Homeowners in Florida coastal areas, as well as in much of the rest of the state, will experience significant increases in their home insurance premiums beginning with the coming New Year. During 2004 and 2005, a series of hurricanes blasted the state, and those surrounding it, causing severe economic penalties for insurers, and more importantly, for reinsurers - those companies that insure the insurance companies. The result was that many insurance companies pulled out of those areas altogether. Those that remain are raising their price schedules to make up for tens of billions of dollars in lost profits.
In fact, the III (Insurance Information Institute) reports that 70% of the most expensive US hurricanes in history occurred from August of 2004 until October of 2005. There were more than three million claims filed from Hurricanes Rita, Wilma, Dennis and Katrina alone. Hurricane Katrina, being the most expensive of all, resulted in $40.6 billion being filed from over 1.7 million separate claims. Additionally, there were more than 20 other significant tropical storms and hurricanes during that same year. And while hurricane Katrina did not affect Florida in such a direct fashion as it did Louisiana and Mississippi, insurance groups look at it all as being the same.
New home insurance and reinsurance legislation:
Reinsurance corporations representing more than 20 states have joined together to stimulate new legislation that will spread the massive costs of insuring natural disasters across the country. Ice storms, tornadoes, firestorms, hurricanes, mudslides, floods and more affect homeowners in all states of the country at different times. Hundreds of billions of dollars must be paid out to accommodate their claims. When a natural disaster strikes anywhere in the country, this new legislation proposes that all 300,000,000 plus members of the society contribute to rebuilding. This legislation will very likely be signed into law by President Obama very soon.
In the meantime, homeowners in Florida coastal regions can expect to see a 10% increase in their insurance premiums beginning in 2010. In addition, 10% increases will continue to affect the region for years to come. In fact, it is projected that insurance premiums for those areas will more than double in less than five years. Insurance companies, and especially the companies that insure them, are corporate giants that absolutely refuse to lose profits in the long run. They hold incredible lobbying power. They will make sure that new laws are passed in order to help them absorb the heavy costs associated with various natural disasters that are bound to occur periodically.
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