Longwood, FL – The insurance industry reacted to horrific hurricane disasters in 2004 and 2005 by raising rates to an unprecedented level in 2006.
United States of America (Press Release) December 19, 2007 --
For more information contact:
Jeremy Burr, Vice President Apartment Complex Insurance
(407) 998-5427
jeremy.burr@ioausa.com or visit http://www.insuredapartments.com
FOR IMMEDIATE RELEASE
Apartment Insurance Rates Tumble
(Thursday, December 13, 2007)
Longwood, FL – The insurance industry reacted to horrific hurricane disasters in 2004 and 2005 by raising rates to an unprecedented level in 2006. Luckily for apartment insurance policy holders the record rates are plummeting all over the United States.
The seemingly “knee-jerk” reaction to the claims in 2004 and 2005 has deeper-rooted issues than most recognize. The reinsurance marketplace was the first to hike rates as they take the brunt of large claims. For example, a policyholder that has apartment complex insurance needs facing a $2,000,000 hurricane claim files the claim to their respective carrier, who then cedes off a majority of the claim payment to a reinsurer. In calm years, reinsurers have phenomenal underwriting profits because small claims are absorbed by the insurance carriers. Due to mild 2006 and 2007 hurricane seasons, the reinsurers posted record profits and the marketplace is now more aggressively underwriting.
The commercial real estate insurance and apartment insurance sector are particularly vulnerable to insurance premium hikes. The value of a property, cash flow, and other variables are impacted not just by hurricane activity itself, but by the financial aftermath of increasing apartment complex insurance premiums. As rates continue to fall, a pessimist would note that we are just one large storm away from a similar reaction by the insurance industry. It certainly seems that the insurance community has a short memory – 2004 & 2005 combined to equal over $100 billion in insurable losses and now rates are quickly approaching 2004 levels. For now, commercial real estate insurance premiums are falling and owners of apartment complexes hope for a continued slide in premiums, which is expected as we enter 2008.
Jeremy Burr, Vice President Apartment Complex Insurance
(407) 998-5427
jeremy.burr@ioausa.com or visit http://www.insuredapartments.com
FOR IMMEDIATE RELEASE
Apartment Insurance Rates Tumble
(Thursday, December 13, 2007)
Longwood, FL – The insurance industry reacted to horrific hurricane disasters in 2004 and 2005 by raising rates to an unprecedented level in 2006. Luckily for apartment insurance policy holders the record rates are plummeting all over the United States.
The seemingly “knee-jerk” reaction to the claims in 2004 and 2005 has deeper-rooted issues than most recognize. The reinsurance marketplace was the first to hike rates as they take the brunt of large claims. For example, a policyholder that has apartment complex insurance needs facing a $2,000,000 hurricane claim files the claim to their respective carrier, who then cedes off a majority of the claim payment to a reinsurer. In calm years, reinsurers have phenomenal underwriting profits because small claims are absorbed by the insurance carriers. Due to mild 2006 and 2007 hurricane seasons, the reinsurers posted record profits and the marketplace is now more aggressively underwriting.
The commercial real estate insurance and apartment insurance sector are particularly vulnerable to insurance premium hikes. The value of a property, cash flow, and other variables are impacted not just by hurricane activity itself, but by the financial aftermath of increasing apartment complex insurance premiums. As rates continue to fall, a pessimist would note that we are just one large storm away from a similar reaction by the insurance industry. It certainly seems that the insurance community has a short memory – 2004 & 2005 combined to equal over $100 billion in insurable losses and now rates are quickly approaching 2004 levels. For now, commercial real estate insurance premiums are falling and owners of apartment complexes hope for a continued slide in premiums, which is expected as we enter 2008.
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