Another “Free Market” Failure
Florida has a problem – insurance companies want to take your money, but they don’t want to pay claims. After losing court cases, they are pulling out of the Florida homeowners insurance market. The insurance companies talk about their losses from hurricanes, while posting record profits because they aren’t paying policyholders.
The private companies are trying to shift all of the losses to the Federal flood insurance program.
The Pensacola Beach Blogger has an article, “Smoke and Mirrors” Insurance, with more depth for Floridians, but it’s all part of a trend of public money used to help corporations through “privatization”, except the corporations make the profits while the taxpayers have all of the risk.
3 comments
Corporations only like the free market when they make a profit, but they want welfare when they lose money. I guess they don’t like the risk that capitalism entails. I have no problem with providing a safety net to corporations when they post a loss, but when they are making a profit, they don’t need it.
And insurance companies need to get a clue about what their business actually is. Someone pays into an insurance policy to provide themselves a safety net in the event a disaster. Now if insurance companies are losing money because hurricanes are becoming more frequent and intense due to global warming, then maybe they could increase premiums on customers whose carbon footprint is larger. They do give discounts to policyholders who install home security systems. Why not penalize policy holders who drive SUVs or use wood burning stoves for heat?
As I often say, when I grow up I want to be the CEO of an insurance company.
It’s a great protection racket; taking money in promise of protection but then refusing to provide that protection.
Phinky, corporations are a direct assault on capitalism because their purpose for existing is to limit their risk. Risk is the core regulator of the free market.
It would make sense if the insurance rates were calculated on actual risk, but the fools who build on flood plains and in the path of storm surge have the money to get governments to force companies to insure them. Houses, like cars, should be “totaled” at some point, and the location removed from the possibility of building. That would be an excellent way to reclaim some of our wetlands. Just as they sell the wrecked cars to junk yards, they could sell the wrecked properties to a conservancy.
Andante, when the insurance companies started reporting record profits for last year, people should have demanded explanations, but Congress would probably just figure out another way to protect the profits from taxes.