After a property/casualty insurance underwriter career of 34 years, I would like to respond to a May 25 letter writer who wondered why insurers allow rebuilding in disaster zones and who feels the possible, unfair burden of increased insurance rates for all of us subsidizing those disasters.
First, there are just too many areas of possible disaster, and disasters are often many years apart for any particular location. California is subject to earthquakes; forest areas have forest fires; coastal areas have hurricanes, rivers flood; the central states have the most tornadoes. We can't all live in the lowest-risk location of the country!
Second, insurance rates are determined for each area code based on the risk of loss potential and historical losses. Areas with high earthquake risk may require earthquake insurance; flood areas, flood insurance; hurricane areas, wind surcharges, and so on. Every area earns its rates, and insurance companies are in a very competitive business to make a profit.
The concept of insurance is that the masses pay for the unfortunate loss of the few, but in practice the system recognizes areas prone to loss, and local premiums are tailored to higher risk of loss.
