Homeowner’s Insurance Set To Rise In 2009
Insurer’s took a big hit in 2008 as a busy Atlantic hurricane season took it’s toll on an industry already hard hit by the financial crisis. Property and casualty insurers are expected to spend over $25 billion for insurance related payouts for 2008.
U.S. property/casualty insurers are expected to pay out $25.2 billion in 2008 property losses, the fourth highest annual total in a decade, according to new data released Tuesday from an industry group.The 37 catastrophes, defined as events with $25 million or more in insured property losses, include hurricanes, severe weather, winter storms and tropical storms, said the Insurance Service Organization’s Property Claim Services Unit (PCS). Hurricanes caused the largest amount of loss, currently estimated at $13.3 billion in insured damage. Severe weather events — damaging winds, large hail, tornadoes, and flooding — caused an estimated $10.5 billion. Winter storms caused $1 billion in losses, and two tropical storms caused $300 million.
With many Americans already struggling with the economy and rising unemployment, higher home insurance premiums are not a welcome sight. Unfortunately the industry has little choice in the matter, the high payouts and a falling stock market have combined to create a shrinking bottom line.
We’ve already seen industry giant AIG narrowly avoid collapse due to government intervention but they aren’t the only ones who are struggling and many analysts are wondering if the insurance industry will require their own bailout like the banking system. A number of insurers have already tried to acquire small regional banks in order to become eligible for TARP funds.
Homeowners are increasingly seeking bundling their insurance as many companies offer discounts if property and auto insurance is from the same carrier. AIG flush with government funds has also tried to slash premiums in order regain market share it lost when many thought it was about to go bankrupt, much to the chagrin of the rest of the industry.
Still with a negative outlook for much of the industry in 2009, homeowners will have likely have to cope with rising premiums for some time.
