How Hurricanes May Impact Insurance

How Recent Hurricanes May Impact Insurance in Wisconsin

Hello Everyone,

Just wanted to send good thoughts to anyone with relatives affected by the storms in Texas and Florida. Those were very powerful and wide reaching storms and we probably all know a few people that have ties to those areas.

When a storm like that hits, especially two in a row, we get a lot of questions about what happens to insurance rates and how a storm in Texas or Florida might impact your insurance here in Wisconsin. I will try and give you a good idea of how this could impact your insurance rates. We also want to provide you with enough information and knowledge so you can help others worried about this type of situation and potentially steer them to the most helpful carriers in our area.

In general, the insurance carriers purchase insurance for a big catastrophe just like we do. They purchase products called reinsurance from other insurance companies with a large deductible (somewhere in the millions). The reinsurance helps the carriers that we represent better predict their claim costs based on significant weather events because they know that once losses from a specific storm hit their deductible, the reinsurance will step in and pick up the balance of the claims cost. Obviously, when two major storms hit back to back, we might expect the reinsurance carriers to have a rate increase next year which would get passed down to our insurance carriers and subsequently to the policyholder. What this means for the policyholder is that there may be a rate increase next year to offset that cost from major insurance companies.

More specifically, carriers with a lot of insurance policies in Florida or Texas will show a greater impact on insurance rates than those who do not. The good thing about an independent insurance agency like us is that we have a variety of carriers which range from national companies doing business in all 50 states down to regional companies working primarily in the Midwest. We even offer a few providers that write only in Wisconsin. Logically, we would expect the Midwest region and Wisconsin based carriers to be less impacted than a national carrier writing a lot of business in Texas or Florida.

With two storms this size coming so close together, it will definitely impact the insurance market. What I wanted to get across in this explanation is that it’s not as simple as “there were storms in Texas and Florida so your rates went up 20% because of that.” You will likely hear that at some point or another in the next 6 to 12 months.  As you have read throughout this explanation, it’s not as simple as that here in Wisconsin and most of the Midwest. We will do our best to look out for your interest and protect your families properly at the most reasonable cost we can.  Thank you again for your trust in that endeavor.