Like Tree0Likes

It's just not a boat insurance issue in FL!

Reply
Old 06-30-2006, 07:10 AM
  #1
Charter Member
Charter Member
Thread Starter
 
Dean Ferry's Avatar
 
Join Date: Nov 2000
Location: Merritt Is. Fl. USA
My Boats: 2006 Hustler 388, 2004 Hustler Talon 25, 1999 30 Spectre cat and 2007 21' hydrostream voyager w/ Merc. 225 EFI
Posts: 6,580
Thumbs down It's just not a boat insurance issue in FL!

This going to be a BIG problem! It's all about profit, at the end of the day!

Potential loss drives rate hike
State Farm seeks 78% increase

TALLAHASSEE - Meteorology, computer models and targeted policy cancellations don't offer enough financial comfort for State Farm Florida.

State Farm seeks a record 78 percent average rate hike -- more than doubling what it charges policyholders in Brevard -- to cover a guess as to the worst potential luck it might suffer in a hurricane season many times worse than any the Southeast has seen.

In rate filings, it justifies the hikes by declaring that its potential losses are five times higher than those projected by its computer models, which include data from 2004 and 2005.

If State Farm persuades regulators to accept that "provision for uncertainty" and the huge profits it would generate most years, the development will bode ill for Florida consumers:


In two years, rates for much of coastal Florida will have more than doubled, including almost 20,000 State Farm customers who face 125 percent increases in this filing.


It will force similar hikes for the nearly 1 million Floridians covered by Citizens Property Insurance, the state-run insurer of last resort, because Citizens is required by law to charge more than the private market. Together, State Farm and Citizens insure about 30 percent of Florida homes.


And it sets a precedent for nearly 200 other property insurers doing business in the storm-struck state, allowing them to look beyond predicted losses and bolster rates to soothe investors.

"It's recognition that you'reexposing billions of dollars of capital. What do you need to make that a prudent investment?" said Chris Neal, State Farm Florida's public spokesman.

In previous years' filings, State Farm has made the case for the accuracy of catastrophe models in predicting losses.

But now, for every $1 in hurricane losses predicted for State Farm by its two state-approved, sophisticated computer models, the company has multiplied that by five. The move compensates for the risk that 104 years of hurricane data could be wrong, State Farm says.

"We look at that one company-ending event, where you get a worst-case scenario," Neal said.

That much-higher risk of ruin appears throughout State Farm's nearly 600-page rate filing.

The details include a 48 percent return on the premiums it collects from Florida homeowners, records show.

It calls for a three-fold increase in payments to its Illinois-based parent company for backup catastrophic coverage -- $447 million that State Farm Mutual will keep as profit if the year brings no disasters.

And the Florida subsidiary itself -- created to protect the national enterprise from Florida's hurricane risks -- would keep a 15 percent profit, four times larger than what regulators recommend.

Rate shock

State Farm's math confounds consumers like Eddie Moran, who moved his family here from California five years ago. Now the commercial airline pilot is ready to bail from Florida.

"If I move out, which I'm seriously considering, who's going to move into my house?" he asked. "Can they afford the property taxes, have kids who go to public schools, be two people who work? Or is it going to be New Jersey or New York retirees who spend six months a year living elsewhere?"

In 2001, State Farm charged $1,800 to insure Moran's dockside home on Merritt Island. The premium now is $5,361 and, if the state approves the company's rate hike, Moran's bill will top $12,000. Even his agent finds the premium hard to digest, Moran said.

"He told me he thinks State Farm is putting outlandish numbers out there to get the government to give them something," he said.

State Farm believes Moran's premium should multiply because his riverfront home poses high risk.

"We're getting closer to rate adequacy," Neal said. "We're still not even at what our numbers would have to be."

But for the Morans, all that hurricane premium money has been money down the drain. After four storms, the family has yet to sustain a loss that exceeds its $8,000 deductible.

Advocate denied

Consumer advocates are appalled.

Using terms such as "substantially overstated" and "unjustified," Florida Insurance Consumer Advocate Steve Burgess has asked state regulators for a second public hearing to address his own expert's review of State Farm's filing.

The Office of Insurance Regulation has turned Burgess down, saying the time for input was at a public hearing three weeks ago in Orlando.

Regulators will give only private consideration to the report produced just this week by actuary Stephen Alexander that questions nearly half of the State Farm hike as excessive profit.

Alexander also challenges State Farm's provisions for a six-hurricane season, far above what forecasters predict. And he concludes the company ignores its own data showing a decline in non-hurricane losses.

Strip out the excess, Alexander calculates, and State Farm's rate hike should be closer to 16 percent.

Risk down

For Tonya Cassano, the impending rate hike isn't as troubling as her feeling that State Farm simply doesn't want her business.

Contemplating a move out of her Palm Bay townhouse, Cassano asked her agent what premiums she could expect if she bought an older home. That's when she learned she would be dropped even if she doesn't move.

"We were told that starting Aug. 15, they won't be insuring anything older than 2001," Cassano said. "I'm not happy. It's getting tough to get insurance and who knows what it's going to cost?"

State Farm Florida already has the highest average premiums in 23 of the 62 Florida counties where it does business, often charging twice the average rates of its competitors. It is a factor sure to discourage customers in high-risk counties such as Escambia, Indian River, and Collier.

Two years of shifting its exposure by dropping older homes and those on the coast are beginning to pay off. Rate filings show State Farm Florida has reduced its probable hurricane losses.

In 2004, the company's computer models calculated a $176 risk of storm damage for every $100,000 in home value it insured. Now that probable loss is $153. Taken alone, that could drop premiums.

But after a decade of convincing regulators to accept rates based on models of probable losses, State Farm makes the case for something less quantifiable.

"The models are not risking their capital," Neal said. "If you were an outside investor, what kind of rate of return would it take to attract that kind of capital?"

He admits the answer is less than scientific.

"Nobody knows for sure," Neal said. "It's all just our best guess."

The argument strikes a sympathetic chord with Florida Insurance Commissioner Kevin McCarty, whose agency is reviewing State Farm's request to impose its new rates Aug. 15.

On Wednesday, lobbying for a national catastrophe fund, McCarty told Congress, "No potential rate of return is going to be worth the risk of losing the entire company."

And on top of this BS, our rental's homeowner's insurance just got cancelled, and we are now in th Citizens insurance trap, (Fl. state pool)! It's probobly going force us to sell the rental next year!

Dean
__________________
Everything is for sale @ a certain $$
Dean Ferry is offline  
Reply With Quote
Old 06-30-2006, 07:55 AM
  #2
Registered
 
gsmith9898's Avatar
 
Join Date: Mar 2005
Location: tulsa, oklahoma
Posts: 1,870
Default Re: It's just not a boat insurance issue in FL!

its new rates Aug. 15.

On Wednesday, lobbying for a national catastrophe fund, McCarty told Congress, "No potential rate of return is going to be worth the risk of losing the entire company
gsmith9898 is offline  
Reply With Quote
Old 06-30-2006, 07:56 AM
  #3
Registered
 
Macklin's Avatar
 
Join Date: Dec 2001
Location: Virginia Beach
My Boats: 36 Concept w/ Merc 250 EFI Smokers
Posts: 1,902
Default Re: It's just not a boat insurance issue in FL!

Wow! Sure hope those rate increases don't make their way to Virginia. I'm three blocks from the ocean. Just renewed my coverage through SF for $995. I don't feel so bad now.
Macklin is offline  
Reply With Quote
Old 06-30-2006, 08:10 AM
  #4
Platinum Member
Platinum Member
 
CAP071's Avatar
 
Join Date: Jul 2001
Location: USA
Posts: 16,430
Default Re: It's just not a boat insurance issue in FL!

I guess they want the money back from all the claims


They interviewed a guy last night here in the Pa floods. He has made 3 claims in 5 years to rebuild his house I think it' s time to move to a different house buddy
CAP071 is offline  
Reply With Quote
Old 06-30-2006, 08:27 AM
  #5
Platinum Member
Platinum Member
 
CigDaze's Avatar
 
Join Date: Jun 2001
Location: St. Petersburg, FL
My Boats: Cigarette 35 Cafe Racer
Posts: 21,346
Default Re: It's just not a boat insurance issue in FL!

Quote:
If State Farm persuades regulators to accept that "provision for uncertainty" and the huge profits it would generate most years, the development will bode ill for Florida consumers
Greedy Bastards!

I would be willing understand an increase in deductable for this "uncertainty," but a continued long term rate hike of almost double? Fvck that!

Insurance, always there until you need it most.
CigDaze is offline  
Reply With Quote
Old 06-30-2006, 08:34 AM
  #6
Gold Member
Gold Member
 
Iggy's Avatar
 
Join Date: Jan 2001
Location: Kissimmee, Florida
My Boats: '88 Formula F-206 LS
Posts: 4,155
Default Re: It's just not a boat insurance issue in FL!

My insurance is currently 900+ and I live 60 miles from the ocean.
Our deductable went from 250/500 to 500/3000 in one year. I know others that pay much higher deductables for wind storm damage.
Iggy is offline  
Reply With Quote
Old 06-30-2006, 08:58 AM
  #7
Geronimo36
Gold Member
 
Panther's Avatar
 
Join Date: Sep 2002
Location: Elkton, MD
My Boats: 36' Apache Warrior / 22' Apache Scout
Posts: 11,838
Default Re: It's just not a boat insurance issue in FL!

What's funny is the insurance companies use all of our insurance payments to finance investments in the market. The major insurance companies invest heavily in hedge funds etc., they're not that poor....
Panther is offline  
Reply With Quote
Old 06-30-2006, 09:11 AM
  #8
Charter Member #232
Charter Member
 
Audiofn's Avatar
 
Join Date: Oct 2000
Location: Carlisle, MA USA
My Boats: 1979 Formula 302, 99 Formula 353, 81 Donzi 18 2+3 with 454
Posts: 18,379
Default Re: It's just not a boat insurance issue in FL!

If you guys are all paying only 900 bucks a year and they want to double your rates then I think that is about right. Of course we would have to compair policies but I pay more then double that in New England and our risk for total loss is MUCH lower then you guys in Florida. My house in MA is only 900 sqft on slab and even with all that rain we just got we had zero issues. No offence but should we in the low risk areas pay for you guys in the high risk areas? Well we do.

Jon
__________________
Put your best foot forward!
Audiofn is offline  
Reply With Quote
Old 06-30-2006, 09:34 AM
  #9
Charter Member
Charter Member
Thread Starter
 
Dean Ferry's Avatar
 
Join Date: Nov 2000
Location: Merritt Is. Fl. USA
My Boats: 2006 Hustler 388, 2004 Hustler Talon 25, 1999 30 Spectre cat and 2007 21' hydrostream voyager w/ Merc. 225 EFI
Posts: 6,580
Default Re: It's just not a boat insurance issue in FL!

Quote:
Originally Posted by Audiofn
If you guys are all paying only 900 bucks a year and they want to double your rates then I think that is about right. Of course we would have to compair policies but I pay more then double that in New England and our risk for total loss is MUCH lower then you guys in Florida. My house in MA is only 900 sqft on slab and even with all that rain we just got we had zero issues. No offence but should we in the low risk areas pay for you guys in the high risk areas? Well we do.

Jon
Jon,
First off, I wish I payed $1,800.00 for Homeowners insurance, I pay ~ $3,200.00. And with all the hurricanes we have had in Florida for the last 16 years since we have live here, I have had 1 claim for 2 waterfront properties! And then the claim had a $4,500.00 deductible!
You are missing the point of the article, it's not about the losses, it's about the insurance companies make HUGE profits! Hell, where we live, which is about 7 miles from the Atlantic, we are in a FEMA Flood Zone X, (No recorded Floods for the last 100 years!!), which doesn't even require flood insurance. And besides, do you honestly think your homeowners insurance is going to stay the same, after all the floods some of you folks have just gone thru up there in the NE? Remember, the number 1 hurricane based force of destruction is Storm surge, (Kinda like flooding! )
Dean
__________________
Everything is for sale @ a certain $$

Last edited by Dean Ferry; 06-30-2006 at 09:39 AM.
Dean Ferry is offline  
Reply With Quote
Old 06-30-2006, 09:35 AM
  #10
Registered
Trade Score: (3)
 
BGIII's Avatar
 
Join Date: May 2001
Location: West Michigan
My Boats: 34 Saber
Posts: 1,383
Default Re: It's just not a boat insurance issue in FL!

If karma truly exists, the insurance people and the oil people should enjoy fukking each other in hell.
BGIII is offline  
Reply With Quote
Reply

Related Topics
Thread
Thread Starter
Forum
Replies
Last Post
Audiofn
General Boating Discussion
6
08-02-2006 03:57 PM
russ
General Q & A
0
07-21-2005 05:35 PM
BAJA WILL
General Boating Discussion
30
04-22-2004 11:10 PM
BAD HTM SR 24
General Boating Discussion
16
07-22-2002 12:43 PM



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On



All times are GMT -5. The time now is 07:18 PM.


Copyright 2011 OffShoreOnly. All rights reserved.