News Release
April, 2006 Oshkosh, Wisconsin
Susan Andrews, President of FirstChoice Insurance Agency, Responds to Questions about How Hurricane Katrina Affects Insurance Rates in the USA
Susan J. Andrews, Owner and President of FirstChoice Insurance Agency of Wisconsin, Inc., one of northeast Wisconsin's top 20 independent insurance agencies, recently discussed the affect of Hurricane Katrina on insurance rates in the United States and in Wisconsin.
"We see great advantage to our clients who rely on us to expand our network of insurers in order to provide as wide range of products as possible in order to offer clients the best coverage at the right price," Andrews remarked. We have all seen the massive devastation from the effects and aftermath of Hurricanes Katrina and Rita. The storms took their toll with individuals, families, corporations, schools, hospitals, vehicles, roads, transportation and animals who suffered property damage and personal injury all along the Gulf Coast.
It has been six months since the hurricanes hit the southern region of our country and this year, businesses and consumers will help insurers pay for last year's estimated $57.6 billion in storm-related losses through higher property and casualty insurance policy rates. Hurricane Katrina will account for about $45 billion of the total, making it the most expensive insured event in history. "We tend to forget about these disasters when they no longer make the nightly news," said Andrews, "but the long recovery and rebuilding goes on and has to be paid for."
Insurance industry resources are less than adequate to pay claims in 2005 for Hurricane Katrina, the Texas / Oklahoma brush fires and other natural disasters. The 2005 losses amount to more than twice any previous yearly total of USAnatural disasters and one-and-a-half times the losses from the 9/11 terrorist attacks.
Survey Cites Increased Property Insurance Rates
Property insurance rates have increased sharply in the wake of Hurricanes Katrina, Rita and Wilma, according to a survey by the Risk and Insurance Management Society (RIMS) and consumers should expect premiums to remain high in 2006.
Reversing a two-year trend of steadily falling property insurance premiums, some commercial insurance buyers saw property premiums increase by as much as 33 percent, with a median increase of eight percent, in the fourth quarter, the survey found.
The survey reviews current policy renewal prices as reported by corporate risk managers. The insurance market shrugged off the record hurricane losses of 2004, but the combined impact of Katrina, Rita and Wilma was clearly more than the market was ready to absorb in 2005.
The Insurance Information Institute predicts that rates will soar 50 to 100 percent this year in specialty markets, such as boats and oil rigs, and will jump to 40 percent in coastal areas and up to 10 to 20 percent in coastal United States.
Will Wisconsin Insurance Rates Be Affected?
"In Wisconsin, where weather-related disasters seldom occur, the affects of the disaster will have an affect, but it will be lower, by comparison to the predicted national rise," Andrews responded. "We have our share of natural disasters, but have escaped anything of the magnitude of Hurricanes Katrina and Rita."
It is believed that rates will only rise about five percent in Wisconsin. In the areas that are prone to hurricanerelated risks, it is likely that costs of insurance and reinsurance will rise substantially, probably for several years.
With more than 200 insurers in Wisconsin, competition will moderate any hurricane damage costs that insurers might try to pass along to local policyholders. The National Association of Insurance Commissioners' data supports that statement. In 2002, (the latest available year for state ranking, the average homeowners policy cost was $593, while the average Wisconsin policy was $340. If rates are going to rise more than 25 percent, which is unlikely, Wisconsin residents will have a 60 day warning period thanks to a state law that requires insurers notification.
As an independent insurance agent, FirstChoice represents highly rated, multiple insurance carriers that deliver a wide range of comprehensive coverage including personal, business and group insurance. This independent agency advantage is the cornerstone of its product and service strength. FirstChoice stands ready to be the first choice for affordable coverage to protect businesses and individuals from unexpected events that cause catastrophic loss.
For more information, visit www.firstchoiceinsurance.biz
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