Are there solutions to the growing crisis in Homeowners insurance?

If there is a typical article in a business trade related to this topic, it goes like this: case study about a specific situation where someone loses insurance and/or has to pay significantly more. This is followed by a high-end explanation, like inflation, climate change, higher reinsurance costs. These factors cause insurers to raise rates or exit the market. Finally, another case study (with a picture) from another state. No solutions are postulated.

Is there something that could help this problem? Maybe. First, we need to ask the right questions. For instance, why do carriers leave markets instead of raising rates to a level where they could make money and keep their people employed? Short answer: they can’t. Most states regulate rates and policy coverage. Most limit rate increases to, say, 25% and most take an inordinate amount of time (years) to approve rates. 

These regulations were passed with good intentions, I am sure, but no one asked, “and then what?” When faced with being forced to lose money, or packing up and leaving, carriers do the latter. And hence, the State Farms (the largest US carrier) of the world leave California (the 5th largest economy - in the world). And so on.

Admittedly, a 50% rate increase stinks. But a 300% premium increase is a lot worse. If the market were allowed to react to economic change in real time, I do believe we’d see a significant improvement.

DII is your partner in finding solutions to the growing Homeowner insurance crisis. Our team of experts can work with you to understand market changes, state regulations, insurance carriers and how to ask the right questions. #homeowners #askquestions #insurancecarriers