What happens in the gulf coast with Tropical Storm Cindy matters to your wa

posted by Brian Mudd - 

What happens in the gulf coast with Tropical Storm Cindy matters to your wallet next year:

Bottom Line: Historically (since 1900) Florida has had a major hurricane strike the state every nine years. And most recently Florida went 11 years between hurricanes (streak broken when Hermine hit the panhandle last year).

As you know our homeowners insurance rates have consistently increased far more often than every nine years or so...here's what really impacts your rates with a little back ground.

During the 2004-2005 cycle an unprecedented 4 major hurricanes hit the state with a 5th skirting the state (Katrina) and causing record damage in the Gulf.  Along with skyrocketing prices for real-estate and construction created complete chaos within the re-insurance market.  The key to understanding the stability of the home insurance company you’re using is to understand the stability of their re-insurance.  Even the largest in the insurance business rely on re-insurance to pay out claims for catastrophic claims.  The biggest problem during that storm cycle is that the majority of insurance companies operating in Florida weren’t anywhere near insured enough for the level of claim activity and escalating price of repairs. Since that period of time the threshold for reinsurance has increased greatly and has recovered but here's how it works.

You insurance polices are priced based on claim levels and risks. Unfortunately we're in the highest risk profile nationally in South Florida. That means that based on claims paid out in a given year, and our risk being repriced for the following year, storm related claims that don't impact our area often do impact our insurance costs going forward. So aside from simply wanting the best for those in the path of Cindy, we have a financial dog in the hunt as well.

Brian Mudd

Brian Mudd

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