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Originally Posted by C. C. Rider
First, you are overlooking the fact that MOST people have insurance on their home that would cover hurricane damage. Typically, this doesn't cover FLOOD or STORM SURGE damage, but it does cover damage that is a direct result of the wind and any subsequent damage that may be done if the wind causes a roof leak or window breakage or other wind related damage.
Second, you are overlooking the fact that property insurers have RE-insurers which provide insurance to them in case of catastrophic losses. In other words, the insurance companies have insurance too to protect them against unusually large losses.
Third, not all hurricane damage losses are covered by insurance. Much of it is due to flood losses which (usually) aren't covered unless the person or business bought flood insurance which is very expensive. It's expensive because not everyone shares equally in the threat of flood damage.
People who live on high ground have no need for expensive flood insurance, so they don't buy it. People who live in flood-prone areas NEED flood insurance, but since the cost is usually quite high, many people don't buy it even though they may need it.
And finally, we can be thankful that an "Ian" level storm doesn't hit us every year. So, even if the insurance companies may lose money in one year, they can make it up in other years in which their losses are less. It's kind of like the gambling in Las Vegas. Occasionally the house may get hit for a big loss, but they make it up by winning many small bets... and most of the big ones too.  |
Even if an insurance company has reinsurance, that is just passing the losses onto another insurance company.
The reinsurance company has to pay so whether 50% of the losses are paid by the insurance company and 50% are paid by the reinsurance company, the premiums have to come from somewhere.
As for Ian being a rare occurrence and the insurance companies can make it up in previous years or future years, the fact is that insurance companies have been losing money over the long haul. I don’t think they would be pulling out if property insurance were profitable in Florida. And as I understand it, to get rate increases, insurance companies have to get approval from the state regulators. They can’t just raise your rates.