Why are home insurance rates in Colorado and surrounding States increasing? I call it the perfect storm. Literally.1.  Hail and Wind-Insurance companies calculate their claims based on the amount of large losses they receive.  Take a look at the impact of Hail and Wind in the US for 2011.  You will see that Mother Nature is taking its toll on Insurance companies.

HAIL LOSS EXPOSURE

  2.  The financial market- Typically insurance companies run very small margins, if any, when it comes to profitability or their earnings on Home insurance.  In fact, for many years, Home insurance carriers have been taking a loss on their insurance premiums.  How can they do this?  The financial market.  They make up for losses by investing premium in the market or secure investments.  So if the market has been down for some time, they are not making up for the losses at the same pace.           3.  Mother Nature and Natural Disasters-  This slide below is quite amazing.  It shows the natural disasters in the Us, much of which is claimable on a Home Insurance Policy.  One key factor here is that weather is not very predictable.  Obviously!  Insurance companies can calculate large losses to some degree but when the last 3 years are off the charts for Large or Sever Weather, there is not an actuary that can hit that mark!         4.  Home Insurance coverages- At one time, you could buy a Home insurance policy for just Fire.  Now, insurance companies throw just about everything into a home insurance product to be claimable.  Identity Theft, Loss Assessment etc.  With these additional coverages, comes more claimable items.  Naturally, the insurance company puts a premium on everything they write but many items are not profitable thus rates increase.5.  Poor Economy = More claims- It is a proven that with a poor economy, more claims get filed.  If clients are in need of income, they are more likely to file a theft claim or maybe a claim from a loss incurred in the past.  This is a proven statistic and one that makes for more claims.Is this the perfect storm?  Absolutely.  Home insurance carriers are going to "harden the market" by increasing rates, non renewing homes and changing coverage requirements.  Seperate wind hail deductibles, forced home and auto combination accounts, cancellations.  This hardening of the market will indeed create an influx of new quote oportunities for agents and carriers.  Now is the time to take a look at increasing an agency marketing budget!So what can you do?  Call your agent for ideas on how to combine accounts, raise deductibles, shop carriers or simply learn more about how the impact is effecting you.www.rickclineagency.com