Some Possible Causes for Rate Increases

When you have the Insurance Equivalent of a “Perfect Storm”, Rates Ultimately Go Up!

Across the world, climate change is wreaking havoc on the environment. In the United States, scientists, citizens, and the government all feel the negative impact global warming has on the environment, such as an increase in natural disasters. For insurers, claims have been quite high because of the stronger hurricanes on the east coast, increased wildfires on the west coast, and wind and hailstorms in the Midwest.

Natural disasters such as tornadoes, hurricanes, wildfires, and tropical cyclones have nearly doubled in the last 17 years, and are predicted to increase, according to a Chubb “Market Trends and 2019 Opportunities” report.  A result of these increased claims, we have seen an increase in premiums by insurance companies. In many instances, insurers refuse to offer coverage at all. Data released recently has shown that after the devastating wildfires in California, more than 350,000 home insurance policies have been dropped in California.

The homeowner’s insurance market is becoming more restrictive in more vulnerable states such as California and Florida, which negatively impacts private clients who tend to own more than one home, private collections, and other expensive goods, which creates a larger exposure for these extensive portfolios.

Some Possible Causes for Rate Increases

Some Possible Causes for Rate Increases

Hurricanes on the east coast have been a cause for the increase of premiums, as the past three years in a row have had devastating storms. But the east coast is not the only place to blame. Around the country, from the Midwest to the west coast, there has been an increase in all kinds of natural disasters. In some high-risk fire areas of California, rates have gone up almost 300% from the previous year, and in some cases, you are considered lucky to even find an insurance company willing to insure you to avoid the California Fairplan – a last resort insurance provider. In the Midwest, hail and windstorms have tripled in the last three years, causing some high net worth insurance companies in Illinois to raise their rates 25%.

Another factor for these increases is the advancement of technology. Technology now can be more expensive to repair than the technology from 15- 20 years ago. Repairing luxury vehicles has increased, as well as the technology found in high-end appliances. The cost to repair a home has also increased, with the cost of labor and cost of materials increasing in price.

 So, What Can I Do?

It is important to have a competent broker review your insurance policies to see if there are any gaps or inaccuracies in your coverage. Doing so could help control costs as well as lead to better coverage. A good broker could help you not only make sure you are not overpaying, but they can also help identify if you are not covered or have limited coverage for certain types disasters in your policy. With the increased costs of insurance policies, it is important to work with a risk expert who has access and knowledge of the insurance marketplace.


For more information or if you have any questions please contact:

Steve Rivera – Partner
The Liberty Company Insurance Brokers

5955 De Soto Ave, Suite 250, Woodland Hills, CA 91367
O: 818.224.6184 | C: 805.823.5835 | F: 866.835.6983
www.libertycompany.com | srivera@libertycompany.com