Can Insurance companies survive and impact

[breweraz]

The devastation from IRMA through the early reports is massive. I expect that it will grow significantly as assessments and IRMA finds the mainland.

Considering the destruction in Texas, now the islands and barring some miracle, in FL or beyond.... can insurance companies survive?

I see many post of insurance will pay....but as in all companies there is a limit before there is no viability. The big guys will get their money first but what about the individuals. If insurance can not pay or find ways to limit what is paid; suing a company with no money or one that files bankruptcy does very little for today.

I understand insurance is a composite of premiums to pay out managed losses but when the loses are so massive, so broad, is there a limit? What will be the new premium post IRMA. What will be new premiums to make up the losses. Is it even affordable?

I do not know the boat insurance industry so maybe they only write policies considering the assets they have to cover them but I doubt that is the case in the boating world. These levels of loss are not generally in the plan.

The challenges of surviving are first but afterward I think the real battle will begin.

It will be a new world.


TBAZ

[David Hughes]

This is my business so I can help answer this. Most carriers purchase Catastrophe coverage to assist them in situations like this. They pay a small percentage of their premium to a Reinsurer like Swiss RE, General RE, LLoyds, etc, who in turn agree to cover losses that are above some agreed upon limit. Reinsurers win in those majority of years that nothing bad happens, then take periodic big hits ( think 9/11) . That's what keeps Allstate or State Farm just fine in spite of having to pay billions for a Harvey or an Irma. If the reinsurance losses are big enough, they have to raise their charges to the carriers, who in turn will raise all of our premiums to cover that. They may raise rates anyway as much of the losses do hit their own balance sheets. But that's why they have huge cash reserves and are regulated.

[brownoarsman]

The private insurance companies will be okay as David Hughes noted. The bigger question now is what will happen to the federal flood insurance program. It was already hugely subsidized and behind after Katrina. Harvey and Irma may kill it.

Edit: Though that said, it will be interesting to see what happens to premiums and risk segmentation going forward on the private insurance market. Everyone might now have to submit acceptable hurricane plans, which, if not followed, may be reason to deny your claim. If catastrophic storms are expected to occur with more frequency, premiums will definitely increase. Etc.

[Cottontop]

Originally Posted by brownoarsman

The private insurance companies will be okay as David Hughes noted. The bigger question now is what will happen to the federal flood insurance program. It was already hugely subsidized and behind after Katrina. Harvey and Irma may kill it.

Edit: Though that said, it will be interesting to see what happens to premiums and risk segmentation going forward on the private insurance market. Everyone might now have to submit acceptable hurricane plans, which, if not followed, may be reason to deny your claim. If catastrophic storms are expected to occur with more frequency, premiums will definitely increase. Etc.

It's getting harder and harder to get insurance along the Texas coast, and as most lenders require insurance, harder to get a loan, which means less poorly-built housing along the coast. It takes time, but the market will eventually sort this out. Even the federal flood program has been revised to more accurately reflect the risks.

[brownoarsman]

Originally Posted by Cottontop

It's getting harder and harder to get insurance along the Texas coast, and as most lenders require insurance, harder to get a loan, which means less poorly-built housing along the coast. It takes time, but the market will eventually sort this out. Even the federal flood program has been revised to more accurately reflect the risks.

Same on the Chesapeake. When my parents rebuilt, they did substantial ground remediation to raise the slab a further eight feet, and then built a flow-through ground floor as well. So hopefully, yes, standards of the new housing stock will continue to increase, as you say.

[valhalla360]

Yes, they have piles of cash set aside for big events but if the entire length of Florida takes a bad beating even re-insurers may have trouble paying up. Hopefully new building codes limit some of the damage claims or the storm takes a sharp right limiting the impact areas.

While there are a lot of safeguards built in but there is a point where the money runs out and once it runs out, it doesn't matter what the insurance contract calls for.

Govt flood insurance is a strange animal as it is only nominally market driven. In the short term, I expect they will raid the budget for whatever they need to respond. It's politically expedient. In the long term, expect slow payment or wiggling out whenever possible as the emotional reaction settles down. Unfortunately, Texas and Florida as big politically powerful states, will likely blunt a lot of the good reforms this event could spawn.

Expect to see lots of delays and hassles getting payments as they attempt to limit or at least delay payouts. I don't see this so much as greed but as survival. If they make payouts too easy, they can easily bankrupt the companies.

In the longer term expect rates to go up significantly. After Katrina, our rates went up by about 40% on the boat...oddly we were on the Great Lakes at the time. I expect you will see the same thing as local state regulators fight insurance companies placing risk on the risky areas.

[danielamartindm]

Trust in this: The big insurers will engage in further gaming and claims adjusting bad faith before they'll go under. You're bleeding for the wrong parties, try the policy holders.

[nautical62]

I assume insurance and marina prices may increase much as they did after Andrew and the other hurricanes that year.

I don't think it's so much about if insurance will remain available but how boat owners will react to ever increasing premiums. (and other increasing costs)

That said, it wouldn't surprise me if some insurance companies conclude boat insurance being a small part of their offerings may simply not be worth offering. The fewer the insurance options, the more an oligopoly type situation can arise.

[roland stockham]

Maybe the system can survive this one but the main aim of the Paris Accord was to get the international community to work together on how to address all the problems of global climate change. Very low laying areas such as the Texas coast and Florida probably need to see some significant rezoning as they will increasingly see flooding from storms and sea level rise. So far this all seams to be going as the science predicted. I feel very sorry for all those affected and think people did a heroic job of looking after each other during the crisis but if you rebuild in the same place and in the same way you WILL get hit again, probably sooner and harder. This was not a 'freak storm' but a predicted change in the climate.

[Maka]

The immediate problem is not money to pay claims, but rather having enough adjusters to adjust the claims.
There is a shortage of adjusters in Texas now. I cant imagine what happens if Florida gets smashed.
Imagine losing your house and having to wait a few years before an adjuster can review your claim.

[GoingWalkabout]

Originally Posted by roland stockham

Maybe the system can survive this one but the main aim of the Paris Accord was to get the international community to work together on how to address all the problems of global climate change. Very low laying areas such as the Texas coast and Florida probably need to see some significant rezoning as they will increasingly see flooding from storms and sea level rise. So far this all seams to be going as the science predicted. I feel very sorry for all those affected and think people did a heroic job of looking after each other during the crisis but if you rebuild in the same place and in the same way you WILL get hit again, probably sooner and harder. This was not a 'freak storm' but a predicted change in the climate.

What a load of codswallop. I suppose the great Florida hurricane 35 years ago and flooding was due to the Paris Accords. Oh. Thats right, there was no Paris accords back then or global warming. Scientific consensus back then was that the world was gripped by global cooling.

It is the height of political opportunism to blame Hurricanes on the USA pulling out of the Paris Accords. All the Paris Accords were about was to continue the de industrialization of the United States while handing a huge advantage to China.

The global heating coocks who peddle bogus fairy tales as science have no shame. Like the opportunists they are, they use every oppurtunity to peddle their delusions.

Atlantic Hurricanes have been extremely quite over the past 10 years. The same period that bogus scientists said the world was heating. Obviously the latest huricanes aren't due to global warming.

If huricanes were caused by global warming then we wouldn't have had a decade of low hurricane activity during your mythical increase of global warming. But this is just rational logic. Something the alarmists obviously don't have.

Finally. Before you go and get upset about some hard truths here, just stop to think how upsetting it is to be reading the cruisers forum to follow the plight of sailors during this horrible time to read political propoganda from the cooky left.

[rabbi]

Originally Posted by GoingWalkabout

Finally. Before you go and get upset about some hard truths here, just stop to think how upsetting it is to be reading the cruisers forum to follow the plight of sailors during this horrible time to read political propoganda from the cooky left.

..or right

[Big Macca]

Wow, that went pear-shaped pretty fast. From "can insurance companies survive Irma and her children?" to climate change, to the Paris accords and (inevitably) Trump.

Yes, the insurance companies will survive just fine, but the scale of the disaster/s will mean claims will be a long and slow process for many.

Our warming oceans are a major cause of larger and nastier windstorms. It's called climate change. The same thing is happening down here, so we all better get used to it, and maybe adjust to discussing its impacts rationally.

Remember the old wisdom about never discussing politics or religion with strangers? The same is true for cruising forums.

[Sailmonkey]

Originally Posted by roland stockham

Maybe the system can survive this one but the main aim of the Paris Accord was to get the international community to work together on how to address all the problems of global climate change. Very low laying areas such as the Texas coast and Florida probably need to see some significant rezoning as they will increasingly see flooding from storms and sea level rise. So far this all seams to be going as the science predicted. I feel very sorry for all those affected and think people did a heroic job of looking after each other during the crisis but if you rebuild in the same place and in the same way you WILL get hit again, probably sooner and harder. This was not a 'freak storm' but a predicted change in the climate.

How about the Galveston storm of 1900? It's been 117 years and Texas still hasn't seen storm surge as high as what occurred then.

[smj]

Originally Posted by Sailmonkey

How about the Galveston storm of 1900? It's been 117 years and Texas still hasn't seen storm surge as high as what occurred then.

The storm of 1900 had a surge of 15.7' in Galveston, hurricane Ike in 2008 had a surge of 19' in Galveston. The top surge in Texas for hurricane Ike was 22'.