Can Insurance companies survive and impact

[Group9]

Originally Posted by breweraz

The devastation from IRMA through the early reports is massive. I expect that it will grow significantly as assessments and IRMA finds the mainland.

Considering the destruction in Texas, now the islands and barring some miracle, in FL or beyond.... can insurance companies survive?

I see many post of insurance will pay....but as in all companies there is a limit before there is no viability. The big guys will get their money first but what about the individuals. If insurance can not pay or find ways to limit what is paid; suing a company with no money or one that files bankruptcy does very little for today.

I understand insurance is a composite of premiums to pay out managed losses but when the loses are so massive, so broad, is there a limit? What will be the new premium post IRMA. What will be new premiums to make up the losses. Is it even affordable?

I do not know the boat insurance industry so maybe they only write policies considering the assets they have to cover them but I doubt that is the case in the boating world. These levels of loss are not generally in the plan.

The challenges of surviving are first but afterward I think the real battle will begin.

It will be a new world.


TBAZ

Insurance companies have known how to handle unexpected claims they can't afford for a long time. Go ask a lawyer you know what the term "starving them out" means. Insurance companies invented it.

[markpierce]

If insurance isn't available, you can self-insure. Pay into a special account what you would have paid for insurance. The odds are you will come ahead but not necessarily protected from financial loss.

[atoll]

paracites cannot survive without a host!

the question should be can joe bloogs survive without having to pay for a risk that may never happen,apart from death.....but that is not really going to worry you anyway

[Sailorbob8599]

Originally Posted by markpierce

If insurance isn't available, you can self-insure. Pay into a special account what you would have paid for insurance. The odds are you will come ahead but not necessarily protected from financial loss.

This is probably fair advice but how many folk can afford to self insure?
When I think of all the insurance payments I've made over many years, I tend to believe the best insurance IS self insurance. The problem being, like many others, I'm NOT a gambler.
But giving it fair thought, 'Term' insurance is likely the least costly for Life Insurance; 'Third Party only' for Boat & Car insurance; House Insurance? . . . Not sure. Maybe cost to rebuild but only because the actual property will survive, just not the building.
But then I'm of an age whereby I would probably move in with family (at their invitation of course) and let them have the property to do with as they wish.
As it is, we live in a fairly stable climate zone not prone to storms; the home is built on a very stable hillside approx 100' above sea level & 5 miles in from the coast; Water usually runs downhill, I think it will continue to do so; There's not much of a rise above us, so I can't see a massive flood tide coming even from above.
The more I think about it, the more I think I'll cancel all my insurance coverage . . . Except Third Party.

[Jdege]

Originally Posted by Cottontop

It's getting harder and harder to get insurance along the Texas coast, and as most lenders require insurance, harder to get a loan, which means less poorly-built housing along the coast. It takes time, but the market will eventually sort this out. Even the federal flood program has been revised to more accurately reflect the risks.

When I was a kid, nobody I knew with property on the water had more than a cabin that could be replaced in a weekend. They'd lose them in the floods, every couple of years, but who cares? They'd build another.

Maybe poorly-built housing in the flood plains is what we need more of...

[Bertie68]

At least in Spain, and I think in most of Europe, almost all insurance have a nice little print near the end where they say that damage from natural catastrophes, terrorism, war, nuclear attack, and some other armaggedon scenarios are explicitly excluded from coverage. And I don't think it's possible to negotiate that point. That's understandable (from the insurer's stand point) as such an event would automatically cause most insurance companies to bankrupt. In fact, I'm startled that it's not that way in the US!

[markpierce]

Originally Posted by Bertie68

At least in Spain, and I think in most of Europe, almost all insurance have a nice little print near the end where they say that damage from natural catastrophes, terrorism, war, nuclear attack, and some other armaggedon scenarios are explicitly excluded from coverage. And I don't think it's possible to negotiate that point. That's understandable (from the insurer's stand point) as such an event would automatically cause most insurance companies to bankrupt. In fact, I'm startled that it's not that way in the US!

If so, little need for boat insurance other than covering for stupidity.

[weavis]

MOD COMMENT.
Although politics may be relevant to this thread, the tone and argumentative nature is not pertinent to it. If you insist on a heated discourse with rancour regarding climate change, then the mods without rancour or heated emotion will close the thread.

My recommendation is to stay within the bounds of the thread topic...

[valhalla360]

Originally Posted by markpierce

If insurance isn't available, you can self-insure. Pay into a special account what you would have paid for insurance. The odds are you will come ahead but not necessarily protected from financial loss.

If you are buying an extended warranty (a form of insurance) on a TV, I agree. You are far better off to just save the money to cover potential repair/replacement.

If you are buying a $500k boat, most can't absorb a total loss (or worse a major liability claim) without it being a major permanent impact on their financial life. This is the original intent of insurance to handle catastrophic losses that would otherwise have life changing impacts.

[valhalla360]

Originally Posted by Big Macca

Our warming oceans are a major cause of larger and nastier windstorms. It's called climate change. The same thing is happening down here, so we all better get used to it, and maybe adjust to discussing its impacts rationally.

Remember the old wisdom about never discussing politics or religion with strangers? The same is true for cruising forums.

https://www.wunderground.com/hurricane/top10.asp

Except we aren't seeing more major hurricanes. See the link going back to 1851.

Named storms appears to be slightly higher but how many tropical storms that didn't hit landfall were just never named in the 1800's or early 1900's. In the modern era, we get at least a few storms per year that never reach land but to get names. Many of those would not have been named in the days before satellite weather forecasting.

As far as major hurricanes, only 1 yr in the 21st century made the top 10.

The problem is hurricanes are fairly rare so there is not enough data to make a good statistical analysis.

The bigger issue is the population in hurricane prone areas has skyrocketed, so the numbers after a single major hurricane are far worse than 3-4 major hurricanes 50-75yrs ago. Example for Miami Metropolitan area:
- 1900 = 4,955
- 1930 = 215,000
- 1950 = 694,000
- 1970 = 2,236,000
- 2000 = 5,007,000
- 2016 = 6,012,000

If only 1% of the buildings are destroyed today, it will still be more than 10 times greater devastation than if 100% was destroyed in 1900.

[Cheechako]

You pay them to take the risk up front. They take the risk. If they lose, you will pay again. If they win, you dont share in the profit.

[Lake-Effect]

From reading flood stories due to the record high water levels on Lake Ontario, I ran across a few mentions that there are no specific prohibitions in the US against building in flood-prone areas... is this true?

In Canada, I believe there are often prohibitions against building on floodplains or other high-risk areas.

[valhalla360]

Originally Posted by Lake-Effect

From reading flood stories due to the record high water levels on Lake Ontario, I ran across a few mentions that there are no specific prohibitions in the US against building in flood-prone areas... is this true?

In Canada, I believe there are often prohibitions against building on floodplains or other high-risk areas.

Historically, you could do what you wanted. Back in the 1930's, if you wanted to build 5' from the riverbank, go for it.

In modern times, there are typically rules but they are generally local and vary a lot. Usually if a local has had a hard hit, they improve their rules and apply them more firmly. After Andrew for example, southern Florida rules were updated and they enforced them much more firmly.

[kenbo]

Originally Posted by Lake-Effect

From reading flood stories due to the record high water levels on Lake Ontario, I ran across a few mentions that there are no specific prohibitions in the US against building in flood-prone areas... is this true?

In Canada, I believe there are often prohibitions against building on floodplains or other high-risk areas.

In the US you can build in most coastal and riparian flood zones unless the building/development is doing environmental damage. As long as your first floor is above some arbitrary elevation you're good to go.

FEMA flood insurance has never made sense to me. If it was a private company it would be bankrupt but since it's not, every US taxpayer get to fund coastal overbuilding.

I've always thought it would fairer to insure one loss with taxpayer money but no more. If you rebuild the risk is on you.

To give a sense of the potential length of the claim satisfaction timeline, my friend suffered severe property damage during Sandy in October, 2012. Her claim was just settled in August, 2017. I believe Harvey and Irma will dwarf the number of claims as a result of Sandy.