Home Insurance - Will they actually pay?

montreal_guy

New member
Feb 12, 2007
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In many western countries insurance companies must keep quite a large percentage of policy payment revenue in a special account where the money can be withdrawn only to pay claims. Does anyone know what is the situation here in the D.R. I ask because if I take an insurance against an earthquake, I'm somewhat doubtful I'll actually get paid if there's a massive earthquake with massive damage all through-out Santo Domingo or Santiago. I'm guessing that at that point the insurance companies here will default on their payments as the amount of claims could overwhelm them.

Anyone have any facts?

:ermm:
 

Bryanell

Bronze
Aug 9, 2005
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In many western countries insurance companies must keep quite a large percentage of policy payment revenue in a special account where the money can be withdrawn only to pay claims. Does anyone know what is the situation here in the D.R. I ask because if I take an insurance against an earthquake, I'm somewhat doubtful I'll actually get paid if there's a massive earthquake with massive damage all through-out Santo Domingo or Santiago. I'm guessing that at that point the insurance companies here will default on their payments as the amount of claims could overwhelm them.

Anyone have any facts?

:ermm:

Very few insurance companies today actually have a large self-retention of risk. Most is farmed out in reinsurance. Insurance today works on a very simple principle. The risk is split up, co-insured and re-insured in relatively small chunks with numerous co-insurers and re-insurers so if there is a major disaster not one company gets hit with a major loss, but that loss is shared by other companies who are also re-insured almost ad infinitum. You would be surprised how small is the mandatory "reserve" held by direct insurers even in industrialized countries. Don't be confused by the publicized assets of insurance companies, most of that comes from investment and not the core insurance business. I won't go into the complexities of how the reinsurance business works, but very simply the timing of payments by direct insurers to re-insurers allows sufficient opportunity for the direct insurers to "double their money" before transferring the premium to re-insurers - this works all the way up the chain so everyone wins at least a little all the time.

In some countries, insurance regulatory bodies of the government approve those reinsurance contracts to ensure that the re-insuring companies are of good standing. In some countries, companies that write life insurance are bound by law to invest a major part of their premium income in solid investments, such as government bonds to alleviate the effect of inflation.

In the DR the industry works in a similar fashion, regulation of insurance companies and their practices is quite strict, however apart from motor vehicle insurance, domestic insurances are not that common even amongst "educated" people. The acid test, heaven forbid, would be a major disaster in the style of the Haiti earthquake......even there a huge proportion of the damages sustained were not insured.

One should remember that direct insurance companies are in the business of selling policies, those that systematically avoid payment of claims, eventually lose their selling power.....
 

TheHun

New member
May 4, 2008
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Bryanell,

Are you in the insurance business, here in the DR?
Let me know, please.
Thanks,

The Hun
 

bayaguanaman

New member
Oct 22, 2009
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It would be interesting to know as stated if the Insurance Companies could refuse to pay out on the basis of such a catastrophe noted above was indeed an "act of God". I have in my cover items like terra motto (Earth quake) and flooding, which I hope never to make a claim under, nut as we are required to supply information regarding the risks covered under the "Utmost good faith" clause, this would work in both directions i'd argue if necessary. Why have Earthquake covered and premiums charged for the Insurable Risk - to have them later declared an act of God !.........

Just thinking out loud !!
 

DMV123

Bronze
Mar 31, 2010
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I wonder how many people here actually have home and contents insurance? Maybe a poll???

If home insurance is anything at all like vehicle insurance - and it is sold by the same companies - what I have seen is that they find every and any excuse to not pay off whenever possible!
 

montreal_guy

New member
Feb 12, 2007
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Thanks for the most excellent reply Bryanell! I guess I'll get that insurance on my condo, and hope for the best. The company I plan on going with is Mapfre