According to a recent article in the Atlanta Journal-Constitution, homeowners’ insurance price increases are affecting most consumers. In Georgia, the three main companies raised rates between 7% and 23.9%.
Industry experts say the increases are due to two main reasons – catastrophe claims and insurance fraud, primarily roofing scams. 2011 had more federal disaster declarations than any other year in history, which has severely taxed insurance companies’ reserves. For every $1.00 paid in premium, insurance companies are paying out $1.085 in claims. Reinsurance prices have also been on the rise, forcing insurance companies to pass on this expense to consumers.
Coupled with the trend of rising insurance prices, is the fact that home prices in Atlanta just reached their lowest point since 1998. Many people are stuck in homes they cannot afford to sell, and are having trouble purchasing insurance.
What do you think the solution is? Should insurance companies be capped at how much they can raise their rates in any given year? Should they be able to deny coverage renewal to current clients that have never filed a claim? Should the government step in and subsidize insurance for homeowners that can no longer afford their insurance?