Insuring your home or other property against major disasters may become more expensive this year as the price insurance companies pay for their own coverage continues to climb.
Reinsurers, or the companies that cover policies for insurers, have upped the price they charge insurance companies by as much as 50% for catastrophe loss coverage so far this year, according to reinsurance broker Gallagher Re. Those hikes could trickle down to end customers, homeowners and businesses.
At the state level, one of the steepest reinsurance rate hikes was in Florida, where prices grew between 30% and 40% between January 1 and July 1, Gallagher Re said. However, those increases likely won’t persist into the rest of the year, the broker said.
The state has seen “meaningful price increases now compounding over multiple years” but the “general sentiment is that current pricing levels are more than adequate,” the report said.
Companies like Markel and Reinsurance Group offer insurance policies to insurance providers so that companies like Nationwide and Geico can lessen their own financial losses when customers file hefty claims.
Climate impact on insurance policies
Some insurance companies have come under scrutiny in recent months for halting sales of property and casualty coverage to new customers in California. Allstate and State Farm have said it’s too pricey to underwrite policies in the state, which has seen record-setting wildfires and other natural disasters in recent years.
California isn’t the only state where insurers are growing more cautious. Florida and Louisiana have struggled to keep insurers from leaving the state following extensive damage from hurricanes. Premiums are rising in Colorado amid wildfire threats, and an Oregon effort to map wildfire risk was rejected last year because of fears it would cause premiums to skyrocket.
Allstate, Geico, State Farm and Nationwide didn’t immediately respond to a request for comment Monday.
To be sure, insurance companies in many states cannot increase customer premiums without notifying state regulators. Half of U.S. states must get prior approval before increasing rates, according to the National Association of Insurance Commissioners.
Still, possible rate increases for customers would come at a time when homeowners are already seeing elevated prices.
The cost of home insurance is projected to climb 7% nationally this year, with Florida seeing a 40% rise and Louisiana prices growing 63%, according to S&P Global Market Intelligence. Auto insurance rates have climbed compared to last year as well.
