Why in the name of Gawd would the state of Maryland sit on its thumbs while State Farm Insurance declares it will no longer write homeowner policies on the Eastern Shore and counties bordering the Chesapeake Bay? According to the last I read, that's nearly half the state - 11 counties. Yes, it's a risk, but insurance is all about risk. It's a gamble, any way you look at it. And just like in casinos, the odds are in the house's favor.
Nevertheless, I'm pretty sure insurance companies operate under a public convenience business license, and that means they have to serve the public without regard to race, religion, sexual orientation or residence. We've seen this scam before, but then it was called redlining - when real estate companies and insurance companies engaged in policies to deny services to people of a certain skin tone. And when it was discovered, state and federal governments took exception to the policies and took corrective actions.
So what's different now? Same operation but the reasons are only slightly different. But it doesn't stand up to scrutiny this time either. If State Farm is allowed to get away with this, what's next? Refusing to write policies in the midwest because of the risk of tornado damage? refusing coverage in other states that border the oceans and Gulf of Mexico. What good is an insurance company that won't write policies.... How would it be providing a public convenience? And if it won't cover some areas of the state, then why should it be permitted to do business in the state at all?
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Actually, there is a bill in the General Assembly that addresses this to an extent (HB 620/SB 494).
I'm not crazy about insurance mandates myself, though.
State Farm is just looking to cover it's own toosh. I imagine they took a beating when Katrina hit, and they don't want to see it happen again.( the claims not the storm)Insurance companies loathe to admit it, but their policies are dictated to them by nothing more than glorified oddsmakers, and when the house loses changes must be made. So what are we supposed to do relocate to an area where we can be insured? Not likely. And after every major storm hits you always hear those who escaped the storm's fury whining about the people who built expensive homes right in harm's way and lost them. It is true that some of these people have made out rather well when disaster strikes. After all if the insurance companies refuse flood insurance or charge exorbitant rates for the same, the homeowner can purchase it from the state they live in or the Feds, neither of which need to be in the insurance business. Some folks are on their second, or third nice waterfront home, and are making out like bandits. Shouldn't insurance companies ponder a little over this? The entire Eastern Shore is termed by geologists to be an alluvial flood plain. I'm considering building a new home. I suppose if I can't insure it against storm damage and it is damaged in a storm I could deduct the damage as an uninsured loss. Not a lot of options here. By the way I don't live near the water.
I think the bigger concern, here, is whether this sets a prescedent for other insurers and re-insurers to decline coverage in coastal areas, especially in light of a population shift that has been going on for more than 10 years and is expected to continue for the forseeable future.
What might that mean for large-scale projects like construction loans, commercial building, attracting companies that offer good-paying jobs to the shore. In short, if companies can't get their physical plants insured at a reasonable cost, they won't come here.
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