As Bob Dylan warned us, “…the times they are a-changin’.” And it seems that the weather is too. Even though we’ve had an unusually mild winter in most of the U.S. this year, remember that freak October 2011 snowstorm in the Northeast? And the day in April 2011 when 199 tornadoes were confirmed in the Southeast? According to NOAA (the National Oceanic and Atmospheric Administration), there were an unprecedented 14 weather and climate related disasters in 2011 and each one caused more than $1 billion in damages, not to mention the loss of precious human lives.
For the past few years, the insurance industry has kept premiums fairly steady and has relaxed its underwriting rules for personal insurance policies, such as automobile and homeowners. Not so this year. As detailed in our “2012 Outlook For Personal Insurance,” we expect the underwriting rules will tighten and premiums will likely increase, especially homeowners premiums. We estimate increases of 5%-6% in most areas. Some areas, such as disaster-prone areas, will see larger increases.
What Policyholders Can Do
So, armed with this information, what’s a policyholder to do? Here are a few things to keep in mind:
- The severe weather trend impacts every insurance company out there. You may find a slightly lower premium with another carrier today, but be assured that they will “catch up” eventually.
- Be aware of insurance company stability. A cheap rate doesn’t mean anything if the carrier is insolvent when you have a loss. Speak to your broker about the market security of your chosen carrier and check insurer stability on Rating agency sites such as A.M. Best Company.
- If you’re a Willis client, speak with your Client Advocate. There may be ways to improve upon your present policy premium. And if it’s time to remarket your coverage to a new carrier, we will certainly do that for you.
What’s the weather going to bring for 2012? It’s hard to predict. But one thing is certain. Having insurance coverage with a strong, reliable insurance company and having an agent you can trust for sound advice and counsel will best prepare you to weather any storm.
Guest blogger Sharon Kimmel is the Quality Assurance & Compliance Officer of Willis Personal Lines. As part of National Operations, Sharon is responsible for training and WEM compliance for Personal Lines across the United States.