How Will the Insurance Companies Pay?

they have it... they will drop people right and left after to keep their homes and boats though. And rates will go through the roof across the board.

As in, my insurance rates will go up?

no **** honey. believe it and don't let anyone bullshit you about it.

And consider this...healthcare rates will go up again as well.

When bush, as the mouth of big business tells the american people they will have to pull in their belts, you surely don't think he includes the big piggies at the trough do you?

exactly.

insurance companies HAVE the money or they wouldnt be insurance companies.
What they dont have 'on hand' they get loans/extra funding for.
Our rates will go up to cover those loans and give the companies more padding in the event that something like this happens before they fully recover.

F*ck....I can't afford higher rates...I don't live in a particularily cheap city.

Speaking of insurance...I think a great commercial right now would be:

George Bush at a press conference, saying, "This recovery will take years. A lot of the Mississippi Gulf Coast has been completely destroyed. But there is good news...I just saved a BUNCH of money on my car insurance!"

Heehee...I liked that stupid joke so much I put it in two threads...

That't ok...I like it too. :wink:

To the best of my knowledge the insurance companies will be sifting through the 1992, 2000, and 2004 voter registration lists from the various election boards and districts throughout the U.S. and anyone who is registered as a Democrat, Liberal or Independent will have their rates tripled.

This is not all bad news since the sensible persons of the country (Conservatives and Republicans) will have their rates lowered by 3%.

Sounds like a good deal to me and I am going to send it forward to Allstate, State Farm, Traveler's and others.

I work in the insurance industry and I can tell you that a good chunk of these losses will be found to be either underinsured or not insured at all. There are many many homes and property (cars, etc.) with no insurance, so will the government be stepping in and providing assistance? Most likely. For those people who never bothered or could not afford to buy insurance, they have no other recourse. The taxpayers will be paying a huge chunk of the rebuild (if they are stupid enough to rebuild in an area that should never have been built in the first place).

As for insurance carriers - they will pay out what they have covered, they have no choice. It may bust some companies and others will tighten their future underwriting in that area so the poor saps who go back to live there will not be able to buy insurance in the future. Insurance carriers do make plenty of money but it only takes a few catastrophic events to bankrupt a carrier, especially in such a litigious society as America. Every Tom, Dick and Harry sues in this country if someone looks crooked at them. They are shut-up with insurance money and people really think these coffers are plentiful and will never empty. Insurers are still suffering the after-effects of 9/11 where they were forced to pay out for a coverage that was actually never intended to be insured - terrorism. Now with this natural disaster (much of which could have been greatly lessened if not for human neglect and unpreparedness I might add) a few more smaller carriers will go out of business and the remaining insurers will eventually work to create a monopoly on rates and demand greater premiums or exclude many covers that are currently available.

Now I know insurers and lawyers are the two most hated professions, but what would this country do without them? If the country keeps going the way it is, insurance and high-level legal assistance are going to be unattainable to the low-mid classes who cannot afford their exhorbitant price-tags.

I wonder if many insurers even offer flood insurance in that area. Good chance that it's an excluded cause.

Also, many/most general home policies don't cover "acts of God" - so unless someone (class action, anyone?) can prove the government was negligent in protecting New Orleans - they're SOL.

A municipality here is being sued in a class action for not having it's storm sewer system up-to-date, causing repeat flooding of basements (which is not covered in that area without HUGE premium). It'll be interesting to see how that pans out.

actually ehBeth, I don't think any commercial insurance carriers offer flood insurance anywhere in the US of A. Flood insurance here in america is only offered by the Feds although it is often required by mortage holders.

You can get insurance for anything, dys. The question is (as hamburger posted elsewhere) just how high is is the premium going to be?

The people who could afford the premium are not likely the ones to be in most desperate need.

a special policy backed by the federal government, with cooperation from local communities and private insurance companies.
About 200 insurance companies, possibly including the company that already handles your homeowners or auto insurance, write and service flood insurance policies for the government, which finances the program through premiums.
just my understanding here ehBeth, but I have always had to get the Federal Govt Flood insurance rider on top of my house insurance.

Dys is right. No insurance carrier will insure against flood in a high-risk flood zone. There is usually a $500,000 deductible on property policies for flood exposure. When this happens an NFIP (National Flood Insurance Plan) policy can be purchased from the government, which is generally serviced by an insurance carrier, but it is the government who pays out any claims made against the policy. Unless a mortgage company DEMANDS this be purchased, very few people generally buy it.

However, in this nightmarish circumstance, even though the homes in the south are unlikely to have purchased flood insurance, I am betting that the insurance carriers will be forced to payout something as a show of assistance. There are going to be many lawsuits and insurers being taken to court in the months and years to come as they fight this out.

I feel dreadfully sorry for all those people who have lost everything and I think insurance companies should pay every penny for the coverage they provided, but it would be unreasonable to expect them to pay for something not insured.

Just to give you laymans some technical info from the perspective of the actuary, insurers dont carry all the risk for the catastrophic events you guys have discussed, in fact they reinsure most of these risks that have the probabilities of occuring less than once every 20 years. Insurance companies buy insurance from "reinsurance companies" so that in times where there are catastrophic events that cause huge concentrated losses for the insurer, they claim from the reinsurer. If the reinsurer happens to be underprovisioned and lack the adequate reserves, then the insurer will be completely liable for claims against it. That is, if the reinsurer defaults or cant pay up because it has not been run properly, the insurer will have to cop it up bigtime or face liquidation. Hope this makes it a bit clearer for you. PS I have excluded all the statistical models needed to prove this to you laymans out there.

I'm aware of reinsurers and what they do. I am also aware that as January 1st rolls around, the insurance industry is waiting with baited breath to see what the treaties will look like and what changes the reinsurers will make and if they can now offer the limits and coverages they were hoping to for the coming year 2006. Insurers depend on reinsurers (the insurance companies insurer) and if the reinsurers go away, limit the coverages they will reinsure, or provide less capacity then there will be less insurance cover available in the marketplace. The very idea of a reinsurer is a good one - it helps to spread the risk so that an insurance company will not go bust with one big catastrophe that it must pay out. However if reinsurers go away (and has happened in the past) then the insurance company has less places to go to spread the risk and, to justify the risk to their shareholders, they cannot take on all the insurance by themselves and the coverage can become unavailable.