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(WTKR)   North Carolina's beachfront residents are shocked to learn that insurance companies don't like it when the Atlantic Ocean is your periodic houseguest   (wtkr.com) divider line 84
    More: Obvious, North Carolina, outer banks, insurance commissioners, beaches  
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6221 clicks; posted to Main » on 21 Feb 2014 at 10:34 AM (8 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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ZAZ [TotalFark]
2014-02-21 09:22:13 AM
The increase isn't specifically for the visiting ocean. That would be flood insurance, which is federally regulated.

I skimmed over the official notice of hearing and it looked a lot like the ritual fights over car insurance rates in Massachusetts. Massachusetts regulators set insurance rates from the 1970s until partial deregulation a few years ago. The insurance companies would ask for 10% because they were barely staying afloat. The Attorney General would ask for no increase because anything that costs urban voters money must be illegal. Usually the companies weren't broke and consumers could afford more. It's all a big, expensive game with lawyers and PR specialists.
 
2014-02-21 09:51:24 AM
Wait, North Carolina is now against letting private insurance companies control the market? Why so socialist, NC?
 
2014-02-21 09:53:07 AM
Ive been going to Duck and Coralla for years and it is crazy the boom of giant luxury expensive homes there the last 20 years.
 
2014-02-21 10:36:14 AM
And the ocean always seems to come to visit when it's on its period.
 
2014-02-21 10:36:51 AM
Socialism is only for rich people.
 
2014-02-21 10:37:24 AM
I am surprised insurance companies will insure anything on the coast anymore, it is a losing bet.
 
2014-02-21 10:40:17 AM
Is it impossible to build a home that can be flooded without being destroyed? these guys build these beach front homes with the same materials as some guy living 200 miles inland.
 
2014-02-21 10:41:17 AM
Luckily state law mandates that water level never rises[1], so these home owners are in no danger.  I don't see what all the fuss is about.
 
2014-02-21 10:44:27 AM
OBX
 
2014-02-21 10:44:32 AM
Beachfront residents: "Wah, insurance just went up for my particleboard palace. I want people in Chapel Hill and Charlotte to subsidize my insurance!"

People in Chapel Hill and Charlotte: "OK, but can I park in your driveway when I come to the beach?"

Beachfront residents: "Fark you, that's private property."
 
2014-02-21 10:46:03 AM
Good job that the NC house passed the laws blocking considering global warming science and rising water levels when considering rules for building at the coast. That let us block the requirements of building houses at an higher height to avoid the flooding.

Thanks Pat McElraft and company for your great foresight in passing the law.
 
2014-02-21 10:48:02 AM

Headso: Is it impossible to build a home that can be flooded without being destroyed? these guys build these beach front homes with the same materials as some guy living 200 miles inland.


Yep.

2.bp.blogspot.com


www.texasgulfcoastonline.com
 
2014-02-21 10:48:12 AM
Sell your house now while there's still some deniers to buy it.

I have a feeling, and I am not claiming anything as fact, that the next few years are going to get a bit weather crazy and the denier is going to become a dying breed.

So sell to them now.
 
2014-02-21 10:48:16 AM

Bareefer Obonghit: Wait, North Carolina is now against letting private insurance companies control the market? Why so socialist, NC?


It's only socialism when people in the North East do it.
 
2014-02-21 10:48:56 AM

ZAZ: The increase isn't specifically for the visiting ocean. That would be flood insurance, which is federally regulated.


You're right, so this is probably for wind damage and other hazards.
Still, insuring homes like these requires a really diversified risk pool, because you don't just lose one house like you would with a fire, you lose an entire town (or two, or three).  It's insane of the federal govt to subsidize these homes through low insurance rates; it just encourages further development and greater future disasters.
 
2014-02-21 10:49:16 AM

Maud Dib: Headso: Is it impossible to build a home that can be flooded without being destroyed? these guys build these beach front homes with the same materials as some guy living 200 miles inland.

Yep.

[2.bp.blogspot.com image 500x333]


[www.texasgulfcoastonline.com image 650x352]


That's awesome.
 
2014-02-21 10:49:40 AM
They need to learn to be bootstrappy and quit being all socialism and making Real Americans pay for their disasters!
 
2014-02-21 10:49:58 AM
I realize from historical and cultural standpoints it's spitting into the wind, but I've never understood why people continue to build on barrier islands.
 
2014-02-21 10:50:36 AM
They want the rest of us to subsidize their living on the edge of a rising ocean. Sorry, but I'm sick of my HOI going up every year because of the billions of dollars lost because of beach homeowners.
 
2014-02-21 10:51:07 AM

Maud Dib: Headso: Is it impossible to build a home that can be flooded without being destroyed? these guys build these beach front homes with the same materials as some guy living 200 miles inland.


Yep.


Makes for a great private beach, but the cleanup costs are killer.
 
2014-02-21 10:51:16 AM

Headso: Is it impossible to build a home that can be flooded without being destroyed? these guys build these beach front homes with the same materials as some guy living 200 miles inland.


Concrete stilt homes are the norm for new construction on the beaches in Pinellas.  Parking under the structure, living space starts 12 feet up or so.  There may even be a law mandating it, too lazy to look it up.
 
2014-02-21 10:51:55 AM

C0rf: I realize from historical and cultural standpoints it's spitting into the wind, but I've never understood why people continue to build on barrier islands.


Really?  Nice view, good beach, and cheap insurance.  Plus you get to redecorate your entire yard periodically.
 
2014-02-21 10:52:47 AM
img.fark.net

Soon...
 
2014-02-21 10:53:32 AM

Farking Canuck: Sell your house now while there's still some deniers to buy it.

I have a feeling, and I am not claiming anything as fact, that the next few years are going to get a bit weather crazy and the denier is going to become a dying breed.

So sell to them now.


Since we've been in a 50-year lull in really severe weather, I'd bet you're right, regardless of your stand on climate change.
 
2014-02-21 10:54:27 AM
I used to work for a company that did homeowners insurance in Florida (which gets hit by about 40% of Atlantic hurricanes). In Florida, they restrict how much you can charge in insurance premium to people. What this means is that if you live in Jacksonville or Orlando, you're subsidizing the insurance for someone who lives in Miami or Naples.  Because it's totally fair for someone who lives in the hellhole of Jacksonville to help pay for someone else to live in Naples.

In addition, you have a lot of people who choose high deductible hurricane insurance plans - a 10% deductible isn't unheard of.  So, if your $200,000 house gets hit by a hurricane, you have to pay the first $20k out of pocket.  People think - if a hurricane hits my house, whatever, it's going to destroy it anyway, right?  Then they see a hurricane come along, rip off their roof and flatten their gazebo, do $17,000 worth of damage and somehow have to magic that amount of money up (people who can't afford anything other than a 10% deductible tend to be the people who don't have tens of thousands of dollars laying around in savings).

Also, my personal pet peeve -- we're subsidizing people living in dangerous places.  We're paying money so that people can live in the parts of New Orleans that is under sea level, can live in the crappy areas of Miami that will flood when a hurricane comes through, etc.  We're spending money as a society to put people in danger.  That really pisses me off.
 
2014-02-21 10:55:37 AM

OldManDownDRoad: Beachfront residents: "Wah, insurance just went up for my particleboard palace. I want people in Chapel Hill and Charlotte to subsidize my insurance!"

People in Chapel Hill and Charlotte: "OK, but can I park in your driveway when I come to the beach?"

Beachfront residents: "Fark you, that's private property."


As a (once) longtime resident of NC and frequent visitor of the outer banks, fark em.

Those islands are farking temporary. Don't like it? Move.
 
2014-02-21 10:57:23 AM

ZAZ: That would be flood insurance, which is federally regulated


FEMA flood insurance rates went through the roof following Katrina, and have also taken a hit from Sandy.  Anyone holding a mortgage in a FEMA flood zone needs FEMA flood insurance, and they're finally starting to price it correctly.
 
2014-02-21 11:01:35 AM
I also don't like the period house guest.
 
2014-02-21 11:03:42 AM

ph0rk: Don't like it? Move.


Most of them don't even live there.  The beach houses are mostly for renting out.
 
2014-02-21 11:04:00 AM
It's not just the coast the insurance companies want to increase home insurance in the state by an average of 25%. This is after the asked for a 17% rise a few years ago and got a 7% rise. They want to raise rates in wake county by something like 30%.
It already cost more to insure on the coast and the companies want to increase that more expensive price by 35%.
It's bullshiat basically.
 
2014-02-21 11:05:26 AM
I'm reminded of a conference call I sat in on for a client... Years ago I was on an investor call for an insurance company that did not do business in Florida. The analysts on the call were enamored with the income possibility of this insurance group entering the Florida market and couldn't understand why the company wasn't interested.

After multiple questions about the decision to stay away from that market, the COO finally spoke up and said something to the effect of "Go look at a map... See how Florida sticks way out in the ocean?  Every so often Mother Nature and that ocean wipe out everything on the land.  Somebody ends up paying for that, and it's not going to be us."

That was the end of that line of questioning.  If memory serves, there was a bad hurricane not too much later that hit insurance companies hard.  Never heard the topic come up again in all the years I worked with that company.
 
2014-02-21 11:06:49 AM

ikanreed: ph0rk: Don't like it? Move.

Most of them don't even live there.  The beach houses are mostly for renting out.


Then fark them twice.
 
2014-02-21 11:08:59 AM

meanmutton: I used to work for a company that did homeowners insurance in Florida (which gets hit by about 40% of Atlantic hurricanes). In Florida, they restrict how much you can charge in insurance premium to people. What this means is that if you live in Jacksonville or Orlando, you're subsidizing the insurance for someone who lives in Miami or Naples.  Because it's totally fair for someone who lives in the hellhole of Jacksonville to help pay for someone else to live in Naples.

In addition, you have a lot of people who choose high deductible hurricane insurance plans - a 10% deductible isn't unheard of.  So, if your $200,000 house gets hit by a hurricane, you have to pay the first $20k out of pocket.  People think - if a hurricane hits my house, whatever, it's going to destroy it anyway, right?  Then they see a hurricane come along, rip off their roof and flatten their gazebo, do $17,000 worth of damage and somehow have to magic that amount of money up (people who can't afford anything other than a 10% deductible tend to be the people who don't have tens of thousands of dollars laying around in savings).

Also, my personal pet peeve -- we're subsidizing people living in dangerous places.  We're paying money so that people can live in the parts of New Orleans that is under sea level, can live in the crappy areas of Miami that will flood when a hurricane comes through, etc.  We're spending money as a society to put people in danger.  That really pisses me off.


The flood insurance fiasco here is going to wipe out the real estate market in certain areas. The Federal subsidies are set to expire with rates going from a thousand to TEN THOUSAND dollars in some cases...
 
2014-02-21 11:12:17 AM
Don't most folks down there not "believe" that climate change exists? Therefore, the reality of the ocean rising can't be 'true' - I mean, they don't "believe" it. Plus, they're every bit as qualified to judge scientific data as 99% of actual climate scientists are. Therefore, this insurance policy is an infringement on their first amendment rights to "believe" in what they want to be true vs. reality, and furthermore and such as.
 
2014-02-21 11:12:47 AM
Federal flood insurance has gone up to match the threat and the cost. The insurance on a tidy 1000 sq ft beach house of 1960 isn't going to be sufficient to cover a 4000 sq ft, 8 bedroom monster of the present day. It behooves people to visit the Edison-Ford compound in Ft. Myers, Florida when they're thinking of investing in beach property. Two of the richest men of their day and they had very modest cottages for vacation homes. Even with relatives, friends, and servants with them. A little foresight and taste and a 2000 sq ft would serve almost everyone but the Duggars.

We aren't in a 50 year lull in severe Atlantic hurricanes. (There was a ~30 year decline.) The number of severe storms over the last 15 years match those of 50-60 years ago. The number of non-severe storms has risen to historic highs in recent years. Atlantic storms are strange beasts with a complicated etiology so past performance is no guarantee of future returns. As they say.  If we had the number of severe storms as we experienced in 2005 we'd have to fold up shop for the Gulf Coast and S. Florida.

www.worldclimatereport.com
 
2014-02-21 11:17:16 AM
Getting a kick?   I live in one of the coastal counties, but not on the beach (can't afford to build a house on sand). Double whammy is I got my new tax evaluation yesterday...and they hiked that about 20%. Homes are being built at a record rate here and "used" homes are sitting unsold for long periods. Insurance company pulled out and kicked me in the state pool because the county has a beach front. Because they are building mini-mansions on a sand bar, those of us on dry land get penalized. The outer island here got cut into three pieces the last big storm. The state put small bridges in those spots when they rebuilt the road. Now they are building houses in the dry channel between the bridges and the ocean. Yep, those are gone and will have to be paid for the next big storm.
 
2014-02-21 11:19:25 AM
 I lived on the border of the NC/SC coast for a while and many of my clients were property management companies.  The folks who own these homes can afford the insurance hike; many of them make enough in rents during the May-August season to cover the mortgage and management fees for the entire year, along with a healthy profit.  Generally speaking, the only dwellings on the coast are vacation homes and investment properties (rentals) for the wealthy, with a sprinkling of family homes bought cheap decades ago by the foresighted before all the infrastructure came in and the land was going for a few hundred dollars an acre.  Almost nobody lives in these homes year-round, and the closest affordable housing for the locals starts about a mile inland.
 
2014-02-21 11:23:51 AM
Doesn't seem to bother insurers in Oklahoma much ..

cdn2-b.examiner.com

... so I'd hazard a guess this is another of those "we have to Save The Beaches" enviro-nazi plans ...
 
2014-02-21 11:26:06 AM

Clemkadidlefark: Doesn't seem to bother insurers in Oklahoma much ..

[cdn2-b.examiner.com image 525x350]

... so I'd hazard a guess this is another of those "we have to Save The Beaches" enviro-nazi plans ...


Environmentalists are all about artificially modifying the land...
 
2014-02-21 11:27:55 AM
As a frequent visitor to OBX (going again this summer) and as a person who flagrantly violated the law while scattering my mother's ashes off the the Hatteras lighthouse, I fully support charging the homeowners the appropriate amount in insurance. Capitalism only works if you let it. Prices will go up and maybe there will be fewer people going out there and they might settle for a smaller yet better built vacation house.
 
2014-02-21 11:31:11 AM
Why the sudden "need" for a 20% or more rate hike?  Insurance companies are large professional businesses with actuarial tables and historical records.  Did they JUST discover that coastal property on the Atlantic shore down there occasionally gets beat down by nature?  Did home values just jump that much in a single year?  To paraphrase Claude Raines in Casablanca- "I am SHOCKED to find there are hurricanes in this establishment."

/insurance in high risk areas should be expensive, but people who pay it still shouldn't get screwed either
 
2014-02-21 11:32:06 AM

madgonad: As a frequent visitor to OBX (going again this summer) and as a person who flagrantly violated the law while scattering my mother's ashes off the the Hatteras lighthouse, I fully support charging the homeowners the appropriate amount in insurance. Capitalism only works if you let it. Prices will go up and maybe there will be fewer people going out there and they might settle for a smaller yet better built vacation house.


Point of order: what are black markets?
 
2014-02-21 11:34:08 AM

Clemkadidlefark: Doesn't seem to bother insurers in Oklahoma much ..

[cdn2-b.examiner.com image 525x350]

... so I'd hazard a guess this is another of those "we have to Save The Beaches" enviro-nazi plans ...


It's interesting what people without actuary or risk analysis experience guess, when reading about insurance.
 
2014-02-21 11:35:02 AM
What is an elected insurance commissioner, Alex?
 
2014-02-21 11:37:54 AM

ikanreed: madgonad: As a frequent visitor to OBX (going again this summer) and as a person who flagrantly violated the law while scattering my mother's ashes off the the Hatteras lighthouse, I fully support charging the homeowners the appropriate amount in insurance. Capitalism only works if you let it. Prices will go up and maybe there will be fewer people going out there and they might settle for a smaller yet better built vacation house.

Point of order: what are black markets?


Black markets are how capitalism responds to legal changes that don't coincide with demand changes.
 
ZAZ [TotalFark]
2014-02-21 11:39:51 AM
DrunkWithImpotence

The answer to your question runs to hundreds or thousands of pages of regulatory filings. There is a statutory formula. On top of that is a regulatory formula, which likely conflicts with the statutory formula. Your team of accountants and lawyers can make the answer come out any way you like.

The goal is to guarantee the industry a chance at a profit without letting it abuse consumers who are required to buy its product.

Imagine you made a deal to write a screenplay in return for 5% of the movie's profit. Sounds simple, but watch Hollywood's accountants go to work.
 
2014-02-21 11:40:01 AM

madgonad: ikanreed: madgonad: As a frequent visitor to OBX (going again this summer) and as a person who flagrantly violated the law while scattering my mother's ashes off the the Hatteras lighthouse, I fully support charging the homeowners the appropriate amount in insurance. Capitalism only works if you let it. Prices will go up and maybe there will be fewer people going out there and they might settle for a smaller yet better built vacation house.

Point of order: what are black markets?

Black markets are how capitalism responds to legal changes that don't coincide with demand changes.


Clearly, all those laws restricting the sale of organs or twelve year olds are just another example of big government interfering with the invisible pedo hand of the market.
 
2014-02-21 11:40:04 AM

C0rf: I realize from historical and cultural standpoints it's spitting into the wind, but I've never understood why people continue to build on barrier islands.


Rich people problems .
 
2014-02-21 11:45:05 AM

DrunkWithImpotence: Why the sudden "need" for a 20% or more rate hike?  Insurance companies are large professional businesses with actuarial tables and historical records.  Did they JUST discover that coastal property on the Atlantic shore down there occasionally gets beat down by nature?  Did home values just jump that much in a single year?  To paraphrase Claude Raines in Casablanca- "I am SHOCKED to find there are hurricanes in this establishment."

/insurance in high risk areas should be expensive, but people who pay it still shouldn't get screwed either


Back in 2008 I was part of a small start-up that offered to help businesses understand climate risk to their properties, supply chains, etc. Those were still early days for the private sector to be acknowledging anything about climate change risk and we were never really able to gain traction with potential clients, so we folded up the tent and went on our way.

Among those sectors we targeted was insurance, because of course they should care about losses stemming from coastal storms, inland droughts, etc. Right? Except that they did. not. give. a. damn. They would only look ahead in the short term and felt confident that if they were overtaxed, their re-insurance company would cover them.

But the reinsurance companies were already shiatting bricks over the potential for large scale losses - so much so that they had entire internal divisions covering that risk as part of their catastrophic event modeling (and they didn't really need our services).

My guess is that the reinsurance companies are raising rates, and finally forcing the regular insurance companies to understand that they are vulnerable to not having all their losses covered... so the regular insurance companies are raising rates in leaps and bounds out of a bit of panic. Though it would not surprise me if they were asking for huge increases knowing that they'll have to settle for something less than the first figure quoted.
 
2014-02-21 11:45:32 AM
If you think it's bad in NC, check out Florida.  Rates increase every year by double digits or more.  Insurance companies set up firewalled corporations that do business only in Florida (see Allstate Floridian).  Then, they take their giant windfall profits from rate hikes and transfer it to their national division.  Next year they are broke again and need a rate increase.  Rinse and repeat.  When the hurricane does finally wipe things out, guess which insurance companies will be broke.
 
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