Along the Gulf Coast, many homeowners can no longer afford insurance on their homes. The Pensacola News Journal reported this morning that homeowners must "either move or cut household spending to make ends meet."
After the area was hit by Hurricane Ivan on Sept. 16, 2004, many along the coast have seen their insurance increase to $8,000 a year. Many insurance companies have fled the Gulf Coast, and consumers are lucky if they find anyone to insure them at all.
Personally, I don't live anywhere near the coast, and my homeowners insurance is $2400/ year.
Here are some findings from Gannett newspapers in Florida;
1) One-third of Florida voters say they cannot afford their home insurance bills and either must move or cut household spending to make ends meet.
2) Most of the cost increase reflects higher profit demands by U.S. and foreign insurers, not higher storm risk.
3) Foreign financial outfits go unregulated, and Florida legislators last year slipped new language into a law that grants insurers even bigger returns at policyholders' expense.
4) Florida voters overwhelmingly distrust the market, and even conservative Republicans urgently want government intervention, such as a rate-freeze.
5) But Gov. Jeb Bush and industry executives want to wait until after the election to consider changes. They hope voter fervor will subside and they can pursue more market-friendly, long-term solutions in the Capitol.
Yes, I'll bet they want to wait until after the election to do....nothing?
The 2006 hurricane season in Florida was a quite one. If hurricanes continue their cycle of the past 10 years, the State of Florida may be witnessing a deja致u of the Florida Land Bust of 1926.
In 1926, Palm Beach County was hit by a hurricane on September 16th with winds in excess of 125 miles per hour. 13,000 homes and farms were destroyed killing an estimated 400 people.
In 1928, Belle Glade was hit by a hurricane packing 135 mph winds that killed 2000 people from waters coming from Lake Okeechobee.
The housing market isn't really the issue. The real issue in Florida (and other areas) is insurance costs (if you can find a company that will insure you), and future hurricanes. Everyone knows the housing market is cyclical. If you wait long enough the market eventually recovers. Given the current hurricane cycle, it may be many years before a solution is found in Florida and along the coastal waters.
In Canada, the National Post said that many buyers in Florida are "walking away from US$80,000 deposits."
How many people do you know that can walk away from an $80,000-$120,000 deposit?
The Fed can lower interest rates to zero, and it would not fix the real estate problem in Florida, or along the Mississippi, Alabama, Louisiana, Texas, and the Eastern coastlines. The only way to fix the problem is if there were no future hurricanes, and insurance companies began to insure homes at a reasonable price.
Comments (1)
The insurance companies here in Louisiana were granted 30-45% increases in premimums pre-hurricane season in preparation for one of the most "horrible" seasons ever. Do you think we'll see a refund?!?!? I guess earnings will really be up after this season!
Posted by Bridget | October 26, 2006 2:22 PM
Posted on October 26, 2006 14:22