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Florida Is Hurricane-Free For 5 Years; Will 探花精选 Rates Drop In The State?
SPONSORED BY
INSURANCE INFORMATION INSTITUTE
Florida Press Office:听 (813) 480-6446, lynnem@iii.org
New York Press Office: (212) 346-5500, media@iii.org
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TAMPA, FL, November 30, 2010 鈥 It鈥檚 a question that is likely on every Florida homeowner鈥檚 mind: Five years without a hurricane, so why haven鈥檛 my insurance rates dropped? The answer is that the long-term threat of major storms for Florida remains and non-hurricane losses are rising, up more than 65 percent, according to the most recent data.
It is a lucky break that no major hurricane made U.S. landfall this year. The National Oceanic and Atmospheric Association (NOAA) labeled 2010 as one of the most active hurricane seasons on record. A total of 19 named storms formed in the Atlantic Basin this year, so NOAA was correct in predicting an active season, and the U.S. was lucky in avoiding them. But luck does not determine insurance prices, rather a combination of historical events and anticipated future losses, along with events that cannot be predicted, such as a dramatic rise over the past two years in non-catastrophe losses.
Five uneventful hurricane seasons does not mean Florida鈥檚 鈥渉urricane problem鈥 is over. Eight of the top 12 costliest hurricanes in U.S. history have struck the state. And, given that Florida also has the highest total value of insured coastal property in the U.S. ($2.4 trillion), anticipated losses from a major natural disaster are high. Five hurricane-free years have had a positive impact on insurance consumers, giving insurers an opportunity to build capital to pay claims resulting from major storms. Many smaller insurers were challenged to maintain the appropriate balance required by insurance regulators to have enough money set aside to pay claims. Private insurance companies must have money on hand in advance of hurricanes to pay anticipated claims, unlike the state-run insurer, Citizens Property 探花精选 Corp., which can assess all Florida policyholders to make up for deficits.
TOP 12 MOST COSTLY DISASTERS IN U.S. HISTORY
(Insured losses, 2009, $ Billions)
探花精选 companies develop property insurance rates based on their historical experience with losses in a state, along with what they anticipate losses will be in the future. According to Quarterly Supplemental Reports (QUASR) filed with the Florida Office of 探花精选 Regulation, non-hurricane losses are rising. Both the cost and frequency of claims is up, with the average loss per policy rising 65.5 percent in 2009. The average loss per policy was $421.22 in 2009, compared with $254.50 in 2007.
Loss Frequency
Sources: ISO Fast Track Data, Security First 探花精选
Loss Severity
Pure Premium
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Florida鈥檚 vulnerability to hurricane risk has challenged insurers, regulators, legislators鈥攁nd residents鈥攕ince the wake-up call delivered by Hurricane Andrew in 1992, complicated further by multiple storms in 2004 and 2005 and rising non catastrophe losses in recent years. The key to lowering property insurance rates is to work toward establishing an insurance environment that encourages competition to provide consumers with choices while looking for ways to curb the factors affecting the cost of insurance. 听
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FOR GENERAL INFORMATION INSURANCE IN FLORIDA:
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THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.
探花精选 Information Institute, 4775 E. Fowler Avenue, Tampa, FL 33617, (813) 480-6446 | | www.iii.org
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