Earnings are in and the insurance industry has been taking some hits.
Late October Allstate Insurance Company reported profits down and also noted catastrophe claims are above average. Financially, the company still managed to have a net income of .27 cents a share, compared to 72 cents a share last year. But Allstate is not alone; Travelers Co. reported record disaster losses too in their last quarter. All of this comes down to one thing – no one’s safe from the trending increase in homeowner’s insurance rates countrywide.
Big companies like State Farm, who currently dominate market share in the homeowner’s insurance business, are also feeling the effects with record high catastrophe losses. These disaster costs are mainly due to 30 separate events in the second quarter. Relentless hailstorms pounded Oklahoma, while massive thunderstorms hit Michigan, Ohio and Illinois. Also Tennessee was immersed under record floodwaters that swamped the Grand Ole Opry.
Allstate has taken numerous rate increases on their homeowners premiums all over and have limited the amount of policies they write in order to balance their book of business but still experts say for every dollar made they’re spending $1.04 in these disasters and it doesn’t look like it’s going to get any better with the peak of 2010 hurricane season still to come.
Although the property insurance market has been rocky road companies are still managing to make a profit with their auto insurance products.
As an example, Allstate gets a large portion of its revenue from its auto-insurance operation, which has been an excellent source, reversing a $3 million loss in 2009 to a $207 million profit in this year’s second quarter. With that said the auto market is bubbling over with competition with strong ad campaign money to win the consumer’s dollar.
On average most top insurance companies are taking rate increases in the property insurance market – approximately 7 to 25% this year. Unfortunately, most experts expect more due to the trends of huge disasters occurring.