Quote:
Originally Posted by Rainger99
People are complaining about insurance costs going up. However, insurance is merely spreading the risk of losses over a large number of people. The chance of a single home burning down in a year is quite slim so insurance companies can sell home insurance to everyone in a city and use the premiums from those whose homes are not burned down to compensate the few policy holders whose homes are burned down. That is how it works in theory.
However, I am not sure if that works in the case of catastrophic losses such as hurricanes that hit thousands of homes and businesses. Hurricane Ian caused about $100 billion in damages in Florida. The population in Florida is about 21 million people and the average household is about 2.5 people. If you divide $100 billion by 21 million, that is about $4700 a person. If you multiply that by the number of households, each household would have to pay $11,750 just to pay for Ian.
Ian is a bit of an exception since Florida doesn't get an Ian every year. However, Florida gets hit with a hurricane about once every two years and seems to get hit with a major hurricane at least once a decade. Irma cost about $30 billion in 2017.
I am not an underwriter or an actuary but I don't see how people in Florida can pay enough insurance to cover their losses. Hopefully, there are some insurance people on this board that may have solutions.
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Just a thought -- Would it be helpful long term to have more stringent coastal restrictions that prevent or restrict rebuilding or new building in the high risk areas and/or require that more "hurricane and flood resistant" structures be adopted and existing structures modified?
Can existing ground-level home or business owners be required to modify their structures to a more hurricane-resistant design? For example, could all homeowners or business owners of ground level structures of one or two stories in high risk areas be required to modify their structures within 10 years so that they are elevated (on stilts) above a certain minimum height and resistant to specified high-level wind forces?
Are there infrastructure changes that would help reduce the damage from hurricane/tidal surge - such as the addition of break-waters, barrier islands, dunes, marshland, etc?