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Originally Posted by retiredguy123
Wow. Setting up an insurance company would require a huge financial investment to cover potential damage claims. The Federal Government requires insurance companies to have a very large amount of assets in reserve to pay claims.
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Have the right idea on reserves but they are created by the state not the Federal Government. In addition, most of the homeowners' companies are Florida only companies.
Why would a developer want to get into the insurance business? I was in the biz and when I was working (1979-2020) they were doing good when they had underwriting profits in the 5% range. Agree they were making other money on re investment of the premiums but like you said that money could only be in reserves or in very conservative investments. It only takes one bad year(like Andrew in 1992) to wipe out those 5% underwriting profits
We still live in the highest areas of lightning in the US. We have had 3 bad lightning strikes in our neighborhood(90 homes) that caused damages totaling over 500K in past years