- New Jersey homeowner: $926 in 2011, the year before Hurricane Sandy. $1,068 in
2013, the year after.
- New York motorist: $1,108.64 in 2011. $1,181.86 in 2013.
- Mississippi homeowner: $860.66 in 2004, the year before Hurricane Katrina. $969 in
2006, the year after.
- Louisiana motorist: $1,228.10 in 2004. $1,254.66 in 2006.
The higher dollar amounts can't be blamed solely on extreme weather; insurance premiums can go up for a variety of reasons, experts say. Replacement costs of destroyed homes may be larger because of elevated construction and labor costs, for instance, and distracted-driving across the United States contributes to auto insurance premium hikes.
Insurance companies' concerns over their own cash flows also stem from the long, low-interest environment which has limited the returns on their investments, CFRA insurance equity analyst Cathy Seifert explained.
Because of Harvey and Irma, she anticipates reinsurance rates rising, prompting insurance companies to pass along those costs to ordinary Americans.
The American Insurance Association, the trade group for the property-casualty insurance industry, said it's too early to know if rates will rise. Actuaries will rely on meteorological models and probability predictions to calculate how much it'll be to cover losses.
"It’s not a recoupment mechanism; it’s not about setting premiums to offset last year’s policies," says Mike O'Malley, senior vice president of public policy for the association.
Because of insurers' preparation for extreme weather and the competitive nature of the insurance marketplace, Ted Nickel, president of the National Association of Insurance Commissioners, isn't forecasting higher insurance costs for consumers either.
"These companies would've built up a surplus with their modeling to be ready for their big event whether it occurred 10 years ago or this week," he explains. "These catastrophes are built into their pricing. Will it be zero? I don’t know. I wouldn't want someone in West Texas to subsidize my insurance in Houston."
By Zlati Meyer
USA Today