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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (38361)	8/18/2005 1:14:03 AM
From: John Vosilla	Respond to of 306849

Wow, it is incredible how the dollar amounts have tripled since GWB has been president.

To: CalculatedRisk who wrote (38361)	8/18/2005 4:06:25 AM
From: shades	Respond to of 306849

Shiller thinks about socializing risk - we have a socialist system like Japan I think. Perhaps giving weight to Mish - we do seem to following them in several regards. hosted.ap.org Aug 17, 6:59 PM EDT Because of Citizens' loss, all property owners facing increase By TRAVIS REED Associated Press Writer ORLANDO, Fla. (AP) -- Florida homeowners will pay an average 7 percent surcharge on their property insurance as the state's insurer of last resort moved Wednesday to recover its losses from last year's hurricanes by charging private insurers $516 million. Citizens Property Insurance, created by the state in 2002 for homeowners who couldn't find insurers to underwrite high-risk properties, is imposing the one-time charge through its legal authority to spread its losses across all companies. Private insurers, in turn, are allowed to directly pass that on to consumers, meaning someone with a $5,000 insurance bill will have to pay an extra $340. That surcharge is on top of up to 30 percent rate increases being requested by insurance companies who say Florida is quickly becoming an unprofitable place to write home policies. Citizens board chairman Bruce Douglas said that insurer had no choice because under state law it must impose the surcharge to recoup its losses. Citizens, with 740,000 customers, is the state's second-largest insurer behind State Farm, but legally must charge the highest rates so it doesn't compete with private companies. Besides spreading out losses by billing insurance companies, the quasi-government entity is able to issue bonds to raise money. "It's just a real tough issue," said Steve Burgess, the state's consumer advocate for insurance. "The homeowners who are being assessed ... a lot of them have difficulty coming up with that. But he said the state has to have insurance available in areas not covered "by the voluntary market." The board had twice this year delayed Wednesday's action, initially hoping the Legislature would appropriate money to cover losses from the devastating 2004 hurricane season. Despite Citizen's high rates, "even they didn't have rates high enough to cover last year's hurricane season," State Farm spokesman Chris Neal said. "We've anticipated it for quite a while." Neal said State Farm would file a request with the Office of Insurance Regulation to pass the surcharge on to its 1 million property insurance customers, as most other companies are expected to do. The average State Farm premium is $1,000, meaning $68 dollars extra for policyholders. Also Wednesday, State Farm joined the chorus of private insurers requesting rate hikes to cover their own losses by filing for an average increase of 8.6 percent statewide. "In insurance you're looking at trends, and we see trends of increasing claim costs," Neal said. "Last year is just history. We can never go back and recoup that money; it's just gone. What we're trying to do is project what our costs." Private companies generally abided by a request from state regulators to put off rate filings until after the 2005 legislative session, which ended May 6. Since then, some have filed for rate increases averaging as much as 30 percent statewide. The Legislature's request did not apply to Citizens, which raised rates April 1 an average of 11.8 percent for wind-only policies and 19.7 percent for all perils. Average annual premiums for single family homes increased by $202 to $1,858 for wind-only and by $415 to $1,710 for all perils.