Insurance companies are fleeing the South in search of higher profits – Liberation News

I never thought I would become an owner, but I have been for two years. I was excited to get out of horrible apartments and high rents. Not that I was saving money, but I thought I was creating more stability and getting perks like an extra bedroom for guests, a nice kitchen, a very small outdoor space, and a covered place to park the car.

However, in January of this year my home insurance went up by $100 and I was frantically calling insurance companies everywhere trying to get a better quote. I didn’t realize I wasn’t the only one on the phone.

In 2021, in Florida alone, 55,000 people were excluded from their home insurance policies. Now, a year later, the crisis is getting worse. This time last year, The Florida Sun Sentinel published an article titled, “Insurance policy abandonment leaves Florida homeowners scrambling.”

In Louisiana, more than 15 insurance companies have left the state recently. People all over the Gulf Coast are frantic, then realize they are not alone and help each other, trying to find the insurance that is required as a condition of having a mortgage.

What is home insurance anyway? The idea is that every homeowner pays insurance premiums, but most people will never need the insurance. For these people, it only provides peace of mind. Of course, some people need insurance to cover disasters such as fire, flood, or trees falling on their roofs. Sounds good: everyone is paying into a system to take care of the much smaller number of people who will actually need emergency help.

However, insurance companies are for-profit entities. Although they often provide essential services to replace or repair damaged homes and furniture, they are essentially engaged in a form of gambling. The insurance company is betting that the cost of settling claims will be less than the amount of premiums collected . This means companies have an incentive to deny or reduce claims in order to protect profits.

Right now, it’s even hard to find a business to sell an insurance policy in Louisiana and other southern states, as businesses pull back. Why? Climate change is increasing the intensity of storms that were already an annual problem in many southern states. Thus, more and more homeowners suffer catastrophic damage and require large payments. Companies are now responding by abandoning these markets, leaving homeowners with no one to sell them an insurance policy.

I actually thought I was making a good decision with buying the house, even though the bank really owns it, because I have a fixed income. I also bought a house in a non-flood zone, which is only 3% of properties in Louisiana, which seems to have helped me with insurance issues.

What I thought was my least concern – getting insurance – has become my biggest nightmare, but I’m not the only one. This impacts other working and poor people across the South.

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I spoke with several of my neighbors and friends in the area to see how they are coping with this crisis.

Bradley Digerolamo of Lake View wrote in response to discussion of this topic on the Next Door app:

“I had State Farm for 25 years. It wasn’t a bad price but there was a fight every time there was damage. During this last hurricane, I had to bring in the insurance commissioner and start the process of a lawsuit. I currently know 4 other people who are currently pursuing them and at least 20 who eventually gave up but gave up on them. I finally dropped them too. A decent rate isn’t worth it if you know they’ll never pay.

“My premiums were $1,000 less than Liberty Mutual for homeowners with the same coverage. These companies take advantage of Louisiana residents and abandon them after a year,” said Asimenye Shafer, a teacher at the Baton Rouge school.

Felicia, who lives near me in Baton Rouge, told me, “We got a phone call and a letter telling us to start looking for a new business. But what I understand is that in the last three months the home insurance went up $400 and now they’re going bankrupt, that’s $1,200 more we lost.

“Hopefully everyone can get what they need,” Felicia concluded.

“I think if I told you what I truly believe, I would end up in federal prison,” one FEMA worker told me of her disgust at the government’s grossly inadequate response to this crisis.

Despite being a busy mom, this FEMA entrepreneur volunteers her time to help others. She went to great lengths to intervene when one of her clients’ insurance was canceled, taking pictures and researching insurance companies that would be responsive.

A veteran commercial insurance underwriter, who chose to remain anonymous for job security reasons, said:

“Like any free market, everyone takes advantage of any means possible for personal gain. The lawyers know this is a catastrophic condition and the insurance companies won’t contest the claims, it’s costing them too much, so the insurance companies are settling with the lawyers. So now they want to avoid those costs by getting out of those areas. There is a virtual exodus of insurance companies in the South.

This is a contradiction that has no resolution under capitalism: we will never feel safe in such a system. Whether you’re going through a storm or getting sick, you should be taken care of. In socialist countries like Cuba, instead of a for-profit home insurance industry, the government has a comprehensive safety plan for natural disasters and rebuilds damaged homes as quickly as possible; Cuba’s healthcare system is world famous and provided free of charge to all Cubans.

With the help of my community here in Baton Rouge, I was able to find an insurance broker, so my payments would stay relatively the same. It makes safe housing a reality for me, at least for a few more months. That is, until we have socialism.

Kristan F. Talley