I don’t feel too bad for insurers. Sorry!
November 19th, 2005 | by mbhunter |Apparently homeowners covered in the regions hit by hurricanes this season are sometimes having trouble getting claims paid:
Insurers Play Hardball with Katrina Victims
This doesn’t surprise me in the least. Insurers make money when they collect premiums. They lose money when they pay claims. So, it’s in their best interest not to pay claims to the extent they can get away with it.
Insurers play the odds. When you play the odds, regardless of how many actuaries you have on staff and how carefully you assess your risk, you never know with certainty what’s going to happen. If you did, then the events in question are not insurable. Just like homeowners have lost for years because their properties didn’t get blown away, the insurance companies lost this year. Problem is, they already have the homeowners’ premiums, and it’s their job to get what’s due to them. That gives the insurers the advantage. And some of them are taking it.
Sorry, insurers. Game’s over. Pay up!
5 Responses to “I don’t feel too bad for insurers. Sorry!”
By Sharon Harvey Rosenberg: AKA The Frugal Duchess on Nov 20, 2005 | Reply
Hey, I totally agree with you.
After Hurricane Andrew in 1992, the insurance industry cried poor.
That Hurricane turned out to be the best thing for the industry. They were able to really spike their rates and the rate hikes far exceeded the claims payouts.
Great piece. Please stay in touch and stop by my frugal site
ciao
By mbhunter on Nov 24, 2005 | Reply
Thanks Sharon. I appreciate your comments!
By James on Nov 24, 2005 | Reply
Why should they pay if the people didn’t pay their premiums? Now listen, this is real simple to understand, if you don’t have flood insurance and your house gets flooded then you are not covered because you didn’t have the coverage. Now isn’t that so simple to undrestand? Everyone living in the Gulf Region knows that floods can happen at anytime, if they choose not to have flood insurance then that is there choice. No, the Insurance company shouldn’t pay and I really can’t envision them on paying any bogus claim. Insurance isn’t a charity.
By mbhunter on Nov 25, 2005 | Reply
Hi James, thanks for your comment!
I went back to read the article again just to be sure. The specific case mentioned in the article talked about a homeowner that had rain damage, there was no flooding of any neighboring houses, yet the claims adjuster said that the damage was due to flooding. Unless the homeowner was living in a hole, this doesn’t make much sense. The insurance company, however, got by with paying out a lot less.
The problems that the article mentioned deal with customers who have their policies fully in force. I agree 100% that insurance is not a charity, but it shouldn’t be a tormentor either.
By James on Nov 26, 2005 | Reply
Well I reread the story, several misconceptions but that’s okay it is a media driven story.
Yet though, while I’m sure in certain cases the insurance companies are going to lose but the massive amount of flooding shouldn’t and I seriously doubt will be covered. Flooding and Hurricane Damage? Now if the State and Federal Government rules in favor of flood damage people to have their claims paid I suppose in the long run that is okay. If in that event, it may very well cause Hurricane Ins or any property insurance to skyrocet in cost in any area in the Gulf Coast.
Which is fine by me and I’m sure the Insurance Companies are planning for the worst case scenario in this event. Once again, due too little to no Insurance claims outside of Florida till now for the most part has left the PC Insurance with large coffers full of stash and they’ll be able to pay out. I’m sure due to their proper management over the years and their large reserves available is driving these stories more then anything els. Ie: It’s a money grap. Yet the so called victims will pay for it when they witness higher then thought increases in their property insurance in coming days, if the Ins. Companies have to pay out flood insurance due to the Hurricane Clause.