Insurance is ultimately a game of musical chairs. For now, there are so many companies and policy types that it’s the boring part at the beginning where everyone mocks the loser but there really aren’t any stakes. The mockery phase will end as companies increasingly become the last holdouts and shareholders start asking why everyone else left but we’re forecasting blue skies.
oh yeah–and the thing is for residents it’s already still really bad. there are people on insurance company number 4 in 4 years (or who have two insurance companies because one has to cover one thing and the other covers everything else), and the state is actively trying to disincentivize joining the lender of last resort because they can’t take on that many policies and it’ll kill the remaining insurers. a bad hurricane this year might genuinely be the thing which kicks off the permanent death spiral here–the market needs years of blue skies to “stabilize”.
Oh, absolutely. I think of it as more of a domino effect than butterfly. What we don’t know is how many dominoes the next one to fall will touch. The actuaries at Farmers determined that N events of X size in Y timeframe make these policies undesirable, but it tells us nothing about what N+1 means to other divisions of Farmers, let alone what happens at other companies with their own Xs and Ys.
Well, each major insurer that leaves makes the state more undesirable for everyone that’s left. Each one of these insurers had their share of the “bad” business and now the ones who are left have to sift through the applicants to try to figure out who is safe to insure and who is going to cost them their ability to continue doing business. So with every insurer that leaves, those undesirable risks who pushed them out end up more and more concentrated with the other carriers. I would expect to see more and more of this.
oh yeah–and the thing is for residents it’s already still really bad. there are people on insurance company number 4 in 4 years (or who have two insurance companies because one has to cover one thing and the other covers everything else), and the state is actively trying to disincentivize joining the lender of last resort because they can’t take on that many policies and it’ll kill the remaining insurers. a bad hurricane this year might genuinely be the thing which kicks off the permanent death spiral here–the market needs years of blue skies to “stabilize”.
Oh, absolutely. I think of it as more of a domino effect than butterfly. What we don’t know is how many dominoes the next one to fall will touch. The actuaries at Farmers determined that N events of X size in Y timeframe make these policies undesirable, but it tells us nothing about what N+1 means to other divisions of Farmers, let alone what happens at other companies with their own Xs and Ys.
Well, each major insurer that leaves makes the state more undesirable for everyone that’s left. Each one of these insurers had their share of the “bad” business and now the ones who are left have to sift through the applicants to try to figure out who is safe to insure and who is going to cost them their ability to continue doing business. So with every insurer that leaves, those undesirable risks who pushed them out end up more and more concentrated with the other carriers. I would expect to see more and more of this.