I can hear the calls to the insurance agents now. “What do you mean my homeowners insurance just went up a hundred dollars because of a hurricane risk? I live 200 miles from the #$%#$% coast!”
Well the agent can blame new technology. A new modeling software package from Risk Management Solutions, Inc. that goes way beyond the criteria that other models project.
The factors include the size of the hurricane and how much of it is still over the water, how fast it is moving, and whether a storm is strengthening or weakening just before landfall. Terrain also plays a role; a storm will be torn apart by mountains, but will be able to gather fuel from swampy areas like the Everglades in hurricane-prone Florida.
The model also accounts for the spike in the cost of construction materials after a storm and updates assumptions about the damage that even a moderate hurricane can do to commercial buildings in some regions to reflect the strictness of local building codes—and how well those codes are enforced. via the WSJ
Gone are the days where only those living in the coastal regions of hurricane country have to bear the brunt of the extra fees in their homeowners insurance. Now the risk will be spread out further and wider.
Of course, if you live on the coast don’t expect your premiums to go down any. That would be just crazy.
No related posts.
{ 7 comments… read them below or add one }
Do you think it is fair that in order to mediate risk companies, are able to widen their net? Seems to me that insurance companies make money in the margins. That is to say, they have traditionally had to take risks in order to make money. If their risks do not work out then they have to pay. In this way profits were never guaranteed to insurance companies, they were hoped for by them. However, it seems now like they can build whatever system of perpetual disadvantage they want and we have to deal with it. Insurance used to be just that, an insurance policy. These policies were only taken out to offer piece of mind to investors and the like. Now these policies have become so ubiquitous that we HAVE to have them. When are we going to step back and realize that privatization of wholly unregulated markets that were previously discretionary is not wise? Now who has any say when something like this happens? We are left to deal with whatever is decided and no one is held accountable any more. It makes me worry that such unilateral measures can be taken and the consumer has no choice.
It is very frustrating to hear what insurance companies can come up with. I once was strongly encouraged to buy earthquake insurance in Kansas City. I about fell out of my chair.
Or flood insurance living on a hill. Doesn't seem fair. Is there anything we can do about it?
So basically what you are saying is that, because of the new risk management software, the property owners that live in areas that surround high risk demographics such as tornado alley per-say, their insurance will rise, even though they are not in and high risk area, like Oklahoma.
If this is correct, the we should see a lot of properties declining in value, as well as a sudden rush to move out of the high risk places, and into more low risk areas.
Self insured will happen if rates go too high and the coverage gets too lean, not realistic. Service means more than collecting, hiking premiums.
Well, if this is the case then they should find time to let the homeowners know about this new software and all the changes and not just on the day when disaster will strike and houses and properties destroyed.
With every new disaster insurance companies will find excuses to jack up premiums. Regardless of where you live, expect a lot more 'software upgrades' that increase your rates every time another earthquake, tornado or hurricane hits.