Will this bancrupt insurance companies?

[freemen2005]

consider that

of the areas affected by Katrina, Louisiana alone has a population of 4,496,334 (2003, census) http://quickfacts.census.gov/qfd/states/22000.html

that many people filing claims is incredible.

if assuming only 1/4 have insurance then (1,124,083.50) insurance claims will be filed. if on average each claim is for a housing, transport, material goods, health etc... per person we could expect avg. of $10K to $160K depending on income bracket.

so we can expect the insurance payouts(if any) to be between $10,000,000,000 and $180,000,000,000.

keep in mind that this is only for personal claims. We are counting insurance or costs of anything else, such as relief costs, rebuilding costs, rescue or aid...

can the insurance companies pay this? or perhaps Bush will sign some waiver and give them a free pass?

this is will go down as the costliest disaster within the nation and all for what? To save a few million so Bush could keep his nose in Iraq.

[vptpt]

1. I wonder what percentage of the people

affected had flood insurance. Flood insurance is still something you have to get separately from the regular homeowner's insurance, right?

(Renter here)

[MetaTrope]

2. As I recall, insurance companies got a huge federal handout after 9/11

Wouldn't surprise me to see it happen again, especially given Poppy's connections to Chubb and Kissinger's to AIG.

[vptpt]

3. Yeah, they won't let insurance companies suffer

The Bush Administration is really compassionate...to scam artists and the like.

[bushisanidiot]

4. Like U.S. power and oil companies, U.S. insurance companies have

made record profits during AWOL's administration..

they will use katrina as yet another excuse to raise their rates, but they will not go under by any means..

[Dogmudgeon]

5. No. They won't be the ones paying.

All insurance is re-insured. When an insurance company takes a loss, other companies pick up parts of the losses, thereby distributing the risk and loss.

It's fundamental to how insurance works.

Ultimately, though, the cost of insurance is raised, even by a little bit. The ratepayers are the ultimate re-insurers.

This may sound like a scam, until you consider what insurance really does -- it distributes risk. Insurance is the prototypical Capitalist form of Socialism. It works fairly well, and I'm sure it will work with respect to the losses incurred by the victims of Hurricane Bush ... I mean, Hurricane Katrina.

--p!

[vptpt]

6. What a racket

I hate insurance companies. I don't have a problem with the idea of insurance, but it's become such a rip-off.

[Dogmudgeon]

9. Good point!

Insurance is a tremendous innovation in economics.

BUT, insurance exclusively for the profit of business owners and investors isn't. The primary purpose of insurance, as I wrote, is to distribute risk and loss, and do it by mutual consent. Insurance companies tap into that need and take increasingly larger profits, which eventually makes insurance a losing game. Insurance company profits are, at the bottom of it, a form of taxation levied by private enterprise.

However, even when there is profit-taking, insurance does soften the blow to society. Sadly, since profits are taken out of the money paid by the poorest "insured class", it perpetuates the same old same-old.

--p!

[abluelady]

7. Don't Know if It's True

But I heard one reason for fires was homeowners were not allowed to buy flood insurance for certain areas. But if the house burned....
We lived in Louisiana once, not NO, and we HAD to buy flood insurance so I'm not sure there was any truth to the above.

[Whoa_Nelly]

8. It won't go bankrupt, however, there will possibly be increases

in flood insurance across the board for all, but the insurance industry is regulated, and there will be those who will oppose increases across the board for homeowner and car insurance based on the number of claims of one disaster.

Read for some reported info here:
http://money.cnn.com/2005/09/06/news/economy/flood_insurance_rates/

<snip>
NEW YORK (CNN/Money) - If homeowners were to take away one lesson from Hurricane Katrina's destruction, it's that flood insurance should be considered a necessity, not a luxury.

But with the National Flood Insurance Program expected to pay out billions of dollars in claims to cover the flood damage in Louisiana and other hard-hit states, homeowners that are suddenly interested in the extra protection may be forced to pay more for coverage.

<snip>
Robert Hartwig, chief economist at the Insurance Information Institute said that the NFIP could pay out over $3 billion as a result of Hurricane Katrina – its largest payout in history. While that may seem like a small number given estimates by catastrophe modeling firms for insured losses of between $14 billion $35 billion, keep in mind that most consumers don't purchase flood insurance. The costs for uninsured homeowners to cover flood damage will be significantly higher.

<snip>
Pasterick said while one storm can't be the sole cause of a rate increase, the organization will base its assessment on the average historical loss for the year, which is expected to be higher in the wake of Hurricane Katrina. He said that generally FEMA doesn't raise flood insurance rates by more than 10 percent a year but he added that the agency would have to judge an appropriate rate based on the risk to insured properties.

[AllegroRondo]

10. I heard before the hurricane hit

that insurance companies had (combined) about $400 Billion in reserves. They should be fine.