The hurricane season of 2004 brought devastation to many areas in the southeast. Even though hurricanes have historically caused significant damage, what the people experienced six years ago was unlike any other. Florida experienced one of the busiest hurricane seasons in 2004, but since then Mother Nature seems to have calmed down for the time being. With fewer hurricanes over the past several years, insurance policyholders might expect insurance premiums to go down or at least stay the same. However, rates continue to increase.
This has many people questioning the increase in rates when it seems there would be fewer claims made due to less damage from hurricanes. The Florida Insurance Commissioner explained that the rates continue to rise because Florida is a state that is prone to hurricanes. Even though residents experienced several calmer seasons, insurance companies must still factor the location of Floridians. Also, non-hurricane related claims have increased by 65 percent for insurance companies mainly due to sinkholes.
A former Texas Insurance commissioner argues that this is price gouging. He explains that the losses from 2004-2005 have been paid out by insurance companies. Consumers paid higher premiums during those years to cover for the increased losses because insurance companies had to pay higher premiums for reinsurance. Reinsurance is an insurance policy that insurance companies purchase. However, reinsurance rates have dropped recently.
The Florida Insurance Council ensures that consumers are not being taken advantage of. Consumers in Florida are well-protected by regulators.
It is still difficult for many residents to understand the rate at which premiums are increasing. Since 2003, Florida homeowners have seen up to a 70 percent increase in premiums. The rates have been approved to increase by another 15 percent for 45 companies this year. It is uncertain what the next hurricane season will bring, but homeowners will most likely see a rise on next year's insurance bill.
WTSP.com: "Hurricanes bypass Florida, but insurance rates rise," Mike Deeson, December 10, 2010