Tuesday, March 20, 2007

From "Texas’ Oldest Paper"

The associate editor of the Galveston County Daily News has an opinion:

Texas insurance companies have been in full pout recently about consumers and lawmakers questioning industry profits.

To hear the industry and its associations, you’d think they were being beaten every time they banked a nickel.

The anger and resentment among consumers, and the legislative attention they’ve inspired, are not about simple profit, however.

They are about massive, perhaps historical, profits booked at exactly the time insurers declared the world to be especially risky and began dropping coastal policyholders, seeking rate increases and demanding fundamental regulatory changes.
Sure, it’s been said before. But I like the way he worded that last paragraph. A brief and concise statement of the Gulf Coast consumer’s ire.

I like the way he worded this, too:
Insurers are in the habit of making threats when consumers, through their elected representatives, attempt to arrange the world a little more to their own benefit.

The threats sometimes are veiled and sometimes overt but they always warn: Push back too much and we’ll leave.

Everybody would suffer if major insurers left the Texas market, but everybody includes the companies, as well as the consumers.

Perhaps the next time a company threatens a partial withdrawal from Texas, we should invite it to make a complete exit.

If nothing else, it would be enlightening to see how much crafty marketing and old-fashioned hustle it takes to recoup Texas in the vast markets of Idaho and Wyoming.
I like the way Michael A. Smith thinks. The next time an insurance company threatens a partial withdrawal from an Atlantic coastal region, every state on the East Coast and the Gulf Coast should invite the insurance company to make a complete exit. That includes 20 states with coastal counties or parishes, which make up over a third (134 million) of the United States' population (300 million).

That’s a sizable market to lose.

Today’s insurance company frustration post was inspired by this letter I received from my agent, caps and italics in original letter:
AFTER MUCH DELIBERATION AND ALONG WITH MANY OTHER MAJOR INSURANCE COMPANIES, ******** ******** HAS FOUND IT NECESSARY TO EXERCISE A REGULATION THAT ALLOWS INSURANCE COMPANIES TO NON-RENEW ANY EXISTING HOMEOWNER POLICY THAT HAS BEEN IN FORCE THREE YEARS OR LESS.
When I received this letter, I had held the policy for two years and 10 months.

I do appreciate the candor expressed in the letter, however:
THE COMPANY FEELS THAT THIS WILL ALLOW THEM TO REDUCE THEIR PROPERTY EXPOSURE IN SOUTHERN LOUISIANA, WHICH THEY FEEL WILL ALLOW THEM TO CONTINUE TO OPERATE IN OUR STATE.
Cue Michael A. Smith’s idea.

I will be okay. I will go get homeowners insurance from someone else. But not everyone will do that:
Facing soaring premiums or feeling shortchanged by their insurers, a growing number of homeowners and businesses in Louisiana and Mississippi are "going bare," or dropping their coverage altogether, insurance agents and consumer advocates say. Many more are drastically reducing their coverage.

"I have every belief that it's going to be more and more common," said Amy Bach, executive director of the United Policyholders advocacy group. "If it's a choice between eating or paying their insurance bills, of course they're going to eat."
Of course.

3 comments:

mominem said...

Hang in there in a couple of years rates will go down and companies will be moving into Louisiana, unless the State does something stupid.

bayoustjohndavid said...

Would the rest of Texas go for it? The different parts of Texas don't hate each other, like some North Louisianians hate New Orleans, but I wonder. Of course, Texas has more economic muscle to flex. Back in December I posted about north and central La. legislators complaining about Citizens' Insurance charging their constituents more to cover losses in the south.

Cousin Pat from Georgia said...

I wonder how difficult it would be to start an non-profit insurance co-op, where the policy holders are the shareholders....the idea being that any massive 'profit' made by the co-op ends up either adding extra protections or reducing rates.

I wonder how feasable that would be.

As far as the 'all in or all out' proposal, I agree completely. Brinkmanship is a hell of a game to play with this recovery on the line.