Premium in and claims paid out….if more claims are being paid out than premium coming in, then rate increases are going to happen. Assuming that the insurance company expense factor is staying in line, it is tough to dispute the rates being charged are incorrect (unless you reduce benefits).
Make no assumptions that claim payments should automatically cause policy premiums to increase. A second element is company expenses, which frequently is inflated by the companies and their rating organizations. The third element is company profit based on prior years’ claims and expenses, subtracted from total premiums. If claim payments and expenses are inflated, then the profit will also be inflated, and overall premiums will rise. The MA. state government insurance regulators can, to a great extent, control what companies charge – or should be controlling same.
I suggest the “real reason” Cape Cod homeowners have experienced significant insurance premium increases has nothing to do with rates or claim experience. In the past few years, insurers, including the Fair Plan, have been requiring policyholders to purchase inflated amounts of coverage.
Policy terms and rate filings base required amounts of insurance on a home’s Replacement Cost, the current cost to build a similar structure before it has sustained any damage.
Insurers and their agents, on the other hand, are now requiring amounts of insurance based on the home’s Reconstruction Cost, an estimate of what it might cost under the worst case scenario to rebuild the home after it has been damaged or destroyed. Reconstruction Cost is often 30-50% greater than the Replacement Cost and results in potential premium increases of 30-50%.
That, I suggest, is the real reason insurance consumers are seeing significant premium increases. In my opinion, its wrong and someone should do something about it. Insurers should be required to refund excess premiums they have charged their policyholders over the past few years and refrain from the practice of inflating required amounts of insurance.
As a licensed insurance advisor, I can’t believe I’m the only one willing to acknowledge this seemingly unfair and deceptive industry practice.
Hello,
There are few aspects you need to fulfill while choosing an insurance policy for your home. Make sure your insurance policy covers all the services like fire/smoke damage, water/flood damage, storm/hurricane damage, mold damage, etc.If your insurance company is not willing to pay the fair amount , all you can do is hire an adjuster who would be your advocate to maximize your insurance claim and make this process easier for you.
Premium in and claims paid out….if more claims are being paid out than premium coming in, then rate increases are going to happen. Assuming that the insurance company expense factor is staying in line, it is tough to dispute the rates being charged are incorrect (unless you reduce benefits).
Also the homeowners product has become bloated with additional coverage and hence more claims paid.
Claims costs as well are higher than ever. Many times people say they have never filed a claim. A claim they remember perhaps.
Make no assumptions that claim payments should automatically cause policy premiums to increase. A second element is company expenses, which frequently is inflated by the companies and their rating organizations. The third element is company profit based on prior years’ claims and expenses, subtracted from total premiums. If claim payments and expenses are inflated, then the profit will also be inflated, and overall premiums will rise. The MA. state government insurance regulators can, to a great extent, control what companies charge – or should be controlling same.
I suggest the “real reason” Cape Cod homeowners have experienced significant insurance premium increases has nothing to do with rates or claim experience. In the past few years, insurers, including the Fair Plan, have been requiring policyholders to purchase inflated amounts of coverage.
Policy terms and rate filings base required amounts of insurance on a home’s Replacement Cost, the current cost to build a similar structure before it has sustained any damage.
Insurers and their agents, on the other hand, are now requiring amounts of insurance based on the home’s Reconstruction Cost, an estimate of what it might cost under the worst case scenario to rebuild the home after it has been damaged or destroyed. Reconstruction Cost is often 30-50% greater than the Replacement Cost and results in potential premium increases of 30-50%.
That, I suggest, is the real reason insurance consumers are seeing significant premium increases. In my opinion, its wrong and someone should do something about it. Insurers should be required to refund excess premiums they have charged their policyholders over the past few years and refrain from the practice of inflating required amounts of insurance.
As a licensed insurance advisor, I can’t believe I’m the only one willing to acknowledge this seemingly unfair and deceptive industry practice.
Hello,
There are few aspects you need to fulfill while choosing an insurance policy for your home. Make sure your insurance policy covers all the services like fire/smoke damage, water/flood damage, storm/hurricane damage, mold damage, etc.If your insurance company is not willing to pay the fair amount , all you can do is hire an adjuster who would be your advocate to maximize your insurance claim and make this process easier for you.