Hurricanes must really really hurt the insurance industry. I mean, don't you think those huge homeowners insurance rate hikes and cutbacks in coverage that we all face after Hurricanes - whether or not we even live in a Hurricane area - are necessary cause, after all, look at those massive insurance industry’s losses, right? I mean, they're a business, they have to make money or they'll just shut down - and then where would we be?
Uh, well, actually, the dirty little secret of recent Hurricanes is that the property/casualty insurance industry has come out of them grossly profitable!
In Consumer Federation of America’s 2007 study Property/Casualty Insurance in 2007: Overpriced Insurance, Underpaid Claims, Declining Losses and Unjustified Profits, the group found
In 2004, insurers posted their largest dollar net (after tax) profit in history ($40.5 billion) despite the fact that four major hurricanes caused significant damage in Florida. Insurers achieved another record of $48.8 billion in 2005, despite the unprecedented losses caused by hurricanes Katrina, Rita, and Wilma. 2006 profits are the highest yet because of low hurricane activity, excessive rates, the use of programs to systematically keep payments to policyholders low and other reasons discussed in this White Paper.
Now we have Hurricane Gustav and despite far few losses, expect the industry to start cutting back and raising rates again - on everybody!
The insurance industry has been adept at exploiting Hurricanes by repeatedly threatening to pull the rug out from under state economies - dumping risk, raising rates and abandoning policyholders altogether. Don't you think the time has come to remove the private section from the Hurricane insurance business?
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