Is homeowner self insurance possible in The Villages?

[mikemalloy]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?

[JohnN]

Good idea. I'd sure consider it.

[Stu from NYC]

Do not think it could work. A tornado wiping out a bunch of homes would wipe out such a group rather quickly

[Normal]

Do not think it could work. A tornado wiping out a bunch of homes would wipe out such a group rather quickly

If you have been around here long enough, there are way too many reasons to not undertake the endeavor. Variable construction techniques from mobile homes to block cover the villages is one. Then there was the Mallory Hills twister that destroyed many villages homes around the housing crisis time around 2008.

[Kenswing]

To become an actual insurance company the legal and financial hurdles are tremendous. If any of the participants in your group still have a mortgage I’m sure that the mortgage company would also balk at such an arrangement.

[Jayhawk]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?

No one with a mortgage would be eligible.

[vintageogauge]

And don't forget, one slight mistake and Morgan & Morgan will be at your doorstep. Personal injury attorneys advertise very heavily down here, never seen anything like it anywhere else.

[mikemalloy]

If you have been around here long enough, there are way too many reasons to not undertake the endeavor. Variable construction techniques from mobile homes to block cover the villages is one. Then there was the Mallory Hills twister that destroyed many villages homes around the housing crisis time around 2008.
I've lived here 10 years. You mention one incident that occurred over 15 yrs. ago. Consider what the premium collection from 5,000 homes over those years would have been. The company could have easily covered all the claims.

[mikemalloy]

No one with a mortgage would be eligible.
I'm suggesting that we form our own insurance company. Why would individuals with a mortgage not be able to purchase a policy through it?

[mikemalloy]

And don't forget, one slight mistake and Morgan & Morgan will be at your doorstep. Personal injury attorneys advertise very heavily down here, never seen anything like it anywhere else.
Love thos guys. Spent 40 years of defending their mostly baseless claims. Remember that the loss to the insurance company is capped by the policy limits. Reinsurance is another way to lower risks.

[JRcorvette]

Rather than forming an insurance company which has many State Regulations it might be possible to form some sort of Co-Op type of self-insurance that would have limited peril catastrophic coverage on the structure only such as Wind - Fire. Wind damage to roof shingle was be base on age and paid on an ACV bases. You would only get paid for limited things.

Just a though since someone brought up Self-Insurance

[TSO/ISPF]

Interesting that the Developers haven't thought of that. They have Banks,
Health insurance, etc... Why not set up an insurance company for eligible village residents? Might help sell properties.

[Stu from NYC]

Interesting that the Developers haven't thought of that. They have Banks,
Health insurance, etc... Why not set up an insurance company for eligible village residents? Might help sell properties.

Somewhere along the line either the developer or someone approached them about this.

If they thought this would make them money without great risk it would have been done

[Jayhawk]

I'm suggesting that we form our own insurance company. Why would individuals with a mortgage not be able to purchase a policy through it?

Good luck obtaining a financial rating for a localized group of residents. Would never happen. Even loans provided by CitizensFirst are written to Fannie guidelines.

General Property Insurance Requirements for All Property Types | Fannie Mae (https://selling-guide.fanniemae.com/sel/b7-3-01/general-property-insurance-requirements-all-property-types#P12046)

[tophcfa]

Interesting that the Developers haven't thought of that. They have Banks,
Health insurance, etc... Why not set up an insurance company for eligible village residents? Might help sell properties.

Most very successful businesses focus on what they are very good at and don’t try to be jacks of all trades and get spread too thin.

[BrianL99]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?


Self-Insurance and setting up an Insurance company, are 2 completely different tracks.

Anyone can "self-insure". Just don't buy insurance ... BINGO! You're self insured. Or even buy a policy with a $50,000 -$100,000 deductible ... you're most self-insured.

As for setting up an insurance company?

Insurance companies that have been in business for generations, are going broke and moving out of Florida. Even if the obstacles others have mentioned weren't real (they are), what makes you think a bunch of retired folks, setting up a mutual insurance company, would be better at it, than the pros?

[Shipping up to Boston]

Love thos guys. Spent 40 years of defending their mostly baseless claims. Remember that the loss to the insurance company is capped by the policy limits. Reinsurance is another way to lower risks.

So you worked for M&M or were opposing counsel?

[mikemalloy]

So you worked for M&M or were opposing counsel?
I worked as opposing council.

[Shipping up to Boston]

I worked as opposing council.

For the (other) people! ;)

[Desiderata]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?

I like the way you think. It’s a great idea!

[JGibson]

If we're paying ridiculous prices what are people living on the coast paying.
Or are we subsidizing the people on the coast.

[NachoMama]

To become an actual insurance company the legal and financial hurdles are tremendous. If any of the participants in your group still have a mortgage I’m sure that the mortgage company would also balk at such an arrangement.

Exactly!

And then there are the logistical and practical issues:

Who would run the company and how would they be chosen?

What sort of staff would you need, and with what backgrounds?

What would you do with the pool of premiums? Who would create the investment policies and execute them?

What safeguards would you have against staff or management absconding with funds?

Who would create and execute the compliance policies?

What would your legal team look like? Would you have in-house counsel, or contracts with law firms?

Who would do the actuarial work?

Would thousands of Villagers sign up to be insured by a loosely aligned group of amateurs just by word-of-mouth? Or would you need a salesforce? What would that look like and how would they get paid?

[Fastskiguy]

Or even buy a policy with a $50,000 -$100,000 deductible ... you're most self-insured.


Is that really an option? Like as in....will insurance companies actually sell you a policy like that?

Joe

[Robnlaura]

Just think of how much you would have in the bank if you saved that insurance cost. After three years you will have plenty to cover a roof or a leak..

[Robnlaura]

The sort of good news: the governor announced, "We are waiving all taxes on insurance premiums for a full year for homeowners' policies and flood insurance policies," a greatly needed step considering Florida's standing as the state with the highest homeowners insurance in the country.

In 2023, Florida homeowners paid the most for homeowners insurance with an average annual rate of $10,996 with six of the 10 most expensive cities in the country for homeowners insurance located in Florida.

The U.S. average? $2,337, NewsPress reports.

[Lisanp@aol.com]

I am insured through a member-owned property and casualty exchange plan. I have mortgages so that is a nonissue. However, they would not issue a homeowners policy on my Florida property. There is your answer on this being a possibly.

[mikemalloy]

Self-Insurance and setting up an Insurance company, are 2 completely different tracks.

Anyone can "self-insure". Just don't buy insurance ... BINGO! You're self insured. Or even buy a policy with a $50,000 -$100,000 deductible ... you're most self-insured.

As for setting up an insurance company?

Insurance companies that have been in business for generations, are going broke and moving out of Florida. Even if the obstacles others have mentioned weren't real (they are), what makes you think a bunch of retired folks, setting up a mutual insurance company, would be better at it, than the pros?
The "pros" have been writing policies in the whole state. They've taken large losses such as the collaps of the Champlain towers and the damage done by hurricane Ivan. Because the proposed ins. company wouldn't be writing policies where there are high rise buildings or exposure to the extensive damage caused by hurricanes on the coast it could be successful. Additionally the need to turn a profit would not be there since the purpose of the company would be to provide property and casualty coverage to occupants at a reasonable cost.
I wonder about the risk is writing policies on Villages autos. Many sit in the garage for days at at a time with the owners prefering to use their golf carts for local trips. There are lots of questions my proposal raises but rates are getting to the point where such and idea should be at least explored.

[gorillarick]

I lived on the FL east coast. My insurance dropped to about 25% of what it was, to a TV house about 66% of previous value.

However, my car insurance has somewhat slowly doubled since.
Go figure.

[bigeasy]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?
Drop your insurance. Then you will be self insured like the Amish.

[nn0wheremann]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?
The storm loss history here would suggest risk is low. We just changed to Tower Hill Insuance Exchange, a “reciprocal” insurance company, which sounds like a mutual to me. I was reluctant, but then I looked at my old Farmer’s Insurance policy, and found it was underwritten on the California Truck Insurance Exchange, a similarly structured company. Tower Hill ha $1Billion in reinsurance, and a good history and BBB rating.

[Wondering]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?
2007 tornado wiped out homes in the Villages. Block and stucco survived but not stick houses.

[Marine1974]

Sounds like you and 4,999 homeowners would be rolling the dice
with self insuring 5000 homes . Better option would be to self insure your home with no mortgage and see how you would sleep at night .
Would you hire a contractor who self insures their business?

[Spartan86]

The storm loss history here would suggest risk is low. We just changed to Tower Hill Insuance Exchange, a “reciprocal” insurance company, which sounds like a mutual to me. I was reluctant, but then I looked at my old Farmer’s Insurance policy, and found it was underwritten on the California Truck Insurance Exchange, a similarly structured company. Tower Hill ha $1Billion in reinsurance, and a good history and BBB rating.
I am not “dissing” Tower Hill, and have no experience with them. One problem personally would be that my homeowners insurance must be underwritten by a company with at least an A- AM Best rating for my auto insurer to write my umbrella policy. Tower Hill, as I understand it chose to delist from AM Best a couple of years ago. Just something to think about if you are carrying an umbrella policy.

[sallyg]

Great idea!

[Robojo]

Do not think it could work. A tornado wiping out a bunch of homes would wipe out such a group rather quickly

I was thinking the same however if we did self-insure and we diversified areas it might work. Like if people self-insured their home in the other state as well

[Robojo]

2007 tornado wiped out homes in the Villages. Block and stucco survived but not stick houses.

Now I know what kind I'm gonna buy thank you

[Shipping up to Boston]

Drop your insurance. Then you will be self insured like the Amish.

I’m sure in the dozens of threads on this topic....the self insurance model has come up just as many times. For me, self insured will always mean you’re riding dirty (no insurance). Unless you have obscene wealth or are part of some larger entity...this will never make any sense to me. If the majors wanted to .....to paraphrase Kevin O’Leary from Shark Tank....they would squash your little group product like a bug!

[mikemalloy]

I was thinking the same however if we did self-insure and we diversified areas it might work. Like if people self-insured their home in the other state as well
It's been over 15 years since that incident. Just think of how much of a claims reserve the Villages Ins. Co. wuuld have if it had been collecting $1,500 from 5,000 homeowners for 15 yerars. You don't think $112,500,000 could have covered the claims?

[dewilson58]

It's been over 15 years since that incident. Just think of how much of a claims reserve the Villages Ins. Co. wuuld have if it had been collecting $1,500 from 5,000 homeowners for 15 yerars. You don't think $112,500,000 could have covered the claims?

5000 homes, say $500,000 replacement value creates $2.5B in exposure, would need 250,000,000 in reserves.

All those premiums don't even cover 1/2 of the reserve requirements, not to mention claims paid over the 15 years, operating expenses, etc.

[Shipping up to Boston]

It's been over 15 years since that incident. Just think of how much of a claims reserve the Villages Ins. Co. wuuld have if it had been collecting $1,500 from 5,000 homeowners for 15 yerars. You don't think $112,500,000 could have covered the claims?

You don’t think with all of these semi retired or actively retired insurance pros here in TV....that the idea hasn’t already been looked at and vetted? Just saying. It obviously is an uphill battle in a very volatile home insurance marketplace (FL). Too much risk and not enough (potential) gain IMO

[Blueblaze]

If the insurance companies don't regain their senses soon, I'll be tempted to "self insure" -- in other words, just do without. When the house is paid off, insurance is kind of dumb, when you think about it. It's kind of like keeping that million dollar life insurance policy you had before the kids left home and you retired. What are you insuring against?

On the 1-in-a-million chance your house is reduced to rubble, what's the worst that happens? You wind up with a mortgage to rebuild? OMG! Wait... maybe that's not as bad as the 100% certainty of handing over four mortgage payments every year to an insurance company -- until the day you die -- FOR NOTHING.

OK, maybe a windstorm merely blows your roof off? What did your four-mortgage-payments- a-year-til-the-day-you-die buy you? A $20K roof you were going to have to buy someday yourself, anyway?

I'm willing to buy a reasonable amount of insurance against disaster. I'm not willing to spend twice the grocery bill to insure against groceries.

The insurance industry has become a scam. If they don't pull their head out soon, they may wake up one morning to discover that 50 million retirees without a mortgage have suddenly realized they have enough scams in their life.

[mikemalloy]

You don’t think with all of these semi retired or actively retired insurance pros here in TV....that the idea hasn’t already been looked at and vetted? Just saying. It obviously is an uphill battle in a very volatile home insurance marketplace (FL). Too much risk and not enough (potential) gain IMO
I'd appreciate comment from some of those insurance pros.

[Shipping up to Boston]

I'd appreciate comment from some of those insurance pros.

Crickets!

[Fastskiguy]

If the insurance companies don't regain their senses soon, I'll be tempted to "self insure" -- in other words, just do without. When the house is paid off, insurance is kind of dumb, when you think about it. It's kind of like keeping that million dollar life insurance policy you had before the kids left home and you retired. What are you insuring against?

On the 1-in-a-million chance your house is reduced to rubble, what's the worst that happens? You wind up with a mortgage to rebuild? OMG! Wait... maybe that's not as bad as the 100% certainty of handing over four mortgage payments every year to an insurance company -- until the day you die -- FOR NOTHING.

OK, maybe a windstorm merely blows your roof off? What did your four-mortgage-payments- a-year-til-the-day-you-die buy you? A $20K roof you were going to have to buy someday yourself, anyway?

I'm willing to buy a reasonable amount of insurance against disaster. I'm not willing to spend twice the grocery bill to insure against groceries.

The insurance industry has become a scam. If they don't pull their head out soon, they may wake up one morning to discover that 50 million retirees without a mortgage have suddenly realized they have enough scams in their life.

100% agree!!!

Joe

[Gatorfan1]

[QUOTE=Spartan86;2329829]I am not “dissing” Tower Hill, and have no experience with them. One problem personally would be that my homeowners insurance must be underwritten by a company with at least an A- AM Best rating for my auto insurer to write my umbrella policy. Tower Hill, as I understand it chose to delist from AM Best a couple of years ago. Just something to think about if you are carrying an umbrella policy.[/QUOTE

Insurance Company Rating Agencies | Demotech vs. A.M. Best: Which is Better?
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[Topspinmo]

I have some experience with insurance companies created by groups such as doctors when their insurance costs had large increases. It appears to me that the current rise in insurance premiums comes from a combination of increases in cost of repairs such as lumber prices, and the losses they sustained from hurricane Ivan.
It seems to me that The Villages is located far enough away from the coast that severe damage from hurricanes is a slight threat. Similarly, the flooding damages we've seen like those along the St. John's river are also much less likely here. I wonder if we in The Villages are subsidizing the risks found in areas susceptible to catastropic damages.
My question is, would it be possible for The Villages residents to self insure? Could we form our own insurance company? I"m not familiar with what the state requirements are for capitalizing an insurance company perhaps some of you have some information about that.
I'm sure that the premiums we are paying are much higher than they need to be and that self insuring if possible would be a benefit to us all. Thoughts?

So you want get into legalized racketeering? Sorry only few sorority members are allowed. :highfive:

[thelegges]

At our last renewal, we got an email and a letter asking if we wanted to change or drop the Hurricane part of our policy. Savings $689, policy would drop to $429 premium.

Still waiting for what would be covered if we went that route. So sort of self insured, but no mortgage company would allow that clause to be deleted.

[mikemalloy]

5000 homes, say $500,000 replacement value creates $2.5B in exposure, would need 250,000,000 in reserves.

All those premiums don't even cover 1/2 of the reserve requirements, not to mention claims paid over the 15 years, operating expenses, etc.
First of all the one tornado incident that people refer to probably effected less than 1% of the villages homes. If some catastrophic event took out 5,000 homes we probably wouldn't be around to worry about rebuilding.

[kkingston57]

I've lived here 10 years. You mention one incident that occurred over 15 yrs. ago. Consider what the premium collection from 5,000 homes over those years would have been. The company could have easily covered all the claims.

5000 homes? Potential pool of people who might want to self insured probably closer to 50K. Some of these newer Florida start up insurance companies have that many policies

[kkingston57]

Somewhere along the line either the developer or someone approached them about this.

If they thought this would make them money without great risk it would have been done

Developers are great biz people. Part of the reason is that they stick to their expertise, land development and home sales. Insurance is a different animal. Good long term insurance returns are in the 5% range and comes with a lot of risk.

[kkingston57]

Self-Insurance and setting up an Insurance company, are 2 completely different tracks.

Anyone can "self-insure". Just don't buy insurance ... BINGO! You're self insured. Or even buy a policy with a $50,000 -$100,000 deductible ... you're most self-insured.

As for setting up an insurance company?

Insurance companies that have been in business for generations, are going broke and moving out of Florida. Even if the obstacles others have mentioned weren't real (they are), what makes you think a bunch of retired folks, setting up a mutual insurance company, would be better at it, than the pros?

Good points but I feel that the biggest reason that this might work is that TV is in the middle of the state and would not have any risks in the high risk areas like near the coast. We are now subsidizing the people on the coasts. State of Florida might not allow an insurance company to ONLY do business in 3 counties. Coastal counties would then go up 3-4X more as there would not be a spreading of the risk(that is what insurance is)

[kkingston57]

Crickets!

I was in the adjusting biz for 40 years and most of the threads here do make sense( good or bad). Ideas could be explored but like all else, big businesses will win out.

[Shipping up to Boston]

I was in the adjusting biz for 40 years and most of the threads here do make sense( good or bad). Ideas could be explored but like all else, big businesses will win out.

Exactly