Insurance Information Institute notes homeowners insurance rates are on the rise and have been for some time
Hurricane Sandy is expected to have a significant impact on homeowners insurance premiums in the Northeast U.S., according to the Insurance Information Institute. The trade association suggests that major storms like Sandy often have an impact on insurance rates, but Sandy is not the only factor that is going into the growing premiums of homeowners insurance coverage. The Insurance Information Institute suggests that premiums have been growing since mid-2011 and that Hurricane Sandy may only be one of many significant factors that is contributing to rising rates.
Rates have been growing since mid-2011
In 2011, several powerful storms, including Hurricane Irene, cause billions of dollars in loss for property insurers. Before then, other natural disasters took their toll on the industry by causing widespread flooding and damage to properties. The Insurance Information Institute notes that businesses were able to see declining rates from 2004 through 2011, but this was not the case for homeowners as 2011 marked the end of what had been a steady decline in insurance rates for these consumers.
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Small businesses facing financial impact of uninsured losses
Homeowners are not the only ones that are expected to see some financial changes in the wake of Hurricane Sandy and other natural disasters. The Insurance Information Institute notes that many small businesses, particularly those in New Jersey, are facing major financial challenges due to uninsured losses. The National Flood Insurance Program, which accounts for t he vast majority of flood insurance policies in the U.S., has a payout ceiling of $500,000, which has become problematic for companies that saw damages exceeding that amount. Companies that make use of expensive machinery, for example, are seeing average losses ranging in the millions of dollars.
Insurers preparing for more frequent and powerful storms
Outside of the Northeast region, homeowners and property insurance rates seem to be stable or on the decline. This could be due to a multitude of factors, but a relatively calm 2012, in terms of natural disasters, could be a significant contributor to this trend. The Insurance Information Institute notes that insurers are poised to account for the risk they see coming from coastal properties, thus are raising rates to prepare for a period in which powerful storms become more frequent.