Florida’s Unique Insurance Risks
October 14, 2013
Florida’s Unique Insurance Risks
When it comes to deciding on what you need as far as insurance it can be a challenging process. What is a person who wants to get Florida insurance quotes supposed to do other than contact an online company like http://yourfloridainsurancequotes.com? Insurance is built on the fact that you will be covered during an accident, or illness. Since insurance companies keep the doors of their businesses open by helping people during tragic events, it stands to reason they want to define some of these tragedies. They want to limit the risk. There is a balance between being able to help your fellow man and being able to manage the larger pool of money. It isn’t an infinite amount and if everyone that walked through the door with a sniffle walked out with a $500 dollar check, then soon the pool would be tapped out. The next person that walked in with a totalled car and an extended hospital stay would be out of luck. The insurance agent gave away the last $500 dollars to the person with the cold. But how does the company figure out how much money they are going to pay on an event and to whom? It all boils down to the laws of probability applied to a group setting.
From Buttons to Medical Bills
John Graunt (1620-1674) was a London salesman who serviced the different textile companies by selling buttons, drapes and notions. This left him ample time and while he was teaching himself Latin and French another document caught his attention. It was the Bills of Mortality- a weekly census of the people who died from parish to parish. What Graunt did was to compile these data sets into tables, eventually compiling it into a small 85 page book (Livio, 2009). Although crude at the time, he was able to, for instance, catalogue sixty-three diseases and casualties listed in a table. He did more than simply catalogue. He was able to put down the average amount of births from parish to parish. He used the basics of statistics to document how different tragic events (death) may have been related to region, time of year, or gender.
This first attempt gathered the interest of scientists and developed into a full blown area of mathematics where a person can study to become an actuary. A modern actuary takes the more advanced steps in mathematics to develop risk assessments for the insurance industry. So with those risk assessments, the insurance companies then set rates, or premiums as to what they will insure. How much they pay depends on the risk and your premium.
Tampa Flooding and National Crisis
A case in point is the extreme rate hike in flood insurance that many Florida residents may have to pay due to the national crisis. Flood insurance has always been a specialized insurance that protects property owners from an “Act of God” -helping them cope with a catastrophe. The challenge is that the larger the event and more risk the insurance company takes, the more money their consumers have to put in. For instance, many states now require by law people to have car insurance. If someone calls for Florida insurance quotes on that one, they aren’t going to like the price, but at least they have many, many people paying into the pool of money that covers the accidents. This lowers the premiums for the entire group.
Flood insurance may be required by the lender of a house in a certain area, but that is by no means everyone in the state, such as is the case with people driving cars. On top of that, more and more disasters in the news, such as Hurricane Sandy, have given the actuaries a run for their money. Catastrophic flooding has been seen in places never before experienced, such as New York and New Jersey. The answer from the companies? Rate hikes could range from 10-20%. Put another way, people say that translates for Florida residents into rate hikes that make them pay three times the amount of people in New Jersey. (TampaBay Times)
Government and Gurneys
The ideas of insurance have come a long way since Mr. Graunt was simply cataloguing what diseases were prevalent in his area. A reality for anyone getting Florida insurance quotes is the fact they have to deal with the shifting landscape of health care. The first major push for health-care insurance in the United States was in the 1920’s at BaylorHospital in DallasTexas. They generated a pre-payment plan for people who would need their services. During the Depression this model became more popular among hospitals that wanted to generate more revenue. One other important element developed in the 1930’s. Because of the severe economic crisis welfare programs developed and the government stepped in to protect the most vulnerable. It wasn’t a new idea. Otto von Bismarck the Chancellor of Germany set up similar programs in the 1880’s even when Germany was not in a place of crisis.
When you fast forward that to this epoch it means that the beyond just risk assessment, insurance companies contend with government regulations. An elderly person calling for Florida insurance quotes has host of other questions to ask and get answered because of the regulations around Medicare and Medicaid. If a person ends up in a hospitalized situation, there are even tighter regulations around the types of medical equipment that may or may not be covered. To compound that, government officials are struggling over all the new changes and each chance directly impacts an elderly person’s ability to get the care they need.
Florida is the Sunshine state and it’s a great place to be. For many people trying to get insurance, they need to examine their own needs and find products that suit their lifestyle so they can keep basking in the sun.
Livio, M. (2009). Is God a Mathematician New York: NY, Simon and Schuster Inc.