and the rebuttal from the insurance industry

In today’s Times Picayune’s letters to the editor, the justification – sounds more like cruel heartlessness – I wonder if any of these insurance movers and shakers have coastal property that has been wiped out, or better yet had THEIR personal insurance coverage pillaged? Oh wait, that would never happen, they probably are simply sitting on OUR billions in reserve to rebuild their McMansions……

Insurer’s have good reason to raise rates in La.

Sunday, November 19, 2006

Re: “Insurance industry greed strangling recovery,” Other Opinions, Nov. 15.

James O’Byrne says that his homeowners’ insurance premium increased to $5,300 a year from $2,000 after Hurricane Katrina swept through Louisiana and other Gulf Coast states. Yet there are some very good economic reasons behind the increase. After all, in 2005, insurers paid $25.3 billion in claims to nearly 1 million Louisiana policyholders for losses incurred because of Hurricane Katrina and $2.9 billion to 185,000 Louisiana home, business and vehicle owners in the wake of damages caused by Hurricane Rita.

It is important to recognize that state government has regulatory oversight over the insurance industry and, as such, the actual and expected losses in each state, and that state only, drive homeowners’ insurance premium costs. In essence, U.S. insurers with a national presence are operating 50 separate businesses, each with its own risk profiles and set of prices.

All the profits that U.S. insurers earned in 2004 and 2005, and most of those in 2006, were derived from states and types of insurance that had absolutely nothing to do with Louisiana’s vulnerability to hurricanes, such as auto insurance in the Midwest or workers’ compensation insurance in the Northeast.

Homeowners’ insurance is more expensive today in Louisiana because of the expectation that Hurricane Katrina was not an aberration. Leading meteorologists all agree that hurricane activity will remain elevated for the next 15 to 20 years.

Insurance premiums are merely messengers of risk, and profits generated from these premiums are compensation to investors around the world who put their capital at risk, all of whom are helping Louisiana rebuild.

Robert Hartwig

Executive Vice President

and Chief Economist

Insurance Information Institute

New York

Blah, blah, blah, fucking blah. It all boils down to compensation for the investors who put their capital at risk. Investors rebuilding Louisiana – that’s laughable. What about the folks that thought they were going to get reimbursed to rebuild from their insurance companies and THEIR capital????? The insurance industry bails, and now the federal taxpayers are financing the rebuilding of New Orleans through LRA grant money instead of the industry that was paid to do this. Flush their homes, their capital down the drain????? Investors risk is more important than people rebuilding their LIVES????? Investors capital gains being financed by federal tax money????? How the heck is the middle and lower class supposed to pay a double mortgage payment, half of which is the insurance premium????? Are the rates adjustors idiots in that they cannot figure out that average joe cannot afford this?????

This is fucking ridiculous. Perhaps if every policyholder in the US paid an extra $20, the industry would have enough to cover the “future” potential losses along ALL the coastlines. Or even better, each individual take that $5,000 they would pay for homeowners and flood insurance annually along the coast, invest it themselves, then rebuild with their own savings if another hurricane of the magnitude of Katrina hits again in our lifetime. Odds are on. Do it yourself. Someone please remind the insurance industry that avarice is one of the seven deadly sins. This here is the stuff anarchy is made of…..

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~ by maringouin on Sunday, November 19, 2006.

 
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