The insurance industry is bracing for another active hurricane season if predictions turn into reality. Most insurance companies, including the state-run insurer of last resort, have filed for rate increases as the entire industry must make adjustments to ensure that if predictions come true and Florida is struck with another major hurricane, there will be sufficient funds to pay the claims that will follow.
“From a consumer standpoint, the good news from the recent two storm seasons is that the industry bent, but it survived and it paid out a record amount of claim, more than $35 billion,” said Sam Miller, executive vice president of the Florida Insurance Council.
“The bad news,” he continued, “is that the industry paid out $35 billion while collecting only about $10 billion in hurricane insurance premiums. The industry cannot survive on lopsided numbers like that.”
“While the industry is bracing for the worst, we are all hoping for a break from any major storm activity for at least the next year or two so that we can recover from the past catastrophic seasons,” Miller said. “A break would help slow the peaking costs of reinsurance and the cost of building materials*two cost driving components that have surged as a result of eight hurricanes in two years,” Miller said.
He added that while newspaper headlines have screamed about insurers reducing their exposure, what is not being written about is the fact that companies, even those which have reduced the number of policies they are writing, are still maintaining a far higher number of policies than those they choosing not to renew.
“Here on the eve of the 2006 hurricane season, while FIC recognizes that higher rates are difficult on some policyholders, we must take into consideration and be grateful that the industry has survived the past two seasons and is still taking on the risk of insuring the homes of millions of Floridians,” Miller said.
The Florida Insurance Council has produced a White Paper on the status of the Property Insurance Industry. It can be downloaded at the FIC website www.flains.org in a special section called, Hurricane Central.
“We invite everyone to review the site for continued updates about the industry and issues involving the industry and hurricanes.”
Source: Florida Insurance Council