Wednesday, February 4, 2009

Health Coverage for Natural Disasters

By Pin-Yu Liao

With the hurricane occurrences such as Katrina and Andrew, the insurance rate has been rising, and there has been less coverage available in the natural disaster region. When there was more demand for the insurance premiums on home, and insurers were unwilling to establish coverage in the risky area, resulting in less supply, the insurance prices inevitably increased. If the insurers endured the heavy burden, the insurers would share the cost with their consumers.
Michael Paisan, principle at Legg Mason Wood Walker asserted that reinsurers would increase the rate by 25-30 percent to the property-casualty companies. The issue remained since there was questions of the affordability of the prices for consumers and insurance companies cost to rescue the disasters.
The Insurance Information Institute investigated that in the year of 2007, the average homeowner's policy in the U.S. was $868, increased up to 46%, compared to its standard in 2002. Rising home values, higher repair costs and disaster losses contributed to the boost of the insurance premiums. The coastal areas are considered risky. As a result, the mid-US had prices reductions as opposed to the residents on the coastal areas.
In the beginning of 2007, Florida homeowners anticipated to save insurance cost based on a plan conceived by lawmakers. The plan included a rate cut of 40 percent to resist the rising cost that affected people spending. Republican Sen. Jeff Atwater, who came up with the bipartisan plan, said he was convinced that Citizens customers in disaster-prone areas of the state would experience 15-20 percent rate reduction. However, there should be a balance between the expenses of consumers and adequate cash flows for the insurance companies.

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