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Tag Archive for 'insured'

State Farm Fine-Tunes Risk Assessment, Decreases Rates

A.M. Best recently reported that carriers are looking at more than just rate increases to help them maintain profitability in a volatile property insurance market. Other risk-management initiatives that are being looked at include mandatory wind/hail deductibles, percentage hurricane deductibles and roof limitations based on the age and condition of the roof. Geo-coding and better understanding a specific home’s (versus an area’s) risk is also becoming a new trend in risk management practices.

Looking at “micro-zones” versus more broad measures is one way that State Farm in CA is able to manage the carrier’s risk while also offering more discounts to their client’s premiums. Beginning April 15th, State Farm, the largest homeowner insurer in CA, is dropping rates by an average 12.6% for more than a million customers. When looking at State Farm’s customer base in CA, that means 85% of the homeowners they insure will see an approximate $100 savings in their premiums. Renters will also see some savings upon renewal.

Instead of looking at just the zip code, State Farm’s new rate-setting system breaks down risk factors such as geology and fire danger, based on the exact geographic location of the home. This will position State Farm as having the ability to offer competitive pricing based on a fine-tuned set of risk assessments.

Spending Increase on Personal Lines; Commercial Rates Remain Steady

According to new research by Bankrate.com, more than a third of Americans spent more on insurance last year, while 52% spent the same, and only 7% spent less.

Of those that spent more on insurance in 2012, 62% said they did so due to rising premiums. The second biggest reason for increased insurance spending, according to survey respondents, was due to the purchase of a new home, car, boat or recreational vehicle.

Spending increases on multiple types of insurance was also seen, including homeowners, renters, life, auto and health coverage.

On the commercial side, rates are expected to continue rising later on in 2013 due to above average losses, low investment returns and receding reserve releases. The occurrence of a hard market is not in sight as of now, as both competition in the insurance marketplace and capacity remains high, and price increases continue to differ across the board.

Some suspected that commercial insurance rates would have started to rise in early 2013, but Superstorm Sandy’s effect on the market is predicted to stall or even out current rates that at one point had seemed to be improving.

Insurers across several types of lines and industries will continue to adjust their pricing and coverage in efforts to maintain their profitability. In addition, the rising severity of losses means that carriers to look more closely when processing claims to ensure the claim and the circumstances that caused the loss matches the coverage currently carried by the insured. For restoration contractors, this could result in further challenges with insurance companies, uncovered losses and angry policyholders who didn’t realize their lack of or gaps in their insurance coverage.



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