Although it’s only August, 2011 has seen its share of wet, dangerous, scary and borderline apocalyptic weather.
When the weather acts up, it seems, so too do insurance companies. The coverage you’re required to keep in case of damages to your home, car or other possessions fluctuates based on several factors- including potentially high payouts for previous events. Images of the extensive flooding and damage done by Irene looks to be large scale- but analysts say that while the event did damage and caused pain for those affected, it wasn’t by industry standards a storm with a massive impact. Nariman Behravesh, chief economist at an industry group, noted:
“Without minimizing the pain and suffering for the people affected, from an economic perspective, this is a fairly small event.”
Although the industry is expected to come out profitable despite the strange weather in 2011, rates are expected to continue their sharp climb upwards for policyholders in 2012. Although historically, rates rose from one to two percent each year, in 2011, consumers saw five to ten percent rate hikes for home and auto policies.
According to the Christian Science Monitor , insurers blame increased risk and location for such spikes:
Even with higher premiums, finding coverage will become harder for people in areas where insurers are sensitive to risks from catastrophes. Few insurers, for example, will cover homes on fault lines or near the Gulf Coast, said Robert Rusbuldt, CEO of the Independent Insurance Agents and Brokers of America.
“When it comes to property insurance, it’s all about location,” Rusbuldt said.
Thomas Wilson, the CEO of Allstate, indicated that consumers can expect rates to increase similarly in coming years due to climate change and resulting weather patters. Wilson says insurers are “acting and running our homeowners’ business as if that is a permanent change, as opposed to an anomaly.”
