What a scam that is! In almost all locations it climbs a little more each year. You think you have a set mortgage amount if you are buying your home but each year you get a new coupon book showing how your payment has increased. Not because your bank changed the rates you agreed to but because your property taxes and insurance increased.
Let's not discuss the property taxes in this post, that's a whole other rip-off.
According to a recent story in the St Petersburg Times, the property insurance industry received near-record profits in 2007--about $65-billion after taxes. But that's not the complete story. It seems that while they were making those huge profits they overcharged American homeowners an average of $870 per household over the last four years, says a new report from major consumer groups.
That study by the Consumer Fereration of America, Consumers Union and several other consumer groups concludes that insurers systematically overcharge consumers and underpay claims.
The findings blasted a powerful industry about to be challenged in Florida on several alleged price-gouging fronts by the state government.
The report by the Consumer Fereration, one of the nation's largest and long-standing consumer watchdog organizations, was based on insurance industry data and the companies' financial statements. Get ready for this......
It estimated insurance industry profits from 2004-2007 at more than $253-billion! That's billion with a "B"!
Robert Hunter, director of insurance for the CFA and author of the study, accused the industry of "methodically over-charging consumers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of the tab for risks the insurers should cover."
Nowhere is that better illustrated, Hunter said, than in Florida, where nearly two-thirds of the property insurance risk is shouldered by the state in the form of Citizens Property Insurance and the Florida Hurricane Catastrophe Fund. (Did I mention that I live in Florida and I was forced to go into the Citizens group with an increase of over double my original premium?)
One of the most startling findings in the Consumer Federation report was that the insurance industry keeps an increasing portion of the premiums. In the 1980's, insurers returned 72 cents for every $1 of premium charged to policyholders either through benefits or claims. But that figure has shrunk to about 55 cents in 2007, even in years with no major natural disasters.
Besides writing the CFA report, Hunter helped calculate rate reductions called for by the state Legislature last year. The new law has met with mixed success, and the state is taking several steps to find out why.
The Florida Senate this past Thursday created a special committee to address the issue. The Florida Office of Insurance Regulation will hold a two-day public hearing next week with executives from Allstate, which has requested a 42 percent rate hike! AND Gov. Charlie Crist last month appointed three lawyers to look for grounds for a class-action lawsuit against the industry for potential collusion. Go, Charlie, go!
Insurance companies have found ways around the risk of the business, Hunter charged. He pointed to 1992, the year Hurricane Andrew struck Florida and insurers paid $1.21 for every $1 they took in. By 2005, when the Gulf Coast was hit by hurricanes Katrina and Wilma, Hunter said the companies paid back just 72 cents on every $1 of premium. "They actually made money in the homeowner line", he said of the 2005 hurricane season. "That's pretty shocking".
Not to Charlie Rutz. The Clearwater retiree this month paid his State Farm homeowners premium of $3,200 - nearly twice what it was two years ago.
"Insurance was put together to spread the risk", Rutz said, "and the compaines should get a fair return. But billions of dollars? These guys are robbing us. the only thing they don't have is the mask and gun."
Now my blood pressure is double what it should be as it always gets when I talk the insurance industry or oil companies. They both are getting filthy rich and we are paying for their mansions, boats, cars, cigars, stocks, women and golf lessons! Send me a comment if you agree.
2 comments:
You live next to the Atlantic Ocean.
You have oceanside property.
You want close to $700,000 for your home that is eventually going to fall into the sea.
You deserve to pay 400 dollars a month for insurance.
4800 a year to insure a property worth $700,000 is not even 1% of the value of the house.
Mathematically, that's not bad.
If you're so angry with insurance companies, why don't you self insure your 700K house?
I'm glad you seemed to finally regain some sense and want to sale your 700K house that will one day fall off into the ocean.
I might have a different opinion if your were inland. You're right at the water's edge. You deserve to pay whatever rate they deem necessary.
#1: I live on Tamopa Bay, not the Atlantic ocean which is all the way across th state from me.
#2: I don't remember reading about any house "falling into the sea" anywhere in Florida since radio was invented. Maybe if they built it on stilts over top of the ocean!
#3: I don't pay $400 a month for insurance, I pay about $200, so it is an even 1/2 of 1%! That price is not based upon a $700,000 value but rather a $187,000 value! Slightly higher than what I bought it for 14 years ago. I couldn't afford to pay the premium on it's $700,000 value!! It's increased 4 times since I moved here only because of all the money they had to pay out for other claims for all the other hurricanes across the country. We've never had a claim nor has anyone living anywhere around me because of storms.
#4: You can't self-insure a home if you have an exisiting mortgage. The lender FORCES you to buy from an insurance company. Unless you are Donald Trump maybe....
#5: Being "inland" doesn't lessen your insurance premiums, I know people that live no where near water and they are paying 3-4 times what I pay. They base it upon the home's replacement value more than where it is located. The only thing I have to pay extra because of my location is flood insurance. And I don't mind that because it is very reasonable. Even though there has never been a flood claim on any of the waterfront houses in my area...ever! BUT, houses in the middle of the city, not near ANY water get flooded often because of drainage! And they ARE NOT required to buy flood insurance!
#6: The only reason the home has a value of over $700,000 (others are selling for $800,000-$900,000 on the same street, I'm making them mad by selling cheap) is because of the inflated housing prices that started 10 years ago here. The houses have nothing to do with it. A lot of people pay that and tear the houses down and re-build! It's about location, waterfront. There's only so much of that left and all the rich baby-boomers want it. So they pay it. I couldn't buy a home here now!
But, hey, thanks for your comment. Glad to see it made you mad enough to write.
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