life's little mysteries for me is the recurrent "Where should I move in retirement?" threads here where serious risk considerations like hurricanes, wild fires, earthquakes, etc. are not considered. Not even mentioned ?!?!?! Having seen Hurricane Michael up close and personal as a Red Cross disaster responder there is no way I would consider coastal Florida as a place to live. Ditto the well-known geological fault lines in CA and the Northwest. At this stage of our lives there's no way I want to consider starting over by courting natural disaster in a choice of where to live.



It can't happen to me. Yeah. Right.

As my wife and I planned our retirement to Florida, we had considered how nice a condo along the coast would be. But we then considered the risk of hurricanes, and me the cost of insurance and assessments for beach replenishment and instead turned inland. We also ensured we were out of a flood zone. New home that meets current wind mitigation code as well. In 8 years there's been 3 hurricanes in the general area, nothing as a direct hit and no damage to our home from the winds, knock on wood.

 

[pb4uski]

It's also odd to me that Hawaii is one of the cheapest on that map! You'd think literally every Hawaiian island is pretty exposed to hurricane risk.

Not the case, according to Bard:

How significant is hurricane risk in Hawaii?

The hurricane risk in Hawaii is relatively low. The islands lie in the central Pacific Ocean, where the water temperatures are not as warm as in the Atlantic Ocean, where most hurricanes form. Additionally, the trade winds that blow across the Pacific Ocean tend to weaken hurricanes before they reach Hawaii.

However, hurricanes do occasionally hit Hawaii. The last major hurricane to hit the islands was Hurricane Iniki in 1992, which caused widespread damage on Kauai. In 2018, Hurricane Lane brought heavy rains and flooding to the Big Island.

The hurricane season in Hawaii runs from June 1 to November 30.

 

[Markola]

It seems like the thread is generally in agreement about insurance fairness, which is refreshing. I hope my Minnesota congressional reps stick up for us if government reinsurance programs attempt to make us pay for Florida and Texas homeowner risks. I love Florida but if I ever lived there, I would rent, due to hurricanes.

Everybody is a libertarian - until their house blows down.

 

[statsman]

I assume the cost map is accurate, but some of those numbers seem counter-intuitive. Kentucky costs more than North Carolina or California? Why is that??

In the case of California, I am going to wager that the insurance costs stated do not include coverage for earthquakes. In the state, those policies are separate and costly, and they generally carry some very large deductibles (10% of house value?).

The weather generally tends to not be extreme in California, although last winter's storms proved otherwise. I am also not sure how the recent wildfires in the state impact insurance costs. May be isolated to specific areas.

 

[Texas Proud]

I think the "they rebuilt on a bad risk to begin with" is a small number of the problem claims. They do make the rounds though.

What do you do with 22M+ people in Florida? Ok, not all of them are homeowners, but still you're talking millions of policies at present.

The whole state is a hurricane risk. Sure, no storm surge worries further inland, but over half of us live within 20 miles of the coast. And many of us haven't been hit despite the spaghetti models that said we coulda shoulda every few years. And I would bet the insurance companies absolutely do not care if your cozy little florida town hasn't actually had a event in 20+ years, past performance, future results...etc.

Hurricanes can and do go cut across the state or go all the way up. Any roof in that cone is at risk. Now, in most cases, most homes won't be destroyed. But many in the eye path will have $30k-$100k damage claims (not counting flooding). I consider us lucky with no claim since 2005 (Wilma took enough of our roofing off to expose wood, and tore away our screen/cage).

If everyone in Florida woke up on Jan1 without insurance, or with annual policies over $10k, it would be absolute chaos here.

I would say one of the things is better building. I remember a year or two ago (heck maybe longer) where there was a lot of destruction but one home seemed to not get much damage... they built it to withstand the high wind...


If you are gong to put on a roof with just a few nails it is going to fly off in a hurricane...


Edit to add... the price of insurance should go up if the risks go up... look at California and earthquake insurance... I read that it is so high that few people have it.. well... had to look it up...



Despite experiencing 90% of the country's earthquakes, only 10% of California's residents have earthquake insurance.

 

[Out of Steam]

Maybe its time to invest in hurricane shutters and a roofing system is not as prone to the damage of asphalt composite architectural shingles.

Hello and welcome!

Asphalt shingles probably need to go away in the Southeastern US. Between mold, algae, windstorms, and sun damage, the life of "30 year" shingles appears to be barely 15.

 

[Midpack]

Hello and welcome!

Asphalt shingles probably need to go away in the Southeastern US. Between mold, algae, windstorms, and sun damage, the life of "30 year" shingles appears to be barely 15.

Hurricanes are a different matter, but 30 year shingles never last that long anywhere I’ve ever lived - more like 15-20. They didn’t in the Midwest either. Architectural shingles last longer than basic 3-tabs but 30 years would be unusual in most regions.

 

[explanade]

Whenever I used to visit back east, people would rib me sometimes about earthquakes in CA.

Like they happened every year.

There wasn't much discussion of hurricanes becoming more common or stronger.

But I recall in Chicago, the phone book had detailed instructions about how to deal with tornadoes, the procedures for moving to safety.

I found that kind of unsettling, that you had to be conscious of the threat all the time, whereas the Chicago residents making jokes about earthquakes didn't seem to see the cognitive dissonance.

There was a famous video of a local Chicago station news anchors diving under the desk when an earthquake hit. The shaking was more pronounced because apparently the studio was on top of a skyscraper.

Earthquakes, we were told the next big one was going to hit because it had been a long time since the 1906 San Francisco earthquake and a big quake in the LA area in the '70s.

Then we finally had the Loma Prieta quake in 1989. I was driving home after work, around 5 PM. I saw the poles shake and I slowed down, pulled over briefly but was able to continue home without incident.

This was in the suburbs and the home was okay but who knows if there was some kind of structural damage. My folks had a home with some cracks in the basement but I think they were there before that 1989 quake.

But I was surprised to hear that a section of the Bay Bridge fell out and the freeway interchange in Oakland had collapsed.

It was noticeable but didn't seem that bad, though maybe I was just on a stretch of road which wasn't that bad as other places in the Bay Area.

I heard some places, which were built on landfill, such as Foster City, was hit worse than more inland suburbs.

In any event, earthquakes are a once in a generation event. In my lifetime, most of which has been spent in CA, there have been maybe a handful of earthquakes that I noticed as it was happening.

There have been dozens more where I didn't know about them until it was reported after the fact. These are tremors which are at most 5 on the Richter Scale.

So it's hard to say which is more likely to impact your life, living under the threat of the next quake which could be over 8.0 or living through hurricane and tornado seasons every year.

 

[JoeWras]

Look at what happened to poor Xenia, OH in 1974.

I bring up Xenia because of the famous super 8 film of that tornado, filmed by a student. This was the dawn of viral imagery. Boy did that film go viral. It helped spark my intense interest in meteorology.

Now that everyone has a video device in their pocket, it seems like there is a new disaster every day. There is! And there was before. Nobody had the camera before, though.

 

[Aerides]

I would say one of the things is better building. I remember a year or two ago (heck maybe longer) where there was a lot of destruction but one home seemed to not get much damage... they built it to withstand the high wind...

With each new storm, hurricane standards and building codes are updated. For a long time in florida, you wanted a "post-andrew" build, as the requirements shot up after Country Walk was reduced to matchsticks. Fun fact about Andrew: It toppled a full size queen palm in our front yard, but left all the petals on a rose just 10 feet away.

Then again after Wilma, the requirements for a screen/cage changed to require a solid concrete perimeter - not just the posts. Many other changes in between.

But millions of homes (mine!) predate both of these. Especially nearer the coast, as that was mostly built up by 1990. Newer developments have continued to push west.

Unfortunately, many folks found out after Ian that they could not afford to rebuild even with insurance payouts, because new construction standards far outpriced their coverage.