More Loons

Last month we posted about Looney Season —that season in Florida where everyone has a solution to the homeowner’s insurance problem.  Evidently, it is merely pre-season in Florida for the Loonies as they seem to be just getting warmed up. (IJ 2/13)  Now there is a proposal to require those who insure to prohibit insurers from dropping policy holders after three years.  It is a loyalty provision of sorts.  However, it is just as likely to guarantee no insurer ever keeps a policy longer than  two years.  Good risk management would make insurers think twice about the risk of being “stuck” with a potentially high risk homeowner.  When in doubt, a rational insurer will say “Adios”.  This puts a further burden on homeowners who have a difficult time right now getting a traditional insurer to underwrite their home.  Homeowners will have to search every two years with certainty rather than when an insurer decides to reduce its concentration in the market.

Another Looney wants to subsidize those in the ultra risk areas. Right now Florida’s insurer of last report (Citizens) can not offer a price below a private competitor.  This prohibits the state from taking polices that a private company might take.  But, what if the locale has no one willing to put private market insurance into the area?  What price should the Citizen’s charge?  It should charge a relatively high price as it is likely to be a risky area if no private insurance companies want to sell.  The Loonies want to make sure that “homeowners insured with Citizens [get] a fair price instead of an artificially hiked price."  The question one needs to ask is if Citizens is the only one selling in the area is the price risk related and justified?  If so, it should be the price that is used.  It is not “artificially hiked.”  This sounds just like another way to further subsidize people in high risk areas.

Since we just had our last snow fall of the season, I thought I'd change the RiskProf scenery from the winter scene by Currier and Ives to one of the lovely loon in honor of the new season.  The picture is by Peter Kasper at Fermilab.

Comments

[Michael]

Heh, you beat me to it.

[Martin]

Only by luck!