Bensman Risk Management, Inc.


Insurable Interests

Bensman Risk Management, Inc.
2333 Waukegan Road Suite 275
Bannockburn, IL 60015
847-572-0800 Phone
847-572-0502 Fax

Insurable Interests may offer general financial, insurance, tax and business ideas. However, due to the ever-changing tax laws as well as the complexity of the financial industry, you should seek professional advice before implementing any of the ideas contained in this newsletter. The Bensman Group, Bensman Associates Ltd., Bensman Risk Management, Inc. or Schemata, L.L.C. assumes no liability whatsoever in connection with the use of this newsletter.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS). Kestra IS and Kestra AS are not affiliated with The Bensman Group, Bensman Associates Ltd., Bensman Risk Management, Inc. or Schemata, L.L.C.

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Insurable Interests

Vol. 7, Issue 6February 2012

MONTHLY MESSAGE

Homeowner's Rates on the Rise

You might be in for an unpleasant surprise when you get your homeowner’s renewal this year. Rates with many companies are going up – often by 10 percent or more -- as insurers react to a string of weather catastrophes as well as to lower-than-normal investment income.

Most of the nation’s major home insurers have announced that they are raising rates or expecting to raise rates in the wake of a record $105 billion in weather-related damage globally in 2011. The United States was struck by several weather events that were unusually deadly and damaging. For example, from April 27 to 28, there were 359 confirmed tornadoes in 21 states. The storms killed a total of more than 300 people and caused more than $10 billion in losses. Overall, weather caused almost $35 billion in insured losses – and $70 billion in total losses --- in the United States in 2011.

In addition to raising rates, insurers are tightening underwriting standards. For example, many companies are expanding the areas considered at risk for tornadoes and hail. And some carriers are limiting or refusing coverage for buildings with older roofs.

Insurers traditionally can offset some of their casualty losses with income they earn on their investments. However, low interest rates and sluggish investments overall have significantly reduced the money carriers are earning on their investments.

We are seeing particularly steep rate hikes and underwriting tightening in Florida. Although there have not been significant hurricanes in the state for the last few years, insurers are concerned about the possibility of another major storm. The regulatory environment in Florida also makes it very difficult to raise rates. When rates are not high enough to cover potential losses, meet financial rating requirements and meet shareholder expectations, companies have to underwrite very conservatively and essentially “ration” their insurance coverage. If you are looking for homeowner’s coverage in Florida, be prepared for high rates and stiff underwriting standards.

There are several things you can do to help lower your insurance premium, wherever you live. You can increase your deductible, and you can bundle your homeowner’s coverage with other coverages such as auto insurance. Adding an alarm system to your home will reduce the likelihood of a loss and can also reduce your premium. Insurance companies are also providing additional credits when components such as temperature monitoring and moisture detection systems are added to an existing alarm system. If you have an older home, major renovations may also change the effective age of your home and thus lower your premium.

At The Bensman Group, we are happy to talk with you about your homeowner’s insurance coverage. We can help you review whether it is adequate for your situation and consider ways you might lower your costs. Please contact us at 847-572-0800 or dmiller@bensman.com.

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