6 straight years without a hurricane … so why are insurance premiums rising?
Dec 2, 2011
The following article was published in the South Florida Sun Sentinel on December 2, 2011:
6 Straight Years Without a Hurricane … so Why are Insurance Premiums Rising?
By Julie Patel
This week marked the end of the hurricane season and six years without a direct hurricane hit in Florida. But many home insurance premiums in the state are still rising.
“Insurers know the cycle won’t last,” said the Insurance Information Institute, an industry research and trade group. It says companies have to save so they have enough money to pay claims after storms strike and still make a fair profit.
From 2000 to 2009, home insurers’ profit on shareholders’ investment was higher most years in Florida than it was for the rest of the country. But the devastating storm seasons of 2004 and 2005 wiped out insurers’ reserves, triggering 183 percent and 53 percent decreases in profit those two years, the institute reported.
Regulators and consumer advocates have said Florida insurers could bolster their claims-paying reserves if they spent less on contractors who manage daily operations, lowered other overhead costs such as advertising or issued smaller dividends.