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Hurricane Sandy could drive up insurance costs, but Kansas shouldn’t be affected.
The Kansas Insurance Commissioner’s Office says state law requires insurance companies to rate risks based only on what happens in Kansas.
Just because rates here aren’t affected by hurricanes, insurance providers can increase rates based on other natural disasters.
“They can and they do,” says assistant commissioner Bob Tomlinson.
Hail damage has been more severe in recent years.
“Three of the last five years in Kansas have set records for losses due to hail,” says Tomlinson.
He says average rates have gone up double digits in some years because of storm damage.
It may take up to 2 years before an insurance company reflects weather-related claims experiences their rate adjustments according the Kansas Insurance Commissioners office.
Here are some other tips provided by the office.
- Most companies file for rate adjustments yearly based on five years’ worth of claims experience. The companies will factor out anything in excess of normal, taking out catastrophic losses and averaging them over a period of time, such as 20 years.
- Property and Casualty premium rates, through state legislation passed several years ago, can increase or decrease up to 12 percent (called a “flex rating”) without approval from the Kansas Insurance Department.
- KID can intervene at any time to determine the reasons for the premium change.
- Insurance companies look at total losses versus premium in helping to calculate rate adjustments.
- Multiple companies are involved in Kansas losses each year. Premium adjustments can be different for each company.
- Adjustments can vary within the state, as designated by each insurance company’s territorial map.
- Companies can be reinsured for catastrophic losses. Reinsurance is insurance that is purchased by one insurance company from one or more other insurance companies. There are different levels of reinsurance they can purchase.
- For real property, fire is still the number one peril, followed by wind and hail. (Real property includes land and structures that sit on the land, but not the personal or business property included on the land or in the structures.)
- Companies have the ability to stop writing new coverage policies.
- In 1937, Kansas was the first state to have laws regulating rate adjustments. Statutes say the adjustments must be “adequate, not excessive and not unfairly discriminatory.” Many other states have copied this statute language for their own use.