Weathering the Weather, Whether you like it or not.
I have been watching the reports with a bit of trepidation. So far, the Atlantic remains quiet. This has certainly not been the case for the Pacific. Hawaii just got struck with a storm causing flooding and wind damage.
One thing is certainly true about the climate, there is such a thing as "Global Weirding". The patterns have been quite weird. Not just warmer - but that is certainly true, too. Don't know what tomorrow will bring. It's never been truer that we don't know what we don't know. Are temperatures going to keep climbing steadily? Seems like it. Are the oceans rising? Most likely -- especially seeing the advancing melting of glaciers and the ice caps.
When we are dealing with such uncertainty, and managing the risk of weather in the property and casualty business - it makes it harder to price policies to meet the needs and not put a company at risk. Insurance rates are set (promulgated) based upon the expected occurrence of losses both in frequency and in severity. Costs are escalating due to the influence of inflation, increasing labor costs demanded by vendors, raising expectations on the part of claimants to have more and more covered by their policy, and by fraud.
What we're left with is trying to be competitive against other company rates, offer a fair deal to our insureds, and keep the company's coffers from depletion following a catastrophe. Imagine selling a product for price, but you don't know its cost of manufacture until after a year has passed since you sold it?
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But I have been in the insurance business as an agent for 32 years and I've sat on boards of insurance companies for over 31. Over the years, I have witnessed change happening at an ever increasing pace. The volatility of weather patterns causing their severe damage is a major determinant of the cost of property insurance. That's why Texas is among the most expensive areas for homeowners insurance. Between hurricanes, hail storms, tornadoes and storm damage from straight winds and lightning - you just can't seem to get a gentle rain shower - without a lot of spitting, fussing and cussing from mother nature.
So when a client calls with the question, "Why is my premium going up?" I have an answer, but they don't really want to hear it. They just want me to listen to them complain - and find another company that has a lower cost. It's complicated.