If you think your insurance rates are high, you should see the amount your insurance company must pay for insurance.
Insurance companies, just like all of us, must pay for insurance to protect their interest. The rate hikes they face this year are expected to rise significantly, as much as a 40% increase.
It’s called reinsurance and their policies are coming due in June. There’s speculation this year that the companies will not be able to spread their payments out over six months. Instead, they’ll have to pay it all upfront — and that could cause some companies to go out of business.
Lora Gailloreto is a new Florida resident who relocated from Wisconsin but is paying much more to insure her new home in the Sunshine State.
“At least 50% higher, but I knew that it was always higher down here,” Gailloreto said.
Florida’s insurance crisis has seen skyrocketing rates, companies going under and policies getting canceled.
Reid McDaniel of McDaniel Insurance Solutions said in January, companies saw a 50% increase and in June, they’re expecting rate hikes to be nearly as much.
“Reinsurance can sometimes cost hundreds of millions of dollars for the insurance company…they would like to break that up into payments over six months. Some of the re-insurance brokers are saying that is not possible this year and they need to pay for it in full,” McDaniel explained.
Slide Insurance, which recently took on 91,000 UPC policies, and Kin Insurancejust purchased their reinsurance ahead of the official start to hurricane season of June 1.
Industry experts predict several companies may not be able to afford the new rates this year.
“There is certainly speculation that a few companies may not make it through this reinsurance cycle,” McDaniel said.
That could ultimately lead to more cancellation notices and McDaniel points out those rate hikes could be passed along to all Florida policy owners.
“Yes, you can say that when re-insurance rates increase, typically homeowners premiums increase as well,” he said.
Gailloreto said it may mean that people have to give up some of the $10 lattes to make sure their biggest investment is covered.