Franklin County Sheriff Zach Scott said, Wednesday, he will run for Mayor of Columbus next year.
Global, National Disasters Affect Local Insurance Rates
Listen to the Story
Natural disasters this year have caused billions of dollars in property damage. The totals exceed typical annual estimates made by the insurance industry. WOSU reports how these losses could affect local insurance premiums.
Two-thousand-eleven has seen remarkable natural disasters in the U.S.: tornadoes, Hurricane Irene, and wildfires. These catastrophic events have caused at least $23 billion in damage to insured properties. And the hurricane season is only at the half-way mark.
Blake Zitko, a spokesperson for State Farm Insurance, said disasters outside of Ohio will not affect local insurance premiums.
“Ohioans are not going to have to pay for a natural disaster that took place say on the east coast or the west coast. We only charge one for their premiums of the risks they absorb,” Zitko said.
Insurance companies such as State Farm, Nationwide and Grange Insurance all said insurance premiums are based on multi-year trends â€“ not a single event or even a single year. Peter McMurtrie is the chief claims officer for Grange Insurance.
“Itâ€™s really been in the last five years that weâ€™ve seen a fairly significant change in the weather patterns particularly in the Midwest and specifically here in Ohio,” McMurtrie said.
Columbus experienced a significant hail storm in 2006; then the half-billion dollar wrath of Hurricane Ike in 2008; another considerable wind storm in early 2009 and flooding this year.
“It is reasonable to assume that there will be increases in homeowner rates again this year, but I think those increases customers have been seeing over the last couple of years as carriers have been reacting to this multi-year trend in weather that has been occurring,” McMurtrie said.
But the insurance industry is a global one. And it has accrued more than $75 billion in losses this year. Youâ€™ll recall the Japan earthquake and tsunami and flooding in Australia earlier this year. Greg Locraft, Morgan Stanleyâ€™s lead analyst for property casualty insurance, said Ohio insurance policies will be affected by national and global catastrophes.
“That amount of loss gets spread across the globe. And what ends up happening is, insurance is a game of large numbers. Everybody individually pays a small amount of money into a pool. And that pool covers losses over the entire world,” Locraft said.
Insurance companies buy their own insurance to cover losses, just like property owners. But because of the massive losses this year, insurance companies are likely to see hikes in their own insurance rates. That too could be passed on to customers. But most agree, including Locraft, that will be minimal.
“Itâ€™s not the kind of thing thatâ€™s instantly going to flow through to consumers,” he said.
Bottom line, you can expect your insurance bottom line to go up this year; Locraft predicts anywhere from five to 15 percent.