Property and casualty insurers took some losses last year as a result of a high number of weather catastrophes, such as floods, tornados and hurricanes. As a result, most industry experts expect insurance rates to increase in 2012.
Rate increases are based on an individual company’s experience, but they will likely rise slightly overall, said Merle Scheiber, vice chair of the property and casualty insurance committee for the National Association of Insurance Commissioners (NAIC).
The insurance product is priced according to what is appropriate for the insurer’s exposure, including weather events, and the storm outlook doesn’t bode well this year, he said.
“The rates are looked at by divisions of insurance across the country and monitored so they’re not excessive — they’re fair,” Scheiber said.
Robert Hartwig, president and economist at the Insurance Information Institute, agreed. High catastrophe losses in 2011 mean higher property insurance rates in 2012, he said.
In addition, insurers paid out about $1.18 for every $1 they received in workers’ compensation premiums last year, so workers’ compensation rates will likely go up as well, Hartwig said.
Premium rates are closely tied to overall economic conditions, said Andy Franken, president of the Wisconsin Insurance Alliance.
If consumers are building homes and buying cars, and employers are hiring, premiums are affected, he said.
However, since Wisconsin has one of the highest concentrations of property and casualty insurers in the United States, competition has still kept rates lower than the rest of the country, Franken said.
“For homeowners insurance, Wisconsin is the second-lowest in the country,” he said. “In auto insurance, we are probably in the bottom 10. It is because there are many companies vying for consumer and business service contracts.”