Costly storms will push rates up

Home insurance experts expect modest increases

Home insurance rates in South Florida — already increasing thanks to claims abuses — will likely be boosted even more as a result of the unusually active 2017 storm season.

That’s what insurance industry experts are expecting as loss reports roll in from hurricanes Harvey, Irma and Maria, California wildfires, the Mexico earthquake and a series of damaging storms in Europe.

But the good news is most experts are expecting only modest increases resulting from the storm season, and they won’t take effect for most policyholders until 2019 because most 2018 rate requests have already been filed.

In Florida, total insured value of losses from Irma have reached an estimated $5.9 billion, according to the most recent tally by the Office of Insurance Regulation.

Nationwide, catastrophe losses in the nine months ending Sept. 30 totaled $38.4 billion — dwarfing the $2.3 billion losses in 2016 and exceeding the full-year $36.1 billion loss in 2012, which included Superstorm Sandy, according to a new report from the ratings agency A.M. Best.

Year-to-date net income for the industry declined 25.5 percent to $22.9 billion compared with the previous year, the report said.

The losses mark the worst first nine-month period of the past five years for the industry, the report said.

Still, the insurance industry remains flush with money, A.M. Best said. “Despite the significant decline in net income, industry surplus grew to $699.8 billion at the end of September 2017, driven by an $11.2 billion increase in unrealized gains, a slight increase in other surplus gains and a 20 percent reduction in stockholder dividends.”

Insurers covering Florida properties reported $1.3 billion in operating losses during the third quarter compared to $349 million in profit for the previous year’s third quarter, according to a tally by risk specialist Guy Carpenter. Of 61 companies tracked, 49 reported losses for the quarter.

The cost of most claims paid by property insurers are underwritten by reinsurance — that’s insurance that the insurance carriers are required to buy — and the Florida Hurricane Catastrophe Fund, a state trust fund created shortly after Hurricane Andrew to protect insurers against insolvency. In addition to funding from individual insurance companies, the CAT fund also buys reinsurance. It purchased $1 billion in reinsurance in time for the June 1 start of the 2017 hurricane season.