Monday, April 18, 2005
On this day:

Mobile Register: Leave Coastal Insurance to the Free Market

Well stated. Intervention by the state into the market for high-risk property insurance, however well-intentioned, can only lead to undesirable consequences.
In the 1990s, Florida attempted to compel insurers to provide coverage [in catastrophe-prone areas]. The effort was counterproductive.

Due to the regulatory environment that virtually trapped a company by setting up extreme barriers on business decision-making, insurers were discouraged from entering the market. Consumers were left with fewer and more expensive choices.

On the other hand, Alabama's insurance market is competitive; and homeowners in Baldwin and Mobile counties are able to find private market options for insurance. To ensure that consumers continue to have these options, insurance companies must be able to make sound, prudent business decisions.

Insurance companies must be able to examine their individual circumstances, consider their level of exposure to catastrophe-prone areas, and determine if they are prepared to handle the risk.