After the hurricane season of 2005, many insurance companies are pulling out of the homeowners insurance market. They claim that they cannot handle the amount of losses and that the government should take a bigger role in providing catastrophe insurance to people in these areas.
First, anyone is in a catastrophe area. California has earthquakes. The southeast has hurricanes. The midwest has tornados. The northeast has blizzards. Can anyone name a part of the country that would not be affected by a catastrophe? I cannot think of any places.
Second, the insurance companies are in the business of insuring risks. The basic model is this: they take your premium and when you have a claim, they pay for the claim. While they hold your money, they invest it. They make a profit for doing this.
Ask any insurance agent and they will tell you that people who file a few small claims either cannot get insurance or cannot get it at a reasonable price. However, the insurance companies are also saying that they cannot insure people who have one claim that is large. So, file a few small claims and they cannot help you, but if you file one big claim, they cannot help you either.
Oh, and in the meantime, they are making record profits. At least the gas industry does not complain while they are making profits. The insurance industry apparently only wants to insure people who have no claims. Of course, if you are never going to file a claim, insurance is a bit of a waste.
The insurance companies need to provide insurance. The government is not, and should not, be in the business of insuring people’s homes and businesses. If they cannot provide insurance across a broad spectrum of the company, then they should not be in business. With their record profits, they are just whining.