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Posts Tagged ‘east coast’

A client who had been insured by a well known carrier recently asked if there wasn’t “any other carrier out there” that could also offer broad coverage for his large home “that didn’t charge an arm and a leg”. I explained that his carrier’s rates reflected their overall loss experience, and reminded him of a claim that he had many years ago and how happy he was with the outcome. Pressing his point, he asked if there were any carriers that had “better loss experience” so that they were able to price their coverage at a lower cost.  Enter a new carrier I’ve written about frequently here – Pure High Net Worth.

This excerpt is form a recent professional journal assessing the marketplace for high valued home insurance summarizes the opportunity: “However, there is some competition out there for these big players. For instance, a relatively new company from Florida called Privilege Underwriters Reciprocal Exchange (PURE) is making a big splash on the East Coast right now.  PURE offers similar features to Chartis and Chubb, and is very open to coastal properties where others are more restrictive in coastal areas.”

When my client reviewed the terms of Pure’s offer, he asked how the costs could be appreciably lower given the very similar coverage. I explained that because Pure was just beginning to add new risks, they had not yet experienced many losses, adding that Pure’s risk selection process relies heavily on credit scoring, which they believe will help attract policyholders who better manage their finances and their homes. The client shared that he regards this as a de-facto “sale” on home insurance, and told me I should explain it in such terms to others.

Well —– although insurance carriers do not have “sales”, it is fair to observe that new carriers entering the marketplace without the burden of prior losses and who also carefully select the risks they insure are able to price their policies at rates that can give the impression they are on “sale”.  For those who find the idea of a “sale on insurance” appealing, please contact me to examine an offer from Pure.  Meanwhile, as an independent risk advisor, my advice on “who the best carrier is” remains unchanged:  it is whichever carrier best meets that particular client’s specific protection needs.

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If you were to key word search the term “hurricane forecast”, among the first entries you’d find is a reference to Dr. William Gray of Colorado State University.  To those of us who obsess about risk, Dr. Gray is quite the celebrity.  Each year Dr. Gray and his team of research scientists dares to announce how many hurricanes we can expect during the season.  For the 2010 Atlantic Hurricane Forecast, Dr. Gray and his Colorado State University staff are predicting 18 named storms, 10 of which are estimated to develop into hurricanes. They estimate a 76 percent likelihood that a major hurricane, with winds of 111 mph (178 kph) or greater, will strike the U.S. This figures represents a 24% increase over the average for the past century.  For those wondering why, few should be surprised to learn that meteorological conditions around the globe are optimal for hurricane development. Sea surface temperatures in the Lesser Antilles and off the western coast of the African continent are the warmest in recorded history. Combined with an absence of high altitude wind shear in the Atlantic Ocean,  Gray advises the 2010 season will be particularly active.

Unlike Dr. Gray and other climate experts, I can actually provide several GUARANTEES regarding this hurricane season: Whether a major hurricane makes landfall in the U.S. or not, the vast majority of Americans will elect not to prepare for one. Rather than take precautions, most Americans will simply gamble that their homes, possessions and families will remain safe from natural disaster. Many will be correct, but some will be wrong.  Buta select few will make sure they are prepared for a natural disaster and will have a plan in place, just in case. Do you need help on how best to prepare for a hurricane? I can provide clear guidance and a list of available solutions and resources, but I cannot help unless you let me.  Call me or send me an e-mail.

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I am often pressed to explain the rising cost of insurance — not an easy task. As with the rising cost of anything, a complete explanation involves revieiwng many factors (boring). There is one leading factor driving the rising cost of insuring homes that the WSJ recently decided to cover.

 

I am surprised that many I speak with do not realize insurance carriers also buy insurance on the risks they insure. The process of buying “reinsurance” allows insurance companies to spread their exposure to large, catastrophic losses that can strain their ability to pay many claims and remain in business.  

 

I share this because the factor with the greatest influence on the rising cost of home insurance (especially those in coastal areas) is the rising cost of the reinsurance that insurers are paying. Of course, those rising costs are passed along to all of us in the form of rising premiums. This page one Wall Street Journal article offers a thorough and interesting explanation behind the factors driving of the rising cost we are all required to pay to insure our homes.

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