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http://www.nytimes.com/2007/11/23/business/23insure.html?ei=5088&en=877ac86cbcb34124&ex=1353474000&partner=rssnyt&emc=rss&pagewanted=allexcerpt: 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.
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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.
“You have a different mentality at the insurance companies,” said Andrew Barile, a consultant who has spent his life in the industry. “They no longer worry about the public service aspect. They’re concentrating on the bottom line.”
The bottom line has been good recently. The property insurance industry, including home, auto and commercial coverages, reported a record profit of $44 billion in 2005, even after paying $41 billion in damages from Katrina. The industry set another record for profit in 2006 at $64 billion. And as a second hurricane season is coming to an end without a hurricane hitting the coasts, 2007 is shaping up to be another lucrative year.
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