Thursday, September 07, 2006

Property & Casualty Insurance Incentive For US States

Hi All,

Lately across many US States effected by hurricane property and casualty insurance companies that are pulling up stakes from renewing or writing new policies. Thus as a survival mechanism on their part they've headed to the hills instead of losing their shirts. Thus abandoning many policy holders or future ones to fend for themselves in disillusionment.

This has to be seriously mitigated and turned around in many southern and coastal US States. I've even heard that insurance companies in Rhode Island have become skiddish and have either shot up their rates or stopped from issuing new policies. We have across our nation have had this veil of false security lifted from us for either good or ill. Now creative solutions and incentives from State governments are needed.

Such measures may warrant that residential or commercial properties may not be able to insure the structure if they are located on or near a beach front community. Including island / isle keys off the mainland due to the high risk factor for the insurance industry. Those property areas in the future may only by for the brave or fool hardy. Which in turn may in a chain of events scare away future construction developments. If there is any insurance in those vicinities it may be just for residential furnishings or business inventories. This may prove more beneficial for mother nature allowing natural barrier sediment within inlets to replenish. So to accumulate by proving beneficial in certain natural barriers to be recreated. This is especially the case if some islands / isles that were once developed that are abandoned later on due to do a "no insurance zone".

My suggestion is to have US States cover the "Doughnut Hole Deductible" for the insurance industry and policy holder customers. The Doughnut Hole Deductible is the portion of a policy after the customer deductible has been paid in full. Then the State government pays a deductible amount in the middle value of the writtened policy. This will insure that the Insurance industry isn't as skiddish as before and indicates that the government will share in the burden. Instead of fully depending on a catastrophe fund until it is wiped out during repeative natural disaster events.

This will also remove to a degree some of the scare that a State government will become the insurer of last resort. Thus insuring that the insurance industry stays involved in writing new policies and honoring past policy customers with renewals.