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Florida homeowners pay highest property insurance premiums because state still owns #1 position for disasters
Guest Blog by James Lynch, FCAS MAAA
Chief Actuary and VP of Data and Information Services
Here’s a question we get every year: Why does Florida have the most expensive homeowners insurance in the nation? The answer is easy: It is the riskiest state to write homeowners insurance.
The average Florida homeowners policy cost $2,115 in 2013, according to a report released last week by the National Association of Insurance Commissioners. That’s highest in the land. Texas is No. 2 ($1,837), and Louisiana is No. 3 ($1,822). We have a ranking of the states at the Insurance Information Institute web site.
Florida regulators issued a memorandum to insurers recently to eliminate the use of something called price optimization. That’s probably an unfamiliar term to most people. It’s interesting that the memo had to define what “price optimization” is in order for insurers to stop doing it. Simply, the memo from the Florida Office of Insurance Regulation was to stop a practice that few insurers are using in the first place and that may actually help lower insurance costs.
Price optimization is a tool that other industries have used for years,
The pre-hurricane season forecast was released today, and it “suggests” the 2015 hurricane season will be well-below average. I used the word “suggests” because the researchers themselves say this forecast is about probability; it cannot be an exact prediction because atmospheric conditions change like (um) the weather. And, armed with information about what is likely, most people will do…nothing. Too bad.
The National Association of Insurance Commissioners (NAIC) issued its latest national report on property insurance costs this week, and you’ll likely be seeing news stories about how Florida homeowners pay more than double the national average for homeowners insurance.
Let’s say you bought something that cost an average $1,900 each year and never took the time to figure out how it works. If you knew that in just 20 minutes you’d have it figured out, would you invest the time?
Investing time – and gaining confidence – in your insurance protection is exactly the point of the Insurance Information Institute’s new consumer email program. CHECK20 is an important new step in our mission to explain what insurance is and how it works. It’s easy, it’s free and its intent is to empower policyholders to be fully engaged in the insurance decisions affecting their family and finances.