Should low risk pay to cover high risk? (in Debates)


AdminQBGentlemanLoser [{END}] March 19 2012 12:53 PM EDT

Take this item for an example;

http://uk.finance.yahoo.com/news/these-homes-are-about-to-become-worthless.html

Some 200,000 homes in the UK are set to become worthless, becuase;

because policyholders in low-risk areas are paying higher premiums to subsidise those living on flood plains. The big insurers who signed this agreement are unhappy that they remain 'on the hook' for large numbers of high-risk homes. In other words, they no longer want to bear such a high proportion of flood claims

The low risk are covering the high risk, so they lose out. And the high risk live off of thier contributions.

Should the low risk remove thier subsidies?

If the Insurance companies pull out and the effected properties become uninsurable, is the following a desirable outcome?

Without insurance, no mortgage lender would be willing to lend against these properties, leaving only cash buyers in the frame. However, taking such a big risk would be sheer madness, forcing cash-rich homebuyers and buy-to-let landlords to reject these properties and look elsewhere

So you no one will buy them, you can't sell them, the next time you get flooded by "an act of God/Nature" you lose your entire investment.

Is this the way it should work?

Sickone March 19 2012 1:03 PM EDT

If you're stupid enough to build on flood plains without budgeting for ample anti-flood measures you deserve what you get when your gamble fails.
So, yes, high-risk areas should pay radically higher premiums compared to low-risk areas, even so high as to be practically uninsureable (even if technically you could still buy a policy, it would be so expensive to not be worth purchasing).

Anything else means idiots will KEEP building on high-risk areas without doing anything to lower those risks and mooching off funds from low-risk areas to cover for their own incompetence when the expected and near-unavoidable eventually happens.

Just my opinion - let natural selection take care of things, stop protecting morons and gamblers.

AdminQBGentlemanLoser [{END}] March 19 2012 1:07 PM EDT

And what about those born into those homes? Who now own them, but find they are now unable to sell them, and are just waiting for a time bomb to make them homeless?

Sickone March 19 2012 1:11 PM EDT

The funny thing about high-risk areas is that they're generally high risk only when you take little or no preventive measures whatsoever.
Without the dykes, the whole of Netherlands would be a huge insane-risk area, but with them, well, they're pretty allright.

Those born in or inheriting places in high-risk areas should think about how to make their areas lower-risk. Then act on it. FAST.
Losing one's insurance due to being unable to pay for it sounds like the perfect jolt towards a great motivation to actually get the needed rules, regulations and budgets passed.

AdminTitan March 19 2012 2:05 PM EDT

You mean someone who inherited the house GL? Yeah they did a lot of work to earn that house huh? If they can't sell it that's unfortunate, I guess their parents should have thought more carefully.

I'd be pretty pissed if I had to pay higher car insurance because of some of other high risk drivers. (I mean I do have to b/c their terrible driving could cause them to get into an accident with me, and then possibly flee, leaving me to foot the bill, or rather my insurance, so the premiums are higher; but that doesn't really happen in the other situation.)

IPoop March 19 2012 2:28 PM EDT

the UK policy of building on flood plains sucks - and putting up flood barriers/dykes around properties can result in large legal battles (local house got told to take dsown theres).

.... but buying a house on a flood plain is as stupid as the building policy

... what did all idiots involved think?!?!


only answer is to protect them and move the flood problem to another area

AdminQBGentlemanLoser [{END}] March 19 2012 7:13 PM EDT

I'd be pretty pissed if I had to pay higher car insurance because of some of other high risk drivers.

Well, that's exactly what's happening now. In the name of equal opportunities of course. ;)

Women drivers over here used to have vastly cheaper car insurances, becuase they were lower risk than male drivers.

That inequality has now been stopped, and women will have to pay the same premiums as men.

As it should be?

How about age? Younger drivers with less exerience have to pay more. Sometimes so high the price of cover is vastly more than the car is worth itself.

Should this also be equalised? I mean, age discrimination is just as bad as sex discrimination. And you don't see many young fol driving the wrong way along a motorway. That usually reserved for more aging drivers.

AdminQBGentlemanLoser [{END}] March 19 2012 7:14 PM EDT

http://www.bbc.co.uk/news/business-12606610

Demigod March 19 2012 7:37 PM EDT

Wow, the Brits really screw with underwriters. I don't know why the government decided to manipulate actuarial figures, but it seems like the real problem is how the government gets its hand back out of the cookie jar.

Regardless, as an American, of course I feel that the cost of risk should be assumed by those who carry the risk.

AdminTitan March 19 2012 9:12 PM EDT

As it should be?
Yes

How about age? Younger drivers with less exerience have to pay more. Sometimes so high the price of cover is vastly more than the car is worth itself.

Should this also be equalised?
No

The whole idea of "discrimination" in insurance business is ridiculous. That's their job, that's how they make money.

Duke March 19 2012 11:23 PM EDT

The same is happening here with motorcycle they represent a huge risk and the cost is divide among the rest several others area would fall under that same risk dividing policy.

AdminQBGentlemanLoser [{END}] March 20 2012 4:45 AM EDT

The whole idea of "discrimination" in insurance business is ridiculous. That's their job, that's how they make money.

Yes

Why is one 'discrimination ok (age), and the other not (gender)?

If women drivers are statistically lower risk than thier male couterparts, shouldn't they have lower premiums?

Waldo March 20 2012 9:33 AM EDT

GL: Insurance is all about making money. You take all the factors into consideration & set a price so that you stack the odds in your favor (ie the house ALWAYS wins.) These factors are continually re-figured & pricing is adjusted accordingly (when it suits their needs.) Lowering the prems for female drivers would cause the insurance company to lose money they are already making, where-as making younger drivers pay more, well, makes them more money. Insurance companies will always do what is best for their profit margins.

The same rules apply to the housing. From a personal point of view it sucks & does not seem fair that these people are left holding the bag, however they did obtain (through purchase, inheritance, whatever) a home that was in a known flood plain. If I had acquired one of those residences I would have sold ASAP to avoid being caught in this kind of situation.

From a business view-point it makes perfect sense. There is no way I would insure a house I knew to be in a flood plain, its giving away money which is, of course, the anti-thesis of business.

The only real solution would be to change the circumstances. Building dykes and such to redirect or hold back floods is the only way that the insurance on these homes will decrease to (what the average person would consider) a reasonable rate. However the cost in such a venture would probably out-weigh the benefit.

This seems to me a case of trying to, as the saying goes, "close the barn door after the cows got out." A little foresight would have made this all a moot point

AdminTitan March 20 2012 10:20 AM EDT

Oh I answered wrong, I meant "No". Women should have to pay more. Or men should if the trend should change in the future.

AdminQBGentlemanLoser [{END}] March 20 2012 10:28 AM EDT

Lowering the prems for female drivers would cause the insurance company to lose money they are already making

The women already have, or rather had, the lower premiums. They are more being charged more.

And men are going to receive less from thier pensions.

AdminQBGentlemanLoser [{END}] March 20 2012 2:15 PM EDT

In addition, why lump people statistically?

Why do all men have to pay more than women for car insureance, when even though as a man I'm statiscially worse off, but unlike the women next to me, I've not ever had an accident, and she's had 2?

Shouldn't there be a standard cost, for everyone, that is then impacted by your *own* quality of driving?

Isn't this what the change to gender discrimination is trying to achieve?

Men and Women pay exactly the same for car insurance, and the worse you are personally, the higher you premium goes.

Is that not the best way?

Lochnivar March 20 2012 3:03 PM EDT

GL, the insurance companies are basically making bets...

Casinos offer different odds/payout at blackjack vs craps vs whatever because the starting odds are different. The casino in this case (insurance company) set the odds as best they can (or as easily as they can)...

It is like dealing 1 card in black jack and setting the betting prices afterwards. The women get a 2,3,4,5 and the men get 9,10,J,Q,K,A... the casino sees that it is more likely to pay out the men and raises the price to play. It isn't really fair but the house is covering it's odds and trying to make a buck... so it happens.
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