LAT: Insurers Saw Record Gains in Year of Catastrophic Loss

[DeepModem Mom]

Insurers Saw Record Gains in Year of Catastrophic Loss
They say the profits are a fluke, but the industry has worked to shift risk to clients and the public.
By Peter G. Gosselin, Times Staff Writer
April 5, 2006

The companies that provide Americans with their homeowners and auto insurance made a record $44.8-billion profit last year even after accounting for the claims of policyholders wiped out by Hurricane Katrina and the other big storms of 2005, according to the firms' filings with state regulators.

Top executives described the profit — an 18.7% increase over the previous year — as a fluke, the product of gains in other lines of insurance besides homeowners and a very good year for their investments.

They said that even with the increase, insurers face deep problems that can be fixed only by substantial premium hikes, a scaling back of commitments by several firms to the most disaster-prone portions of the country and, according to some, a greatly expanded role for the state and federal governments in insuring individuals against the largest of catastrophes.

"Unless insurers can get relief, you're going to see a pullback by the private industry," warned Robert P. Hartwig, chief economist of the industry-funded Insurance Information Institute.

"We're not being good stewards of our investors' capital or our policyholders' surplus if we keep doing business where we can't make money."...

http://www.latimes.com/news/nationworld/nation/la-na-insure5apr05,0,3061059.story?coll=la-home-nation

[Vinnie From Indy]

1. Their new slogan going into '06 is "Bend over America"

eom

[rodeodance]

2. Dah!

...."We're not being good stewards of our investors' capital or our policyholders' surplus if we keep doing business where we can't make money."...

[MrModerate]

3. I'm not sure that nationalized insurance would work . . .

But this reaming is a HUGE social cost -- and transfer of wealth -- that we could do without.

A pullback by private industry from overflowing troughs of money? Seems unlikely. Just them trying to jigger the news to justify even further cornholing of the customer. The shareholders need (apparently) not only reasonable returns, but returns that grow every year until society collapses under the weight.

[Ian David]

4. Maybe the insurance companies should re-build the levees?

Or do something to fight global warming?

[Warpy]

5. My pop's homeowner's insurance, which EXCLUDED flood

and storm damage, was a thousand bucks a year. Ye gods!

Mine here runs about $250 and this inner city casita is worth almost as much as his house on a barrier island was, at least on paper.

They're making record profit because they jacked everybody's insurance up in Florida after 2004 and Florida only had minimal hurricanes last year.

[FlaGranny]

16. Minimal? I guess you could call them

minimal, but a cat 2 and a cat 3 hit my home last year. In the last 2 years we've had 3 direct hits and 2 or 3 brushes from hurricanes with tropical storm winds. Every one of them caused some damage in my area. Better than a cat 4 or 5 I guess, but not much fun. In my own neighborhood nearly every home has had some kind of damage.

[juajen]

17. Ours in So. Louisiana is $145 per mo. and

we've been told there will be a 35% hike next renewal. Our house is in the $150,000 range. I don't know how we will afford this hike. We're with Allstate. Just four years ago, our HO ins. was $45 a month with another company. How can they justify a hike like this? Their answer, we have to pay for all the claims in the gulf. IMHO, insurance companies are the root of all evil in this country.

Does anyone know how our premiums compare with other countries around the world. I'm truly sick of this highway robbery.

edited: for spelling and addition

[bullimiami]

6. these bastards need to be severly regulated.

or the there needs to be a not for profit insurance pool.
we are getting raped front and back. record rate hikes and they made record profit. thats just wrong.

[Rose Siding]

7. "They say the profits are a fluke" -can you believe this crap?

What was so profitable; *not* paying NOLA claims?

[intheflow]

8. They'll reply their costs will rise because

of all the litigation filed against them by hurricane homeowners. It'stakes money to fight for the legal right to screw people, don't you know! :grr:

[madrchsod]

9. the groups that insure insurance companies

have raised their rates because of--guess what?-- global warming. yes they have taken the position that this century there will be ever increasing monetary losses do to global warming.

[northofdenali]

10. Headlines in my mom's Florida county (Brevard):

http://floridatoday.com/apps/pbcs.dll/article?AID=/20060405/BUSINESS/604050390

Brevard faces grim reality of insurance

Forum speakers agree changes need to be made

BY WAYNE T. PRICE
FLORIDA TODAY

An insurance company representative, a state official and a consumer advocate agreed on one thing during a forum Tuesday night: As wobbly as the insurance industry is, it's likely to get worse.

As the storm level is likely to increase in the next decade, rates will go up. And insurers are likely to remove policies from their portfolios to reduce their risks.

(snip)

Yeah, and the poor oil companies, TOO!

Assholes.

[donkeyotay]

11. Seems more like a protection racket.

Funny how disasters like Katrina and Sept 11th don't cost insurance companies money, but rather make money for them.

Don't forget to kick a little back to your favorite blind politician.

[TreasonousBastard]

12. Well, I guess everyone would rather see them go broke...

like they used to when major disasters hit, and then they pay 10 cents on the dollar for claims and your tax money picks up some of the difference.

[crikkett]

13. isn't that line of reasoning called a false choice?

There are other options besides "get screwed" and "get screwed".
Like regulating the industry.

[depakid]

14. That isn't a line of reasoning

It's just a lie.

[TreasonousBastard]

15. After spending 20 years as an underwriter...

I know full well where the bodies are buried and what the industry does wrong.

But, it is already one of the most highly regulated industries out there, and we still went through constant cycles of boom and bust. In my line, we once were happy with a profit three years out of five, until the bad years got too bad to be covered by the good. Then there are the reinsurers, mostly British with Switzerland, Hong Kong and a few others chipping in, who get tired of getting hit with huge losses and demand even more of our money to stop us from going broke. There are all sorts of fancy reinsurance treaties and catastrophe covers primary insurers have to buy, and they ain't cheap.

Simply put, once we would look at a few $35,000 homes getting wiped out in a storm. Now the houses are worth $400,000 and more of them get wiped out. The math is simple-- it's just going to cost more, like everything else.

[crikkett]

18. Thanks

I didn't understand.