Prometheus 6

I guess what works for medical insurance works for home insurance too.

Insurers Shift Cost Burdens to Homeowners
By JOSEPH B. TREASTER

PALMETTO BAY, Fla. — Charles R. Williams stood near the glass sliding doors in his home south of Miami and pointed out parts of the ceiling and walls that had crumpled after Hurricane Andrew ripped open the roof 15 years ago.

The visible damage from that storm, one of the worst of the century, has largely disappeared. But Mr. Williams and homeowners nationwide are still feeling its effect in their pocketbooks.

The storm stunned insurance companies and, after paying out more than $22 billion in claims in inflation-adjusted dollars, they began rewriting policies to protect themselves as much as homeowners. They also developed computer programs intended to limit payouts on claims.

As a result, American homeowners are having to make do with much less coverage at steadily rising prices. In Miami and other places along the coast, insurance prices have skyrocketed, deepening the national slowdown in home sales.

The insurers say they have had to take defensive measures to stay in business and pay claims as operating costs have climbed. “If you’re being overly generous in covering risks and you’re not taking in sufficient premium, it doesn’t make business sense,” said Richard Ward, the chief executive of Lloyd’s of London, a large insurer of homes and businesses in the United States.

Yet some industry experts and consumer advocates say that efforts by the insurers to increase profits, after years of taking losses on home insurance, are shifting more of the burden of repairs and reconstruction to homeowners. The cutbacks in coverage, consumer advocates say, have contributed to the slow recovery of the Gulf Coast from Hurricane Katrina and will most likely hamper recovery from the recent wildfires in California.