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It doesn't necessarily go up 'in that area' if you mean
Posted on: July 22, 2016 at 11:30:38 CT
JeffB MU
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some section of a city.
Awhile back there were some massive insurance payouts along the Gulf & eastern coasts and the actuaries decided that 1. They had too much exposure in those areas and 2. they underestimated what damages for such events would be and 3. they had underestimated the probability of those events
In addition to that they lost a lot of their reserves (cash, bonds & other assets) when they paid out those claims which reduced their capacity to write as many policies, at least in the short run, as they must keep up their reserves to written premium ratios to keep their financial ratinsrms in the future, so to speak.
So, they had to raise their prices and reduce the number of policies they wrote... and all of the companies that had written any significant number of policies in those areas had similar experiences in that regard.
That resulted in a pretty big increase in prices in many of those and similar areas.
It was the perfect storm, so to speak.
Awhile back there were some massive insurance payouts along the Gulf & eastern coasts and the actuaries decided that 1. They had too much exposure in those areas and 2. they underestimated what damages for such events would be and 3. they had underestimated the probability of those events
In addition to that they lost a lot of their reserves (cash, bonds & other assets) when they paid out those claims which reduced their capacity to write as many policies, at least in the short run, as they must keep up their reserves to written premium ratios to keep their financial ratinsrms in the future, so to speak.
So, they had to raise their prices and reduce the number of policies they wrote... and all of the companies that had written any significant number of policies in those areas had similar experiences in that regard.
That resulted in a pretty big increase in prices in many of those and similar areas.
It was the perfect storm, so to speak.
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It doesn't necessarily go up 'in that area' if you mean - JeffB MU - 7/22 11:30:38