Front Page > Business Page

Page 1 of 2 next » | Email | Print | Subscribe

Add To Insider Newsclips | Click-2-Listen

advertisement

Insurance-rate rise a recipe for disaster

By Tom Ramstack
THE WASHINGTON TIMES
March 20, 2007

Mississippi State Insurance Commissioner George Dale tells reporters yesterday that State Farm Fire & Casualty Co. has agreed to re-examine more than 35,000 policyholder claims filed following Hurricane Katrina and to 'make millions of dollars available'  (AP)

---

Homeowners in more than a dozen states have been left with fewer financial backups the next time a hurricane blows their houses down, an earthquake rattles them or a tornado carries away their roofs.
    The average cost of homeowners' insurance has risen 47 percent in the past 10 years, according to the Insurance Information Institute, an industry trade group.
    Hurricane Katrina -- the most-expensive natural disaster in U.S. history -- was the death knell for access to insurance for many Gulf Coast residents. Even coastal residents in Mid-Atlantic and New England states are encountering a backlash from insurers because of the 2005 storm.
    Then there's terrorism risks -- and jumping insurance premiums -- for Washington and New York, earthquakes for California and floods for lower Mississippi River communities.
    Several members of Congress last week proposed an insurance "backstop" for natural disasters.
    The government would pay for catastrophic losses instead of forcing homeowners to pay through higher rates, similar to the backstop Congress gives insurers for terrorism losses.
    "We believe that we have reached a similar point with regard to what happens with floods and hurricanes," said Rep. Barney Frank, Massachusetts Democrat and House Financial Services Committee chairman, who is drafting the legislation.
    Bob Hunter, insurance director for the Consumer Federation of America, said he met a Florida woman whose insurance premium on her home west of Palm Springs shot up from $500 a year to $6,000 a year after Katrina.
    Rates for "multiple-peril" insurance, which covers hurricanes, tornadoes and other weather disasters, have increased at the fastest rate, an average of more than 6 percent per year in the past decade, the Insurance Information Institute says.
    "I'd say the average American is going to pay 2 to 4 percent more for homeowners insurance in 2007," said spokesman Michael Barry. "The numbers go up significantly, however, for those residing in coastal communities. In coastal communities, we've seen increases of 20 to 100 percent."
    The issue most likely to lead to higher homeowners insurance rates is "almost always hurricane risk," said Robert P. Hartwig, the institute's chief economist.
    Insurers say they are trying to avoid catastrophic losses that could drive them out of business.

Page 1 of 2 next » | Email | Print | Subscribe

Add To Insider Newsclips | Click-2-Listen

Front Page > Business Page

Want to use this article? Click here for options! Copyright 2007 The Washington Times