Kevin - would agree with you if the gov't didn't make it the problem of the govt (and therefore us, the people, who control it).
Insurers are not allowed to set rates they want to insure. Many leave markets only to be told they must remain in-state on some coverage lines or risk losing others.
Remember premiums are NOT intented to provide a buffer in event of loss. They are meant to fully insure the loss they are calculated to cover. And the means to calculate is to offer a product to many that will provide to only a few, at a price that ensures the math works.
Insurers are usually frighteningly accurate - actuaries are very good at this math. Where the process breaks down is when it is overly regulated - when the govt forces insurers to offer insurance at prices that are deemed acceptable.
Imagine the outcry if insurers came to homeowners in Monmouth after the storm and said "ok - market rates for all" and the premiums on all houses here jumped 10 fold? If someone making 65,000 gross per annum but who has lived in their house for generations was told they now must pay 8,000 per year for homeowners not 800? Making up the numbers but the point remains. The govt is in this because it has chosen to be in this.
Source: http://berkeley-nj.patch.com/articles/record-storm-threatens-flood-insurance-program
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