[StBernard] Insurers Retreat From Coasts

[Westley Annis]

Let's see...I'm not an insurance agent nor have I played one on tv.
 
I thought the companies built up their reserves for the occasions when they
have big events like Andrew, Katrina and Rita.  In normal years they receive
premiums for coverage of X amount on your policy and everyone else they
insure.  If they don't have to pay out for any damages (roughly speaking),
do they invest those premiums, hold certain amounts out for reserves or
what?  
 
I guess what I'm trying to say is, everytime we have a big disaster the
insurance companies all scream and howl and say "Oh!  We had a big hit!
We're withdrawing from this area" or "Now we've got to have a rate
increase."  
 
These aren't stupid or dumb people.  I'm sure someone said "Hey, we're
insuring people where hurricanes might cause damage; like Texas, Florida,
Louisiana, Miss. and Al".  (and the entire eastern seaboard for that matter)
I'm sure the idea of a castastrophe more than crossed their minds, and
that's why I understood that they built up the reserves.
 
Jim

 

	-----------------------------------------------------
	I will agree they have an obligation to their shareholders to make a
profit,
	but it is just that, an obligation. It is not a guarantee that they
will
	make a profit.
	
	Ask any of the big three automakers? They also have an obligation to
make a
	profit. How about the airlines?
	
	Personally, I think it is all just a cover-up because the actuaries
screwed
	up when determining premium levels. What is the difference if you
sell
	$100,000 worth of coverage against $200,000 worth of coverage? At
worst, it
	should just be double the premium.
	
	Now, I will give the insurance companies a little bit of reprieve.
	Sometimes the government regulators force them to charge less than
they need
	to for the amount of coverage they are providing. Some of the
problems we
	are facing in the insurance industry are governments fault.
	
	Westley