Florida Insurance Industry in Flux

[73 Reds]

53 minutes ago, thepupil said:

sorry  if I'm not following; on which region/s of florida do you have a positive/negative view? 

I wouldn't invest in any coastal areas yet to be developed.  IMO the results will be disappointing.   I'd also shy away from partially developed coastal regions simply because the costs and risks don't warrant being there and ultimately this will affect investment performance.

[longterminvestor]

On 10/13/2024 at 6:00 PM, james22 said:

 

I have lived in Florida my whole life.  I am a 4th generation insurance agent in Florida.  These rubes above are unintelligently discussing a topic they "seem to be knowledgeable" just because they have a mic and video pointed in their general direction.  The "Winter is Coming" narrative is nice and I personally welcome it - allows for volatility in markets - which I enjoy.

 

The stats, loss estimate numbers are directionally correct.  Even still the basic understanding of the CAT Fund shows one of them does know how to operate chatGPT however the dystopian society inside the insurance market is far from correct and the lack of understanding regarding the topic discussed is laughable.  The term "value" is thrown around a few times with reckless abandon - and incorrectly used with reference to how insurance and mortgages cooperate post loss.  

 

A 30 year Fixed Mortgage, contrary to popular belief, is not an "American Entitlement" - neither is the kissing cousin to a fixed rate mortgage - a low priced super easy to procure insurance policy containing a giant red lever when pulled - money falls out of the bottom of the insurance machine endlessly to bail out those who don't really know what they actually own.  Both mortgages and insurance are financial marketplaces where government entities (both State & Federal) exist to facilitate risk transfer for the benefit of the mortgagor / policyholder. 

 

ATTENTION FINANCE BROS: When both the mortgage market and insurance market become "illiquid", the value of all assets which depend upon mortgage and insurance markets being super liquid, WILL GO DOWN.  Which is just fine with me.....actually I prefer it.  

Edited October 21 by longterminvestor

[james22]

You're probably right.

 

The OG thread had good criticisms in the comments:

 

 

 

 

[longterminvestor]

6 hours ago, james22 said:

You're probably right.

 

The OG thread had good criticisms in the comments:

 

 

 

 

 

 

-- there is $500B-$1T in real estate value on the FL coastline

ACCURATE, however that's MARKET VALUE, NOT INSURABLE VALUE

-- avg FL homeowner pays ~1% of home value in insurance

this is an unintelligent way to think from an insurance perspective

-- that 1% is based on a disaster event happening once every 100-200 years

speculation and unintelligent way to describe situation

-- however, due to a bunch of factors, hurricanes are becoming more frequent and more severe

hhhmmmm, now you are a meteorologist?  Thought you were a financial alchemist?

-- so the insurance math has changed dramatically: disaster events could happen every 20-30 years instead of 100-200

Good news for insurance market, they get to re-price every year vs a mortgage priced once every 30 yrs

-- because of this, flood insurance costs are skyrocketing, making it untenable for most people

Flood pricing is set by FEDERAL GOVERNMENT AND NEEDS CONGRESSIONAL APPROVAL 

-- so, the state of FL has stepped to subsidize flood insurance

FLORIDA GOV SUBSIDIZES WINDSTORM, NOT FLOOD.  ABOVE IS FALSE.  ALSO SEE BELOW HOW COMMENTS ARE NOW A RACE TO BOTTOM IN SPREADING FEAR / MISINFORMATION

-- however, due to the damage from helene and milton, this program is effectively bankrupt without subsidized flood insurance, we could see major economic and social issues, which

@friedberg describes:

"So if the value of your home dips by 25%, because everyone starts selling their homes, leaving Florida, or they can't get insurance..."

"... the people that live in Florida, most of them have their net worth tied up in their home, are going to see their personal net worth wiped out or cut in half."

"... there are so many people that have put their entire net worth into their home, the value of their home is written to a point that it no longer makes sense, given the frequency at which homes are going to get destroyed."

FREE MARKET, MOVE TO IOWA

[james22]

I thought the better criticisms:

 

1. There's no evidence hurricanes are increasing in frequency. 

 

2. Even if older homes need be replaced sometime over the next twenty years, they only need be replaced once. New homes aren't vulnerable.

 

3. Most of waterfront home's value is in the land. Replacing older waterfront homes is not as expensive as its value.

 

4. There's unlimited demand for waterfront homes.

 

 

[Gregmal]

2 hours ago, longterminvestor said:

 

 

-- there is $500B-$1T in real estate value on the FL coastline

ACCURATE, however that's MARKET VALUE, NOT INSURABLE VALUE

-- avg FL homeowner pays ~1% of home value in insurance

this is an unintelligent way to think from an insurance perspective

-- that 1% is based on a disaster event happening once every 100-200 years

speculation and unintelligent way to describe situation

-- however, due to a bunch of factors, hurricanes are becoming more frequent and more severe

hhhmmmm, now you are a meteorologist?  Thought you were a financial alchemist?

-- so the insurance math has changed dramatically: disaster events could happen every 20-30 years instead of 100-200

Good news for insurance market, they get to re-price every year vs a mortgage priced once every 30 yrs

-- because of this, flood insurance costs are skyrocketing, making it untenable for most people

Flood pricing is set by FEDERAL GOVERNMENT AND NEEDS CONGRESSIONAL APPROVAL 

-- so, the state of FL has stepped to subsidize flood insurance

FLORIDA GOV SUBSIDIZES WINDSTORM, NOT FLOOD.  ABOVE IS FALSE.  ALSO SEE BELOW HOW COMMENTS ARE NOW A RACE TO BOTTOM IN SPREADING FEAR / MISINFORMATION

-- however, due to the damage from helene and milton, this program is effectively bankrupt without subsidized flood insurance, we could see major economic and social issues, which

@friedberg describes:

"So if the value of your home dips by 25%, because everyone starts selling their homes, leaving Florida, or they can't get insurance..."

"... the people that live in Florida, most of them have their net worth tied up in their home, are going to see their personal net worth wiped out or cut in half."

"... there are so many people that have put their entire net worth into their home, the value of their home is written to a point that it no longer makes sense, given the frequency at which homes are going to get destroyed."

FREE MARKET, MOVE TO IOWA

LOL this is why I often just give up on having the insurance debate with people. Every year we have one of these "everyones an expert" subjects come up. In 2020 they were all medical experts, 2021 virologists, 2022 inflation experts, 2023 economists/banking reserve experts, 2024 I guess they're insurance experts. Always fade the hysteria. 

Edited October 21 by Gregmal

[Pelagic]

Interesting read on a specific very high risk property on the beach in Sarasota, it's still there but more in the water than on land now post Milton. Article is from 2013 but has some rate breakdowns.

 

https://www.heraldtribune.com/story/news/2013/05/28/a-residence-of-extremes/29178399007/?fbclid=IwY2xjawGDZbhleHRuA2FlbQIxMQABHZR5dMS_qIoWaXYDD3DX4I8dE2uuW8-pfGq4WLm8jIufR0R7sgjxr9rrJw_aem_GpTTAgrFZc8bstQwvHEALg

[james22]

You can get insurance as long as the perfume of the premium exceeds the stench of the risk . . .

 

Poetry.