Premiums Accepted For Life, But Not For Property Insurance.
Huge CatClaims in 2004 and 2005 and large profits in 2006 have been the subjects of previous posts here. One possible approach to the combination of these twin facts involves two steps. Proponents see the two steps together as leading to even greater profits in the Insurance Industry.
The first step these persons see is to eliminate risk. This involves eliminating all CatClaims Coverage such as in Florida. Steps to eliminate CatClaims Coverage include cancellation of existing Homeowner's Policies where permitted, or issuing renewal Policies with what are in effect total CatClaims Exclusions where authorized, or not issuing Homeowner's and other First-Party Property Policies at all.
The second step is to divert resources from the eliminated risk to a different source of profit. Financial planning products for targeted prospects make a favored source for proponents of this method. Targeted prospects are not limited by geographical location under this plan. Prospects for financial planning products can live anywhere. So long as prospects possess the capacity for Life Insurance Policies or for such other financial products as annuities, they qualify as targets under this approach. Some label this second step as the much-attempted 'one-stop shopping' goal for selling Insurance. One of the major Insurance Companies reportedly chooses this double approach, reported for example in this Subscription Required Article by Liam Pleven, "Hurricane Losses Prompt Allstate to Pursue New Path" (Wall Street Journal, Friday, November 24, 2006, page A1, col. 1)(Subscription Required).
Consider something else, however. If a prospect for Life Insurance is not a prospect for CatClaims Coverage -- because she or he cannot obtain Homeowner's Insurance for example -- then that prospect cannot live just anywhere if they want to be protected against CatClaims. Businesses have their own issues obtaining CatClaims Coverage in Hurricane or Earthquake or other Catastrophe prone areas, but businesses cannot locate to any geographical area where employees are not available to staff that business. Florida is not alone in bracing for these effects although the double approach to Insurance Profits outlined above hits Florida very hard. Other States and their locales which will feel the effects of a double approach of the kind outlined in this post include the Gulf Coast -- Texas, Louisiana, Mississippi, Alabama, and Florida -- and also the Atlantic Coast from Florida north to Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, New Jersey, New York, Connecticut, and Rhode Island.
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
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