While this article is about Florida, California is in the same boat. As you know, several insurance companies are refusing to sell home insurance in California. Some are refusing in major portion of California. The cost of home insurance is forcing people to leave the State—since if they can get insurance, it is too expensive.
California is in a crisis, but the Hollywood Slicky has decided to run for President.
“U.S. reinsurance rates for policies which previously faced claims for natural catastrophes rose 30-50%, Gallagher Re said.
Reinsurance rates for similar policies in Florida rose 30-40%, the broker added.
Some insurance firms have pulled out because of the risk of heavy losses. State Farm said in May it would stop selling new insurance policies to homeowners in California.”
Sundance, 7/3/23 https://theconservativetreehouse.com/blog/2023/07/03/reinsurance-rates-for-catastrophic-coverage-jump-as-high-as-50-to-insurance-companies-effective-july-1st/
As if carrying Homeowners insurance in California and Florida wasn’t already subject to ridiculous increases in premiums, things are about to get a lot worse.
Effective with the July 1st notification, Reinsurance rates, these are companies who insure the insurance companies, are telling their clients there will be up to a 50% increase in cost for underwriting catastrophic coverage. Perhaps claims in the past few years have been higher; however, I suspect the issue amid the reinsurers is partly connected to the issue that surrounds banks and bond rates.
Back when interest rates were near zero, banks and reinsurers likely scooped up lots of Treasuries and bonds. As the Federal Reserve hikes rates those bonds have declined in value. When interest rates rise, newly issued bonds start paying higher returns to investors, which makes the older bonds with lower rates less attractive/valuable. The result is that most banks, and I suspect big reinsurance houses, have some amount of unrealized losses on their books.
Whatever the reason, the big reinsurance companies are now telling the insurance carriers their catastrophe rates are going up as high as 50%. Those insurance companies will then pass those rate hikes to the individual policy holders for commercial buildings, residential homes, cars, RV’s etc. Bottom line, homeowner insurance rates are about to go up again with policy renewals, especially in Florida and California.
LONDON, July 3 (Reuters) – U.S. property catastrophe reinsurance rates rose by as much as 50% at a key July 1 renewal date, broker Gallagher Re said in a report on Monday, with states such as California and Florida increasingly hit by wildfires and hurricanes.
Reinsurers insure insurance companies, and have been raising rates in recent years because of steepening losses, which industry players put down in part to the impact of climate change. Higher reinsurance rates can affect the premiums which insurers charge to their customers.
U.S. reinsurance rates for policies which previously faced claims for natural catastrophes rose 30-50%, Gallagher Re said.
Reinsurance rates for similar policies in Florida rose 30-40%, the broker added.
Some insurance firms have pulled out because of the risk of heavy losses. State Farm said in May it would stop selling new insurance policies to homeowners in California.
In Florida, “all the major carriers (insurers) left and so you ended up with this market which is populated by a large number of very small, very thinly capitalised insurers which is exactly what you don’t want,” James Vickers, chairman international, reinsurance, at Gallagher Re told Reuters. (keep reading)
In Florida specifically, homeowners insurance costs have now generally risen higher than the mortgage payment for a middle-class family. This is not sustainable.
