Florida property tax and home insurance

[Anonymous]

Anonymous wrote:

Anonymous wrote:Help me understand why someone living anywhere else should care about Florida's property taxes and insurance? My property taxes go up on average 10% every single year and that's not a national issue. Why are Floridians so special?

These posters hate DeSantis.

Yes they hate tax and pocket conservatism.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The insurance problem is a massive issue and perhaps unrealistic to expect DeSantis to solve- basically the market is backing away.

It’s not helped by Florida’s pervasive culture of fraud with insurers.

For their part, insurers have enormous sway in the legislature.

It’s a big problem for Florida.

He is doing less than nothing to try to address it. He isn't even trying.

It's quite difficult to claim that. He's led a number of legislative efforts on the issue.

Not really. There was a special session that made is harder for people to sue insurance companies, that most Floridians don't feel like is going to help them get and keep insurance. And other than that, little white boots twinkly toes has been off pursuing his culture wars - leaving Floridians to hang in the wind, literally.

I am guessing you don't live in Florida. You get the Foxxy version of PFD. You don't know what people who live here actually talk about or care about.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The insurance problem is a massive issue and perhaps unrealistic to expect DeSantis to solve- basically the market is backing away.

It’s not helped by Florida’s pervasive culture of fraud with insurers.

For their part, insurers have enormous sway in the legislature.

It’s a big problem for Florida.

He is doing less than nothing to try to address it. He isn't even trying.

It's quite difficult to claim that. He's led a number of legislative efforts on the issue.

All those efforts resulted in increased cost.

What bothers me most is, he gets so much coverage (for drummed-up social issues), yet he rarely uses that stage to lobby for action on an issue like this. He’s got everyone’s attention, he should use it more for practical things like skyrocketing insurance rather than stunts that elevate his profile.

That's what he'd do if he were a remotely serious person. He is not a serious person.

Make America Florida? I hope you all see this and say no thanks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

These are the posts that get people coming back. Kudos.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Help me understand why someone living anywhere else should care about Florida's property taxes and insurance? My property taxes go up on average 10% every single year and that's not a national issue. Why are Floridians so special?

These posters hate DeSantis.

Yes they hate tax and pocket conservatism.

They hate DeSantis and mock his appearance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Help me understand why someone living anywhere else should care about Florida's property taxes and insurance? My property taxes go up on average 10% every single year and that's not a national issue. Why are Floridians so special?

These posters hate DeSantis.

Yes they hate tax and pocket conservatism.

They hate DeSantis and mock his appearance.

They are realist.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

State Farm is claiming that regulatory required underwriting standards prevent it from accurately pricing risk in California—particularly California’s requirement that underwriting be based on historical risks when wildfire risk has exploded during recent years.

Insurance companies typically invest their reserves in diversified assets of which only a relatively small sliver are made up of risky, illiquid assets. Most states have decent reserve requirements.

When insurance companies exit a market (FL or CA) that’s generally a really bad sign that something is up. You offer a product with mandated demand that scales to an entire market and … you stop?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

State Farm is claiming that regulatory required underwriting standards prevent it from accurately pricing risk in California—particularly California’s requirement that underwriting be based on historical risks when wildfire risk has exploded during recent years.

Insurance companies typically invest their reserves in diversified assets of which only a relatively small sliver are made up of risky, illiquid assets. Most states have decent reserve requirements.

When insurance companies exit a market (FL or CA) that’s generally a really bad sign that something is up. You offer a product with mandated demand that scales to an entire market and … you stop?

State Farm has a history of fraudulent practices and a corporate culture of bad faith lies. They were despicable after Katrina, forcing their contracted adjusters and engineers to change reports to deny wind damage. I’ll never believe anything they say.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

State Farm is claiming that regulatory required underwriting standards prevent it from accurately pricing risk in California—particularly California’s requirement that underwriting be based on historical risks when wildfire risk has exploded during recent years.

Insurance companies typically invest their reserves in diversified assets of which only a relatively small sliver are made up of risky, illiquid assets. Most states have decent reserve requirements.

When insurance companies exit a market (FL or CA) that’s generally a really bad sign that something is up. You offer a product with mandated demand that scales to an entire market and … you stop?

State Farm has a history of fraudulent practices and a corporate culture of bad faith lies. They were despicable after Katrina, forcing their contracted adjusters and engineers to change reports to deny wind damage. I’ll never believe anything they say.

The Rigsby Sisters Whistleblower Case Against State Farm Comes to an End After 16 Years
https://www.propertyinsurancecoveragelaw.com/2022/08/articles/state-farm/the-rigsby-sisters-whistleblower-case-against-state-farm-comes-to-an-end-after-16-years/

State Farm Fire and Casualty Co. has agreed to pay the federal government $100 million for potential liability over its handling of flood insurance claims after Hurricane Katrina, settling a lawsuit that two whistle blowers filed against the company more than 16 years ago.

[Anonymous]

Florida residents love to complain about insurance costs - not unjustifiably.

What Florida homeowners love even more, is the humble brag about the the price appreciation of their homes. In some areas, 3x in four years.

So, yeah, it’s just terrible down there and it’s DeSantis fault.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Help me understand why someone living anywhere else should care about Florida's property taxes and insurance? My property taxes go up on average 10% every single year and that's not a national issue. Why are Floridians so special?

It's a matter of national interest if the Florida governor is running for president of the US, but not doing anything to address real concerns impacting constituents in his home state. It matters in terms of his competency to govern.

"You" elected Trump last go around so competency to govern is not a true concern of Republicans. Hilarious to think that it is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

These are the posts that get people coming back. Kudos.

Eh, your pp's comments are not entirely accurate. Yes financial markets affect insurers, and so a big financial crisis will have a large nationwide impact. Florida is not experiencing a nationwide phenomenon though. It is facing something very state-specific. What's going on in Florida is risk-related and fraud-related.

The risk is big weather events. Big national insurance companies, led by State Farm, began reducing exposure after the 2004-2005 hurricanes. It happened again after Irma and Michael in 2017-18. And every big hurricane year causes insurers to reprice or retrench. This is not the result of the 2008 financial crisis, or any swings in the stock market.

State Farm holds 18% of insurance policies nationwide, but only 6% of Florida. Allstate has 9% nationally but only 1.6% in Florida. USAA, Liberty and Farmers have 20% of the national market, but 5.2% in Florida (Farmers isn't even in Florida now.) Combined this means that the top five insurers, the most stable insurers, who cover half the homes in America, only provide insurance to 12.8% of homeowners in Florida.

The result was a lot of smaller insurance companies cropped up, but they are particularly vulnerable in big claim years. They are poorly capitalized, their risk is concentrated in one geography, and many rely on reinsurance from private capital. 14 of these insurance companies went belly up in the last five years and the state has had to levy extra fees on policies to keep its own insurance guaranty program solvent. For the ones that survive, their reinsurance costs have gone up because the hedge funds backing them adjust for losses.

The fraud is a roofing scam that has been going on for several years. In the scam, roofers claim to find damage then say they will get the roof fixed guaranteed if the homeowner signs and Assignment of Benefits, which makes the roofer the beneficiary of the policy. This allows them to sue the insurance company, and I'm sure they hope some fraction of those lawsuits get settled. And the costs get passed on to you, the consumer.

It's bad, but it's not the global financial markets. This is Florida.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

These are the posts that get people coming back. Kudos.

Eh, your pp's comments are not entirely accurate. Yes financial markets affect insurers, and so a big financial crisis will have a large nationwide impact. Florida is not experiencing a nationwide phenomenon though. It is facing something very state-specific. What's going on in Florida is risk-related and fraud-related.

The risk is big weather events. Big national insurance companies, led by State Farm, began reducing exposure after the 2004-2005 hurricanes. It happened again after Irma and Michael in 2017-18. And every big hurricane year causes insurers to reprice or retrench. This is not the result of the 2008 financial crisis, or any swings in the stock market.

State Farm holds 18% of insurance policies nationwide, but only 6% of Florida. Allstate has 9% nationally but only 1.6% in Florida. USAA, Liberty and Farmers have 20% of the national market, but 5.2% in Florida (Farmers isn't even in Florida now.) Combined this means that the top five insurers, the most stable insurers, who cover half the homes in America, only provide insurance to 12.8% of homeowners in Florida.

The result was a lot of smaller insurance companies cropped up, but they are particularly vulnerable in big claim years. They are poorly capitalized, their risk is concentrated in one geography, and many rely on reinsurance from private capital. 14 of these insurance companies went belly up in the last five years and the state has had to levy extra fees on policies to keep its own insurance guaranty program solvent. For the ones that survive, their reinsurance costs have gone up because the hedge funds backing them adjust for losses.

The fraud is a roofing scam that has been going on for several years. In the scam, roofers claim to find damage then say they will get the roof fixed guaranteed if the homeowner signs and Assignment of Benefits, which makes the roofer the beneficiary of the policy. This allows them to sue the insurance company, and I'm sure they hope some fraction of those lawsuits get settled. And the costs get passed on to you, the consumer.

It's bad, but it's not the global financial markets. This is Florida.

I’ve followed this for decades in coastal windstorm markets and they yo-yo in a cycle that isn’t explained by increased risk or lawsuits, but by extreme disasters and investment trends. All of the private insurers want to limit their exposure in any specific hurricane risk location and do so by cherry-picking the well-built expensive houses with cars, boats, and business policies to bundle. The older and modest homes are dumped into the state last-resort pool. After an Andrew or Katrina insurers have to pay out billions at once and some stop writing in coastal markets. That causes other insurers to stop because they don’t want too much exposure in one place. Eventually, they all want to go back in and cherry-pick those nice bundles again. The yo-yo effect shows up in the state wind pools where their exposure suddenly doubles or triples with no time to build up reserves so they are gouged by reinsurers. That’s where I noticed the effect of their investment portfolios. After Katrina, insurers dumped coastal policies into state pools from Cape Cod to Brownsville, forcing them all to jack up premiums and send it all to Bermuda reinsurers. Just when the exposure in the state pools started to stabilize, the financial crisis resulted in another mass pullout of coastal markets. 2010 was much worse than 2007 for state pools. The investment trends affect the high-risk disaster coverages only, because they have extreme timing risk that could require billions of dollars in claims at once. Auto, life, fire (other than wildfire), etc. lines have predictable claims every year so the premiums cover the risks and those lines are not affected by investment losses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

I'm going to agree that this is likely due to State Farm getting caught wrong-way on interest rate risk. They probably have a ton of agency securities with 2-3% coupons that had their fair values wrecked by the increase in rates.

Vast majority of California homes have no exposure to wildfire risk. The only people exposed are rich folks up in the grassland hills or rural areas where 2nd homes are concentrated. Vast majority of people live in concrete sprawl of LA, San Diego, or the Bay Area with pretty much no wildfire risk at all. State Farm could easily tailor its availability and charge the appropriate premia to any homes adjacent to woodlands or grasslands that are fire prone. No one living in Riverside, Long Beach, Santa Monica, or Daly City is at risk of a wildfire. And those four cities right there probably cover 350,000 dwelling structures.

State Farm ain't telling the whole story.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina.
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc.
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims.

I'm going to agree that this is likely due to State Farm getting caught wrong-way on interest rate risk. They probably have a ton of agency securities with 2-3% coupons that had their fair values wrecked by the increase in rates.

Vast majority of California homes have no exposure to wildfire risk. The only people exposed are rich folks up in the grassland hills or rural areas where 2nd homes are concentrated. Vast majority of people live in concrete sprawl of LA, San Diego, or the Bay Area with pretty much no wildfire risk at all. State Farm could easily tailor its availability and charge the appropriate premia to any homes adjacent to woodlands or grasslands that are fire prone. No one living in Riverside, Long Beach, Santa Monica, or Daly City is at risk of a wildfire. And those four cities right there probably cover 350,000 dwelling structures.

State Farm ain't telling the whole story.

Reinsurance rates matter more than anything else and those are still going up. Unless those rates stabilize, nothing else really matters.