How Hurricanes Beat the Insurance Companies
- Author Marcus Stalder
- Published March 7, 2011
- Word count 530
Have you ever tried to predict a hurricane? Ever watched the meteorologists on television try? It's frustrating at best and completely insanely impossible at worst.
Yet insurance providers have to try. Otherwise, they wouldn't know how much to charge for hurricane insurance.
Insurance Companies Use Computer Models to Try to Predict Hurricanes
In order to try to get a useable number so that they can decide 1) if they should provide you with hurricane coverage, and 2) how much they should charge you for hurricane coverage, insurers use extremely complex computer models. These models feed off of scientifically gathered data about weather systems, climate patterns, and ocean currents.
Since literally trillions of dollars are riding on it, you'd bet these computer models would be pretty accurate, huh?
You'd be wrong.
Computer models are almost never accurate
There are several problems with the way insurers do things:
-
The data fed into the computer is incomplete and inaccurate
-
Scientists only have 50 years of history to use
-
The models are best at spitting out a range, not a single number
-
Insurers are not objective when choosing models
Insurers are concerned about 1 thing only: profit. They need a single number, not a range. When they are deciding on a model to choose, insurers tend to choose the model that gives them the highest number. Why? The higher the number, the higher the premiums they charge you, and the higher their profits are.
Garbage In, Gospel Out
This whole thing has become a kind of crisis because of something called the "garbage in, gospel out" attitude.
Insurers feed the computer models with bad data, and they put their complete trust in the number that comes out. It's a recipe for financial disaster.
Who ends up paying for it? The insurance executives? Of course not. It's you, the consumer.
To make it worse, 90% of insurance companies use the same 3 computer models. This means that the consequences are widespread and deep-seeded.
Why don't state governments regulate this better?
Offshore ownership is the answer. The company that gives you your hurricane insurance policy does not actually own the risk. They sell it to a company operating outside of the United States. This makes it impossible for states to regulate your hurricane insurance effectively.
On top of that, most hurricane states tend to be governed by conservative politicians. They generally aren't very strong on insurance industry regulation. This is especially true in Florida, where only one official has any say over how hurricane insurance is regulated.
These offshore firms play a big part in determining the prices.
Hurricanes are just the start
Across the US, so called "catastrophe models" like this are being used for new home insurance factors:
-
human greed
-
government failings
-
tampering
The biggest problem is that there are no good alternatives to using these computer models. That's why they are also used for:
-
Tornados
-
Tsunamis
-
Earthquakes
How you can save on Hurricane Insurance
To get your home insurance premiums down, make sure your home is hurricane-proof. Install storm glass and reinforce weak areas of the house.
Better yet, move away from coastal areas where hurricane coverage for home insurance is so expensive.
With over 10 years working as a professional journalist Marcus Stalder has contributed many interesting materials to [http://www.myhomeinsuranceplace.com/hurricanes-damage-home-insurance-rates.html](http://www.myhomeinsuranceplace.com/hurricanes-damage-home-insurance-rates.html) that many users around the globe regard as a benchmark for professional writing.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- The Transformative Power of Yamaigel’s Certified Gel Eye Masks
- Checking account with cell phone protection!
- Keeping Cool This Summer: Air Conditioning Installation Services in Milwaukee
- A DIY Guide to Fixing Your Garage Door (with a Call to Garage Door Magnolia When All Else Fails!)
- Can a Bent Garage Door Be Bent Back into Shape? Don't Panic, Call Kiki Garage Door!
- How Can I Tell If My Garage Door Opener Sensor Is Bad?
- Maximizing Profitability: The Economics Behind Customizable Design Assets
- Exploring the Hidden Gems of Si Racha, Thailand
- DIY vs. Professional Movers: Pros and Cons in 2024
- MK Web Celebrates Top Position in Bourne's Premier Web Design Rankings
- The Road to Sobriety: Understanding Substance Use Disorders
- MotorKote Ultimate 40/60 Synthetic Hyper Mix 5W-30
- Exploring Denver on a Dime: A Frugal Travel Guide
- Top 10 Ways Production Scheduling in Business Central Transforms Manufacturing
- Strength Training and it's Incredible Benefits for Fat Burning
- Enhancing Home Security with Aluminum Shutters: A Focus on Weatherwell Elite
- 5 Easy Ways to Make Oral Hygiene Fun for the Whole Family
- Transforming Plastic Extrusion Machines into Recycling Powerhouses
- Unraveling the Potential of Plastic Extrusion Machines
- The Rise of Plastic Recycling Machines: A Step Towards Sustainability
- Strawberry Cheesecake Ice Cream: OMG! Unreal!
- The Advantages of Using Professional Home Cleaners in Ilford
- 8 Compelling Reasons to Hire Professional Home Cleaners
- The 12 Steps Narcotics Anonymous Program To Recovery
- Send Money to Tanzania: Effortless Transfers with SafariRemit
- Stylish Savings: 10 Frugal Ways to Stay Fashionable in 2024
- Fly Cheap With FlightPapa To Any City
- How Collaborating with a Software Development Company Can Propel Your Business Forward
- A Comprehensive Guide to Choosing the Best Hair Transplant Method
- 15 Frugal Tips for a Memorable Wedding Day