From the insurance premium-ups, downs follow storms
Insurance, in collaboration with the stock market and banking, finance, service industry. All these three sectors have experienced ups and downs.
So why insurance premiums to change the way they do? Subscriptions risk insurance on the basis of certain standards. They collect premiums from their policyholders and invest a lot of money in the stock market. If the rate of return on investment is better than expected, some companies will be in the “cash flow underwriting. For more money to invest, they are lower their underwriting standards and / or pricing to sell more. This is called the “softening” of the insurance market.
A period of heavy losses is to maintain the price level, if not disappear.
Let’s go back to Hurricane Andrew. Prior to the storm, the insurance premiums for a nice middle-class house, valued at $ 150000 at the expiration of $ 350 to $ 450 per year. Striking South Florida in August 1992, Andrew was the most costly hurricane right now. Damage surpassed $ 20 billion.
Insurance companies achieve their premiums were insufficient and premiums for similar houses “hardened” to $ 500 to $ 600 per year.
According to Andrew, we had some serious hurricanes, but also the assurance not to expect something bad happens significantly in the future. Then, five cases, the country of hurricanes in Florida during 2004. Hurricane Katrina hit Florida, Louisiana and Mississippi in August 2005, to $ 81 billion in damage and killing more than 1,800 people. Another great success Florida hurricane later in the year 2005.
The market dipped again.
We have no hurricanes in the past two years, it is about helping personal and business damages prices are stable and even in some cases. But remember that assurance it will be sooner or later.
Alden Weichel Bradenton is chairman of the insurance. He can be reached at (941) 748-0511.
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