At What Point Does One Move?

The news is filled with notices that insurers have asked the state of Florida for a rate increase, are dropping customers (middle of article), or have gone bankrupt.  Some people are complaining, of course, as the price increases seem astronomical.  No one (except for the consumer dis-advocates) appears to be claiming the price increases are not justified.  Further, the state of Florida has acknowledged the need for higher prices (by granting rate increases) and I am sure it would love to have the Feds take care of this problem through the creation of a national cat fund. 

No one, however, is talking about a rational response to the higher prices.  Let the people leave.  While we have a right to travel, the government has no obligation to make it easier for us to stay in a particular place especially when it has to tax others to subsidize Floridians.  According to the US Census Florida is the 4th most populous state and it has experienced a 11% increase in its population sic ne 2000.  By keeping insurance rates below actuarially suggested levels, the State of Florida through the insurance industry has subsidized the cost of living in the state.  Now the problems appear worse and the risks appear to be greater.  At what point do we say— “Move to Georgia”?

The reason I mention this is because of this article in the IJ which has an AP article on the recent price increases in Florida.  The last line is the money quote.

Lynn Martin took a day off work and drove all the way from Punta Gorda to Lake Buena Vista, Fla. to talk about homeowner's insurance. In just under a decade, the 51-year-old has seen her State Farm premiums rise 300 percent to $1,600 this year, and that's not even including the 80 percent average rate hikes the company just requested.

"My income has not increased 300 percent, and please don't tell me to sell out and move out of state," Martin said at a public hearing on the request. "We really don't know how to go live somewhere else."

 

 

Comments

[David Rossmiller]

I think the lady may be on to something: we are not really free to live anywhere we want unless we also have the corresponding right to make others subsidize us in our choices.

[Megan Mahan]

I have a hard time telling consumers to put up [the cash] or shut up [move]. I'd hate to leave Colorado, a job I love and friends that I care about to move back to Northern Iowa where the insurance [among other things] is cheaper.

Despite all of this, I agree with Prof's post David's comment. I moved to Denver knowing my cost of living would increase and I'm frankly a little dumbfounded by homeowners—especially those living in high-risk areas—who seem to think certain entitlements come with a mortgage. Perhaps it simply comes down to consumer education. So how do we get the point across: Home + high-risk = $$ ?

[Kevin Burke]

As a Florida resident that doesn't live near the coast, I like to research these people's circumstances through public records and usually, the complainers are better off than most. The Charlotte County Property Appraiser has Mrs. Martin living at 2493 Cushing Drive in Punta Gorda (see link 1). She's pretty close to the water (link 2). I'm not sure what the "just value" of $160,000 means but looking at a similar property (link 3) one mile away suggests that she could sell her house, make a tidy profit, and move.

Sorry I couldn't figure out how to link to the sources.

www.ccappraiser.com/Show_parcel.asp?acct=00832890000008&gen=T&tax=T&bld=T&oth=T&sal=T&lnd=T&leg=T

maps.yahoo.com/maps_result?addr=2493+Cushing+Drive&csz=Punta+Gorda%2C+Florida&country=us&new=1&name=&qty=

webapps2.planetrealtor.com/idx/pkg_IDX.pr_ViewIDXProperty?sStateID=FL&sRealtorID=&sUserType=S&sMLSID=puntagorda&sMLSListingID=633438&sSearchSource=X&sTrackNum=&sOnlyCities=F&sSearchID=&sClientID=&sSavedSearchType=&sLangCode=ENGLISH&sSubSystemCode=&sRunSearch=F

[DelicateZero]

Another way of looking at this is that the people selling insurance should leave. Yes, there are barriers to exit for insurers but these don't really compare to the barriers to exit faced by homeowners who need insurance. There are plenty of other businesses that regulators place burdens on, for example: importers of steel, sex workers, brokers of low-cost labor, etc. in the interest of the general welfare. It is one thing to champion the cause of the betrodden steel importer who can not ply his trade. It is another thing to lament the fate of the shareholders who are asked to accept a low return on capital and do it anyway. Short-sighted insurers continue to play ball with the regulators for short-term gains but end up losing out in the long-run as the commissioners raid them in the long-run.

[Lynn Martin]

yes, i could sell my home and make a tidy profit, but i'm a fifth generation floridian and the prospect of living outside the state of florida doesn't appeal to me. (that was left out of the article.) while near the water, i'm not on it and am not even in an A flood zone. my complaint is the cost of homeowner/hurricane coverage. it would be more sensible to have the state of florida underwrite a hurricane policy and have private insurers underwrite homeowner coverage. and if i'm better off than most it's because we purchased hurricane shutters in 1999 and made sure we were ready for whatever storm came our way!

[David Rossmiller]

Lynn, I respect someone who will come on a blog to comment when the original post was about her. I may be wrong, but your comment indicates that the value of your home has been rising, which would make it more expensive to insure, especially with the hazards from hurricanes. No one is saying you have to leave Florida, but neither should those who choose to live in Florida be able to pass the cost of that choice to everyone else.