Florida doesn't need Federal insurance bailouts when the next big catastrophe hits. In the real world, it needs a long-term Federal evacuation plan for all coastal homeowners within 10 feet of sea...
Florida doesn't need Federal insurance bailouts when the next big catastrophe hits. In the real world, it needs a long-term Federal evacuation plan for all coastal homeowners within 10 feet of sea level, starting now. Sea level is already 10 inches higher than levels 50 years ago, and the rise is accelerating due to climate change. Much of Florida land is on permeable limestone, which means pumping, damming, and diversion are ineffective. Drinking water supplies are already being infiltrated by saltwater. Miami has tidal flooding to 3 feet above sea level on a regular basis.
Also, note that Florida property insurance does not cover flood damage, as one of the homeowners in this story discovered on a (wrongfully) denied claim. That's part of the Federal taxpayer-underwritten National Flood Insurance Program, which should be refusing to issue policies for coastal Florida. Only about 14% of Florida homeowners are knowledgeable enough to buy the subsidized flood insurance in any case, since it's not a requirement for mortgage issuance.
Making money on private property insurance in Florida is a rug-pull game - you can't do it without criminal intent to defraud. Bruce Lucas has already gotten away with this under his former company, Heritage Insurance. Claiming that any coastal land in Florida is legitimately and affordably insurable is a blackhearted lie so evil that I wish I believed in a Hell for the perpetrators.
I'm not being melodramatic or exaggerating the risks for attention. This ongoing calamity is exactly what the available data and physics-based modeling are showing. If you have loved ones and family in Florida, encourage them to plan an exodus ASAP.
I've put my money where my mouth is on this - left Florida 4 years ago, and I'm terrified for the friends who are still anchored to their mortgages and jobs there.
The trick is how to get it done when you factor in people being obstinate. The way I see this could be done would be to have a state fund to compensate people for moving out of these areas,...
The trick is how to get it done when you factor in people being obstinate.
The way I see this could be done would be to have a state fund to compensate people for moving out of these areas, effectively buying their property, afterwards which the property is ineligible for state insurance coverage. That would of course tank the value because now the cost of ownership would reflect the true risks of maintaining a structure in the path of a hurricane.
The state could sell the property at a loss to property managers who can manage the risk or take collections of the parcels to form natural habitat zones or parks and public land that can be enjoyed outside of hurricane season.
However, even such a slow approach would face obscene pushback, so I'm not optimistic.
Florida government will never do this - there's too much corrupt capture by various business interests, not least of all realtors. It's going to have to be a Federal government program, which will...
Florida government will never do this - there's too much corrupt capture by various business interests, not least of all realtors. It's going to have to be a Federal government program, which will go down like a cruise ship anchor.
I'd like to see a $250,000-capped, no-questions-asked buyout program and very strict requirements/high premiums on insurance if the buyout is refused. It's enough to cover remaining mortgages for most of the lower- and middle-class homeowners, allowing them to start over elsewhere, and it's cheaper than insuring inflated market values. Yes, some people are going to suffer losses, but they won't risk being utterly wiped out. The rich can keep their seafront villas, using their own capital for catastrophes, with few left to provide services for them.
Yeah, it's unfortunate when government won't be proactive on such things. I don't know about the exact dollar amount. I know a number of folks in cheaper areas than Florida with more than $250k...
Yeah, it's unfortunate when government won't be proactive on such things. I don't know about the exact dollar amount. I know a number of folks in cheaper areas than Florida with more than $250k mortgages, but I feel like the right number could be found by crunching the public sales data.
I mean, since we're talking about essentially trying to wipe the properties off the map, I'd say just void the mortgages and then offer the $100k. Let the banks eat any losses they'd have to eat...
I mean, since we're talking about essentially trying to wipe the properties off the map, I'd say just void the mortgages and then offer the $100k. Let the banks eat any losses they'd have to eat anyway when the insurance companies won't pay out.
Unfortunately, I think the banks would challenge in court and prevail, though. There isn't a good legal basis for that approach, I don't think. I think buying out homeowners and exempting the...
Unfortunately, I think the banks would challenge in court and prevail, though. There isn't a good legal basis for that approach, I don't think. I think buying out homeowners and exempting the property from state backed insurance is the only way I see it happening without a major event literally wiping a coastline off the map. Even that would require legislative action.
I mean, it's just emminent domain, except we pay the people losing their homes rather than the people whom can afford to have a few unprofitable quarters.
I mean, it's just emminent domain, except we pay the people losing their homes rather than the people whom can afford to have a few unprofitable quarters.
So eminent domain usually ends up in court and the courts often provide a high bar to clear for the government to make its case. I know there are exceptions, but in general the government doesn't...
So eminent domain usually ends up in court and the courts often provide a high bar to clear for the government to make its case. I know there are exceptions, but in general the government doesn't pursue eminent domain lightly.
But even in eminent domain they would need to pay the owners and the use of eminent domain wouldn't automatically discharge debts or liens on the property.
I wish there was a simple solution! Have a great day!
"obstinate" is perhaps not the right word -- I'm sure some Florida homeowners would refuse to move for no other reason than stubbornness but I'd wager a FAR larger portion would refuse because...
"obstinate" is perhaps not the right word -- I'm sure some Florida homeowners would refuse to move for no other reason than stubbornness but I'd wager a FAR larger portion would refuse because they can't remotely afford it and have nowhere else to go. Sure, you can view that as "being obstinate" and big government payouts would still be a (partial) solution there, but let's not pretend people living in these places have infinite funds to relocate themselves somewhere safer.
I don't know that this is a fair characterization of what I said, though I did leave some ambiguity. I fully agree the lack of means to move and lack of places to go is the primary issue for most...
I don't know that this is a fair characterization of what I said, though I did leave some ambiguity.
I fully agree the lack of means to move and lack of places to go is the primary issue for most folks. Solving that problem is no trivial feat and requires difficult tradeoffs and balancing the financial winners and losers in any given scenario.
However, I think there are a large number of people who would see even the gentlest of plans to depopulate these high risk areas very negatively. And I get it, I do. Being incentives to leave where you have established a life or career, where you bought your "forever home", or your retirement near that you plan on spending your twilight years. I think there would, very naturally, be tremendous consternation. A former employee has parents who retired to one of these areas and from what I know would never voluntarily leave even if compensated.
However, my main target for stubbornness is the politicians who would block even voluntary programs, misrepresent the risks, and make it political theater.
I think reasonable people can disagree as to their predictions of what proportion of push back would come from where. I think the important part of planning isn't demonizing any one source of pushback, but rather acknowledging the potential and planning accordingly with preparation to pivot as needed.
But like I said, I'm not optimistic the legislature would ever be proactive enough.
Not all of Florida is that bad? My parents live about 30 miles north of Orlando, house is 130' above sea level ... lived there since 2004, been through a ton of hurricanes. Had minor damage to the...
Not all of Florida is that bad? My parents live about 30 miles north of Orlando, house is 130' above sea level ... lived there since 2004, been through a ton of hurricanes. Had minor damage to the roof a few times, sure insurance paid out ... but it was only a few grand each time. Not a flood risk at all.
You can get damage like that from snowstorms up north etc. Just don't live by the coast.
Maybe not a safe place indefinitely. Models are showing Florida storm high winds reaching further inland. It could be safe enough, but do you really want to be among a hundred thousand people...
Maybe not a safe place indefinitely. Models are showing Florida storm high winds reaching further inland. It could be safe enough, but do you really want to be among a hundred thousand people clamoring for an insurance payout under current Florida laws if something big does happen?
We lived eight miles inland from Fort Lauderdale when Hurricane Irma went through. Area winds were 70 mph sustained for hours, with gusts to 90 mph. The house was mostly undamaged, thanks to storm shutters and current building codes, though we had some worries about wind-driven flooding from the adjoining canal.
But there's nothing quite like hurricane-related winds in most of the continental US. I've lived through many Northern storms that brought down trees or lifted shingles, and even golf-ball sized hail, but I'd never seen an entire neighborhood covered in a thin layer of wind-minced leaves that looked like they'd been through a blender. Happier out of there, and I hope your family stays safe.
I grew up about 90 mins from the coast of NC in the 90s when we had just as bad hurricanes with MUCH worse flooding, Hurricane Floyd etc. ... So the problem isn't JUST FL either. Honestly the...
I grew up about 90 mins from the coast of NC in the 90s when we had just as bad hurricanes with MUCH worse flooding, Hurricane Floyd etc. ... So the problem isn't JUST FL either.
Honestly the worst hurricanes, power outages and flooding of my lifetime were in NC in the 90s - my area of FL has been tame in comparison. Entire surrounding areas were under water for weeks and my family was actually flooded into our small town for about a week as all the roads out were under water. That doesn't happen in my part of FL.
But you're right the insurance bit is worrying. It might influence me to never own a home ..
I'm not a climatologist and don't have direct access to modeling software or data. Here are a couple of recent papers I've found of interest, but I won't claim that I still have the statistical...
I'm not a climatologist and don't have direct access to modeling software or data. Here are a couple of recent papers I've found of interest, but I won't claim that I still have the statistical chops to evaluate them deeply.
A question I have is: if these shenanigans are profitable, why are so many insurance companies going bankrupt? Apparently much higher fees are justified by actual losses (which is why reinsurers...
A question I have is: if these shenanigans are profitable, why are so many insurance companies going bankrupt? Apparently much higher fees are justified by actual losses (which is why reinsurers are raising rates so much), but they're unaffordable to many homeowners.
Maybe this means that Florida real estate is becoming unaffordable? The Florida state government is not likely to own up to this. Giving some policies to other insurance companies means someone else can be the bad guy and make the tough choice to raise rates dramatically or risk bankruptcy and stiff people on claims.
Downsizing to less-pricey houses that are cheaper to rebuild or replace when disaster hits might be one way to make the insurance affordable in some disaster-prone places, but adjusting to that new reality will be long and painful.
Banks require insurance when making mortgages, so they might end up being the ones who say no more.
These shennanigans are only profitable because they're able to leave all the high-risk policies back with the state. Flordia just being Florida and letting scamsters squeeze out a few extra bucks...
These shennanigans are only profitable because they're able to leave all the high-risk policies back with the state.
Flordia just being Florida and letting scamsters squeeze out a few extra bucks while leaving people high and dry.
My nutjob brother thinks Florida is gonna secede in 2024. I well and truely hope he's right.
It's not like the companies are filing bankruptcy with billions in assets and allowed to walk away with them. They file bankruptcy when they have more claims than they can pay. Bankruptcy allows...
It's not like the companies are filing bankruptcy with billions in assets and allowed to walk away with them. They file bankruptcy when they have more claims than they can pay. Bankruptcy allows the court to bring order to the process of paying out what is owed and prioritizing recipients and creditors.
The fundamental issue is that homes in large parts of Florida can not be affordably insured anymore, and really never could be. Part of the problem was for decades US flood insurance rates were too low and inadvertently incentived development in the very places it was meant to keep homes out of.
The financial model of insurance is that you can protect many people financially from uncorrelated risks. E.g., of Bob and Frank both have their house burn down, is generally unlikely that they are related events. When you have areas where hurricanes, floods, etc, are likely and where there will be lots of correlated losses, you need to charge sky high rates to ensure the ability to pay out. So companies have been going out of business, rapidly increasing the costs of insurance, or rejecting new policies and leaving it to the state to fund.
What's needed is a plan that would allow the state to compensate people moving out of these high risk areas and phasing out state insurance coverage.
You're correct that the companies can't just declare bankruptcy and walk away with billions in assets. I've deleted that incorrect and intemperate assertion. The grift is in the executive...
You're correct that the companies can't just declare bankruptcy and walk away with billions in assets. I've deleted that incorrect and intemperate assertion. The grift is in the executive compensation, corporate relationships that hide excessive payments, and pump-and-dump stock schemes. As the article mentions, Bruce Logan receives $78 million as the CEO of Slide, not including whatever he receives from selling shares.
And we're in agreement, as I indicated below, that most of Florida is practically uninsurable. Since the bulk of real estate value and major cities are all in the flood zone and exposed to climate-strengthened hurricanes, it's not a big exaggeration to say the whole state is unacceptably risky to reside in unless you can afford to absorb 100% of value loss, not to mention life and limb.
That's a very fair point; executive compensation is obscene in this country and in the cases you listed. I got a paywall on the article so only read the excerpts quoted in the comments. Have a...
That's a very fair point; executive compensation is obscene in this country and in the cases you listed. I got a paywall on the article so only read the excerpts quoted in the comments.
That's a different issue, though. If there's real reason to believe Bruce Logan or any other CEO of these bankrupted insurance companies acted recklessly to pursue personal financial gain, then...
That's a different issue, though. If there's real reason to believe Bruce Logan or any other CEO of these bankrupted insurance companies acted recklessly to pursue personal financial gain, then the next question is why have shareholders (or debters) not sued for breach of fiduciary duty? Shareholders both have money and lawyers, and do like money, after all.
IANAL, but it's difficult and expensive to prove breach of fiduciary duty or inadequate governance/excessive compensation. Also, it's not so much bankruptcy as complex webs of receivership, policy...
This is it right here. Remaining companies get to choose low risk, high value properties from vacating businesses in the state through what's known as bookroll processes. Insurance companies...
This is it right here. Remaining companies get to choose low risk, high value properties from vacating businesses in the state through what's known as bookroll processes. Insurance companies leaving the area hand off expiring policies to other companies. Other companies use various metrics to select a cross section of those policies that will be the most profitable and target them while over charging riskier policies and forcing them to go elsewhere leaving state insurers or insurers of last resort holding ridiculous amounts of risk.
In Florida, this is what’s known as a takeout, in which an insurer is able to assume thousands of policyholders and millions in premiums in one swoop, without fees or acquisition costs. Florida officials created the system about 30 years ago to try to shrink the exposure of Citizens, the state’s insurer of last resort, and attract new carriers after Hurricane Andrew sent major carriers scrambling.
That opportunity is what drew Lucas to the industry in 2012 when he created Heritage Insurance, and what’s behind Slide. He’s far from alone. Dozens of start-ups have flocked to the state over the years lured by the chance to grow big.
...
Over the past two decades, more than half of the carriers that participated in the “takeout” program have gone insolvent, state data shows. As climate-fueled hurricanes have repeatedly hit Florida in recent years, Citizens has picked up hundreds of thousands of new homeowners who otherwise couldn’t get insurance, fanning fears that the state-run insurer, with about half a trillion dollars of financial exposure, could need a U.S. taxpayer bailout.
Florida’s insurance market is one of the worst in the nation for homeowners, according to data from the National Association of Insurance Commissioners (NAIC) obtained by The Post. Overall, in 2022, Florida had the highest percentage of unpaid claims of any state and the most claims that were never processed, and it failed to renew the most policies.
Lucas created Slide in 2021 in response to Florida’s emerging insurance crisis, which began even before Ian. And already, insurance officials have awarded him the opportunity to take over far more policies than any other company, data shows — either directly from Citizens or from other insurers that have gone under or pulled out of the state. A key reason he’s cited for the success of Slide is the state’s recent spate of pro-insurer legislation — changes that he and his lobbyists have been pushing for years.
Lucas and allies say that by raising a significant amount of money, they are able to bring more confidence to Florida’s insurance market. He says it’s especially critical because property insurers in Florida rely on reinsurers — usually global companies — that reimburse them when big disasters hit, and those reinsurers have been raising rates dramatically because of climate change.
...
“What this market needs is stability and solvency,” Lucas said in an interview with The Post. “It needs companies that have bigger balance sheets, and it needs companies that are buying more reinsurance to keep up with climate change so they can pay hurricane claims. And to make sure that no matter what storm hits your portfolio, you survive.”
...
Lucas is counting on new Florida legislation to make sure his current business succeeds. The legislation clamps down on lawsuits from homeowners who claim they weren’t paid what they were owed, freeing insurers from covering the legal fees if they lose a case and prohibiting other practices that insurers said inflated their costs.
...
Slide and Florida insurance officials almost instantaneously brokered a $400 million takeover of an insolvent company — a deal made so quickly that other insurance executives complained that it was signed before they even knew that an opportunity existed.
Knowing they were going insolvent, executives at St. Johns Insurance Company approached Lucas in February 2022 asking him for help, he said. He couldn’t invest in or take on the company’s liability, but he said he could offer policy renewals to its 147,000 customers, while the state’s financial guarantee association, FIGA, would take on its open claims and debt.
So, new Florida legislation is going to... Legalize stiffing homeowners? Because you're only on the hook if you lose and if you lose you obviously underpaid the policy holder.
clamps down on lawsuits from homeowners who claim they weren’t paid what they were owed, freeing insurers from covering the legal fees if they lose a case
So, new Florida legislation is going to... Legalize stiffing homeowners? Because you're only on the hook if you lose and if you lose you obviously underpaid the policy holder.
Here's the Florida-specific story on why blocking litigation is not in the public's best interest. And reinsurers are suddenly interested in the high profit margins available with limited...
Here's the Florida-specific story on why blocking litigation is not in the public's best interest.
And reinsurers are suddenly interested in the high profit margins available with limited liability.
Excellent Mother Jones story detailing what a corrupt mess this is.
If anything Florida should be creating a plan to compensate people for moving out of these high risk areas and phasing out state insurance in them. They asking with the underpriced US flood...
If anything Florida should be creating a plan to compensate people for moving out of these high risk areas and phasing out state insurance in them. They asking with the underpriced US flood insurance have incentives people to live in these dangerous places by underwriting the costs.
Florida doesn't need Federal insurance bailouts when the next big catastrophe hits. In the real world, it needs a long-term Federal evacuation plan for all coastal homeowners within 10 feet of sea level, starting now. Sea level is already 10 inches higher than levels 50 years ago, and the rise is accelerating due to climate change. Much of Florida land is on permeable limestone, which means pumping, damming, and diversion are ineffective. Drinking water supplies are already being infiltrated by saltwater. Miami has tidal flooding to 3 feet above sea level on a regular basis.
Also, note that Florida property insurance does not cover flood damage, as one of the homeowners in this story discovered on a (wrongfully) denied claim. That's part of the Federal taxpayer-underwritten National Flood Insurance Program, which should be refusing to issue policies for coastal Florida. Only about 14% of Florida homeowners are knowledgeable enough to buy the subsidized flood insurance in any case, since it's not a requirement for mortgage issuance.
Making money on private property insurance in Florida is a rug-pull game - you can't do it without criminal intent to defraud. Bruce Lucas has already gotten away with this under his former company, Heritage Insurance. Claiming that any coastal land in Florida is legitimately and affordably insurable is a blackhearted lie so evil that I wish I believed in a Hell for the perpetrators.
I'm not being melodramatic or exaggerating the risks for attention. This ongoing calamity is exactly what the available data and physics-based modeling are showing. If you have loved ones and family in Florida, encourage them to plan an exodus ASAP.
I've put my money where my mouth is on this - left Florida 4 years ago, and I'm terrified for the friends who are still anchored to their mortgages and jobs there.
The trick is how to get it done when you factor in people being obstinate.
The way I see this could be done would be to have a state fund to compensate people for moving out of these areas, effectively buying their property, afterwards which the property is ineligible for state insurance coverage. That would of course tank the value because now the cost of ownership would reflect the true risks of maintaining a structure in the path of a hurricane.
The state could sell the property at a loss to property managers who can manage the risk or take collections of the parcels to form natural habitat zones or parks and public land that can be enjoyed outside of hurricane season.
However, even such a slow approach would face obscene pushback, so I'm not optimistic.
Florida government will never do this - there's too much corrupt capture by various business interests, not least of all realtors. It's going to have to be a Federal government program, which will go down like a cruise ship anchor.
I'd like to see a $250,000-capped, no-questions-asked buyout program and very strict requirements/high premiums on insurance if the buyout is refused. It's enough to cover remaining mortgages for most of the lower- and middle-class homeowners, allowing them to start over elsewhere, and it's cheaper than insuring inflated market values. Yes, some people are going to suffer losses, but they won't risk being utterly wiped out. The rich can keep their seafront villas, using their own capital for catastrophes, with few left to provide services for them.
Yeah, it's unfortunate when government won't be proactive on such things. I don't know about the exact dollar amount. I know a number of folks in cheaper areas than Florida with more than $250k mortgages, but I feel like the right number could be found by crunching the public sales data.
Have a great day!
I mean, since we're talking about essentially trying to wipe the properties off the map, I'd say just void the mortgages and then offer the $100k. Let the banks eat any losses they'd have to eat anyway when the insurance companies won't pay out.
Unfortunately, I think the banks would challenge in court and prevail, though. There isn't a good legal basis for that approach, I don't think. I think buying out homeowners and exempting the property from state backed insurance is the only way I see it happening without a major event literally wiping a coastline off the map. Even that would require legislative action.
I mean, it's just emminent domain, except we pay the people losing their homes rather than the people whom can afford to have a few unprofitable quarters.
So eminent domain usually ends up in court and the courts often provide a high bar to clear for the government to make its case. I know there are exceptions, but in general the government doesn't pursue eminent domain lightly.
But even in eminent domain they would need to pay the owners and the use of eminent domain wouldn't automatically discharge debts or liens on the property.
I wish there was a simple solution! Have a great day!
"obstinate" is perhaps not the right word -- I'm sure some Florida homeowners would refuse to move for no other reason than stubbornness but I'd wager a FAR larger portion would refuse because they can't remotely afford it and have nowhere else to go. Sure, you can view that as "being obstinate" and big government payouts would still be a (partial) solution there, but let's not pretend people living in these places have infinite funds to relocate themselves somewhere safer.
I don't know that this is a fair characterization of what I said, though I did leave some ambiguity.
I fully agree the lack of means to move and lack of places to go is the primary issue for most folks. Solving that problem is no trivial feat and requires difficult tradeoffs and balancing the financial winners and losers in any given scenario.
However, I think there are a large number of people who would see even the gentlest of plans to depopulate these high risk areas very negatively. And I get it, I do. Being incentives to leave where you have established a life or career, where you bought your "forever home", or your retirement near that you plan on spending your twilight years. I think there would, very naturally, be tremendous consternation. A former employee has parents who retired to one of these areas and from what I know would never voluntarily leave even if compensated.
However, my main target for stubbornness is the politicians who would block even voluntary programs, misrepresent the risks, and make it political theater.
I think reasonable people can disagree as to their predictions of what proportion of push back would come from where. I think the important part of planning isn't demonizing any one source of pushback, but rather acknowledging the potential and planning accordingly with preparation to pivot as needed.
But like I said, I'm not optimistic the legislature would ever be proactive enough.
Have a great day!
Not all of Florida is that bad? My parents live about 30 miles north of Orlando, house is 130' above sea level ... lived there since 2004, been through a ton of hurricanes. Had minor damage to the roof a few times, sure insurance paid out ... but it was only a few grand each time. Not a flood risk at all.
You can get damage like that from snowstorms up north etc. Just don't live by the coast.
Maybe not a safe place indefinitely. Models are showing Florida storm high winds reaching further inland. It could be safe enough, but do you really want to be among a hundred thousand people clamoring for an insurance payout under current Florida laws if something big does happen?
We lived eight miles inland from Fort Lauderdale when Hurricane Irma went through. Area winds were 70 mph sustained for hours, with gusts to 90 mph. The house was mostly undamaged, thanks to storm shutters and current building codes, though we had some worries about wind-driven flooding from the adjoining canal.
But there's nothing quite like hurricane-related winds in most of the continental US. I've lived through many Northern storms that brought down trees or lifted shingles, and even golf-ball sized hail, but I'd never seen an entire neighborhood covered in a thin layer of wind-minced leaves that looked like they'd been through a blender. Happier out of there, and I hope your family stays safe.
I grew up about 90 mins from the coast of NC in the 90s when we had just as bad hurricanes with MUCH worse flooding, Hurricane Floyd etc. ... So the problem isn't JUST FL either.
Honestly the worst hurricanes, power outages and flooding of my lifetime were in NC in the 90s - my area of FL has been tame in comparison. Entire surrounding areas were under water for weeks and my family was actually flooded into our small town for about a week as all the roads out were under water. That doesn't happen in my part of FL.
But you're right the insurance bit is worrying. It might influence me to never own a home ..
I 'd be interested in reading more about what "physics-based modeling" is showing, if you can remember where you read that.
I'm not a climatologist and don't have direct access to modeling software or data. Here are a couple of recent papers I've found of interest, but I won't claim that I still have the statistical chops to evaluate them deeply.
Continental United States climate projections based on thermodynamic modification of historical weather
Assessing population exposure to coastal flooding due to sea level rise - Less physics-based, more statistical based on historical patterns. I believe this paper understates extreme event risks within the year 2100 horizon.
What Does Global Land Climate Look Like at 2°C Warming?
Mirror, for those hit by the paywall:
https://archive.is/MWPKY
A question I have is: if these shenanigans are profitable, why are so many insurance companies going bankrupt? Apparently much higher fees are justified by actual losses (which is why reinsurers are raising rates so much), but they're unaffordable to many homeowners.
Maybe this means that Florida real estate is becoming unaffordable? The Florida state government is not likely to own up to this. Giving some policies to other insurance companies means someone else can be the bad guy and make the tough choice to raise rates dramatically or risk bankruptcy and stiff people on claims.
Downsizing to less-pricey houses that are cheaper to rebuild or replace when disaster hits might be one way to make the insurance affordable in some disaster-prone places, but adjusting to that new reality will be long and painful.
Banks require insurance when making mortgages, so they might end up being the ones who say no more.
These shennanigans are only profitable because they're able to leave all the high-risk policies back with the state.
Flordia just being Florida and letting scamsters squeeze out a few extra bucks while leaving people high and dry.
My nutjob brother thinks Florida is gonna secede in 2024. I well and truely hope he's right.
This cherry-picking seems to be rather difficult:
Maybe we could think of this like gambling. Not every company that plays this game is a winner.
It's not like the companies are filing bankruptcy with billions in assets and allowed to walk away with them. They file bankruptcy when they have more claims than they can pay. Bankruptcy allows the court to bring order to the process of paying out what is owed and prioritizing recipients and creditors.
The fundamental issue is that homes in large parts of Florida can not be affordably insured anymore, and really never could be. Part of the problem was for decades US flood insurance rates were too low and inadvertently incentived development in the very places it was meant to keep homes out of.
The financial model of insurance is that you can protect many people financially from uncorrelated risks. E.g., of Bob and Frank both have their house burn down, is generally unlikely that they are related events. When you have areas where hurricanes, floods, etc, are likely and where there will be lots of correlated losses, you need to charge sky high rates to ensure the ability to pay out. So companies have been going out of business, rapidly increasing the costs of insurance, or rejecting new policies and leaving it to the state to fund.
What's needed is a plan that would allow the state to compensate people moving out of these high risk areas and phasing out state insurance coverage.
You're correct that the companies can't just declare bankruptcy and walk away with billions in assets. I've deleted that incorrect and intemperate assertion. The grift is in the executive compensation, corporate relationships that hide excessive payments, and pump-and-dump stock schemes. As the article mentions, Bruce Logan receives $78 million as the CEO of Slide, not including whatever he receives from selling shares.
And we're in agreement, as I indicated below, that most of Florida is practically uninsurable. Since the bulk of real estate value and major cities are all in the flood zone and exposed to climate-strengthened hurricanes, it's not a big exaggeration to say the whole state is unacceptably risky to reside in unless you can afford to absorb 100% of value loss, not to mention life and limb.
That's a very fair point; executive compensation is obscene in this country and in the cases you listed. I got a paywall on the article so only read the excerpts quoted in the comments.
Have a great day!
That's a different issue, though. If there's real reason to believe Bruce Logan or any other CEO of these bankrupted insurance companies acted recklessly to pursue personal financial gain, then the next question is why have shareholders (or debters) not sued for breach of fiduciary duty? Shareholders both have money and lawyers, and do like money, after all.
IANAL, but it's difficult and expensive to prove breach of fiduciary duty or inadequate governance/excessive compensation. Also, it's not so much bankruptcy as complex webs of receivership, policy exchanges, and other methods of transferring ownership of shares and liabilities. Example - https://www.law.com/dailybusinessreview/2023/02/21/insolvent-insurer-united-property-casualty-headed-to-receivership/
This is it right here. Remaining companies get to choose low risk, high value properties from vacating businesses in the state through what's known as bookroll processes. Insurance companies leaving the area hand off expiring policies to other companies. Other companies use various metrics to select a cross section of those policies that will be the most profitable and target them while over charging riskier policies and forcing them to go elsewhere leaving state insurers or insurers of last resort holding ridiculous amounts of risk.
I hope they don't, just what we need is another isolated insane mini nation with ICBM capabilities 🤦♂️🐊
It's OK, thanks to all the cuts to their education system they won't be able to open the doors.
From the article:
...
...
...
...
So, new Florida legislation is going to... Legalize stiffing homeowners? Because you're only on the hook if you lose and if you lose you obviously underpaid the policy holder.
This video was a great introduction to why tort reform, as a concept, is bullshit.
Don't Call Us (with Medical Malpractice cases)
Here's the Florida-specific story on why blocking litigation is not in the public's best interest.
And reinsurers are suddenly interested in the high profit margins available with limited liability.
Excellent Mother Jones story detailing what a corrupt mess this is.
If anything Florida should be creating a plan to compensate people for moving out of these high risk areas and phasing out state insurance in them. They asking with the underpriced US flood insurance have incentives people to live in these dangerous places by underwriting the costs.