The majority of U.S. homeowners insurance rate filings approved by regulators still do not adequately recognize the cost of capital needed to protect policyholders in the case of a large catastrophic event, according to an annual review by Aon Benfield Analytics.
Claire Wilkinson writes about the continuing rate adequacy problem in Homeowners insurance. This appears to be an especially thorny problem in the coastal areas. In New York, there are still insurance availability issues in the New York City metro area, particularly eastern Long Island. North of Westchester County, I assume the market is still quite competitive, since I seldom get calls about it.
Homeowners rates in coastal areas are a tough political problem. The political outcry in New York has been muted so far, certainly not compared to what insurers have seen in Florida. The issue will remain under the radar for another year if we can get through the next month without another hurricane (the season ends December 1.) When (not if) we have another difficult hurricane season, insurers will naturally toughen their underwriting, reduce coverage and seek higher rates. Given that the study Claire writes about says that rates are already too low, the outlook for adequate rates after another bad storm or two is not positive.
What do you think? Are rates too low? Not low enough? What do you think insurers should do about it? Sound off in the comments.