Once again, insurance companies are raising rates. I say once again, because this seems to be a pretty common theme. This time the excuse is the hurricanes that hit the gulf coast.
Insurance companies made $30.8 billion in profit last year. They are now saying that they have to move money from their capital account and “reserve” it to pay for these claims. (By law, insurance companies must keep enough money in reserve to pay their expectations for existing claims.) But its pretty hard to justify continuing to raise rates when profits are soaring. Rates have gone up 67 percent, on average, since 1995.
The real issue is that the insurance companies want to make MORE money. They have a built in excuse every time there is a natural disaster. This gives them the ability to increase premiums and not have such public outrage.
My guess is 10 to 15 percent rate hikes over the next 18 months. And that means more of your money for the insurance companies!