During the 1990's I had the pleasure of living in Spain. There they have National Health Care and from a broken toe to a heart transplant you are covered and pay practically nothing for treatment. No worries about losing everything due to any type of illness. You could also get private health insurance policies. These were more for convenience and could get you a private room, save you time, etc. Their cost was $50 per month! Why so low? Because they did not cover catastrophic health issues. If you had a broken leg, hernia, pregnancy, or other every day problem, they would cover it. If you needed cancer treatment or a kidney tranplant, for examples, the National Health Care would take over. That kept premiums very low. Bet you cannot find a private health insurance company in the US for just $50 per month.
Now let's swing over to property insurance. Here in Florida and around the country our rates are going higher and higher while service is dropping like a stone. Add to that the fact that companies are dropping customers left-and-right, and you have some serious problems with our insurance system in this country.
Many state governments, US Senators & Representatives, civic groups, trade associations, city governments, and the National Association of Insurance Commissioners have been calling for a National Catastrophe Fund that would be tapped when a disaster took place somewhere in our country. This would allow insurance companies to lower rates since severe situations would be at least partially covered money from this fund. As it is, when a hurricane hits a state, the companies try to recover the funds they pay out by raising the rates of customers, usually in the very state where the disaster took place and whose residents are least able to handle rate increases.
The federal fund would spread the risk over the greatest pool possible, that being the entire country. It is unlikely that major disasters would hit all parts of the country at the same time. Thus this year the fund could help pay costs for a hurricane in Texas, next year an earthquake in California, and the following year wildfires in the Dakotas. That is how insurance works. You spread the risk as wide as you can so that the few people who have to make claims are covered by the premiums of the majority that get through the year with no problems.
Sounds like a pretty good idea to me. So what is the hold-up? The stiffest opposition comes from the Bush administration. A spokesman said a fund like this would "interfere with well-functioning private insurance markets". What are those? They sure aren't functioning very well in Florida, unless you count their abiliity to raise rates or run for the border. The administration also said the fund would push out private insurers and encourage people to build in earthquake and hurricane prone areas, and would put more people in harms way. Well, charge them a higher premium then.
When hearing the spokesmans remarks, Rep. Ginny Brown Waite - Florida said if someone from the administration came to her district and said those things she did not think they would "get out of the room alive." She went on to ask if the administration did not think people in Florida were paying enough for insurance already? I pay over $1,700 for a 700 sq ft concrete block home valued at $100,000. I pay enough I can assure you.
Could it be that some people are either not seeing things as they really are? Or could it be that they have some friends in the insurance sector who do not favor any tampering with their free-for-all approach? In any case a catastrophic fund seems a long way away.
If you feel strongly about this issue, I suggest you not only contact your state representatives, but also your US Senators and Representatives. And do not leave out the White House. That seems to be our biggest obstacle at this point in time.
You can find your Florida representatives at: Florida Legislature
You can find your US Representative at: United States House of Representatives
You can find your US Senator at: US Senate
You can contact the White House at: The White House
This is an important issue for many current and future homeowners. Take the opportunity to let your ideas be heard. Remember, often the squeaky wheel does get the grease, and all of these government people are OUR employees. They are supposed to work for US!
John Elwell - REALTOR
Bill Nye Realty, Inc.
Licensed in Florida