Citizens Insurance, again

Professional Actuarial Topics Property/Casualty
21

but no Tim Hortons

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22

Noooooooooooo

23

WaPo has a story that looks at a new entrant into the Florida homeowners market, with a book built by Citizens’s takeout mechanism. (Supposedly free link).

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24

What…an absolute wild read. P&C is really the wild west of the insurance industry. What an absolute effin’ mess they’ve got going on.

Florida clearly has a whole house of cards going on right now. I’d speculate that any number of things could happen that would cause a chain reaction of, I dunno, a bunch of bad things, that could really substantially harm the state and everyone in it. It wouldn’t surprise me if they had another weather event, and basically everyone in the state didn’t get claims paid. Then half the state goes bankrupt or moves out, and nobody can build, etc.

25

I’d say the details in that article are more cherry-picked than the Citizen’s policies Slide acquired.

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26

that’s the cycle. market backs away, citizens gets FAT. rates soar. at the new rates, carriers think they can execute a citizens depop and carve out all the now-possibly-adequately priced policies. and it works…as long as the wind doesn’t blow. for 3 years or so. then repeat

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27

Don’t hurricanes typically hit the same coastal areas over and over again?

I’m not surprised home insurance rates are five digits in places where homes are routinely wrecked by hurricanes every 10-30 years, same goes for fire

Also lmao at the $50k a year home insurance policy for the canal facing home, you may as well build a dock and live on a boat at that point

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28

That boat will still have to be insured…and hull coverage there is still going to be expensive.

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29

Just sail it up north in the summer. Easy peasy

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30

Exactly. And it’s one thing when you’re buying private insurance. If you’re receiving a taxpayer subsidy (i.e. NFIP, FEMA, etc.) they should be able to mandate you can’t rebuild in the worst flood zones.

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31

who pays them for the difference between the cost to rebuild and the total value of the property, then, after a storm? That difference could easily be huge. So you get a 200K loss and tell someone, here’s 200K, but you have to abandon your 500K property (well, it’s only worth 300K after the damage) to get it. Sorry!

32

Yeah, it maybe only works if there is a total loss. But unlike, say, a car… the land would have value … if it could be built on again.

So the guy with the $500,000 house on a lot that would go for $100,000 without the house (implying the structure is worth $400,000) and sustained $200,000 worth of damage maybe gets to rebuild.

But three streets over another $500,000 house was totally destroyed. Maybe you pay that guy $500,000 instead of $400,000 and seize the land. Or maybe his land that can’t be rebuilt on is only worth $20,000 (instead of $100,000 if it can be built on) and you pay him $400,000 for the structure and tell him he can’t rebuild and he gets to sell the lot for an $80,000 loss… dunno. It’s definitely tricky figuring out what’s fair.

33

That’s easily solved, like twig suggested you could start with just total losses to get the thing rolling and could eventually get more nuanced with it.

And we deal with this kind of nuance all the time every time there’s a hurricane adjusters are having to deal with what to pay out. In practice there are typically so many claims at once that people are just cutting checks like mad (from an actuarial perspective). Think of all the homes completely destroyed by Katrina and then people are made whole by FEMA so they can patiently wait for the next Katrina.