2012 Insurance Outlook; Auto Insurance, Home Insurance, Business Insurance

Thought I would give a 2012 New Hampshire insurance news update this month and I’ll expand a little more on each subject in the upcoming months.  Overall, experts say and we see that carriers are looking to increase their insurance rates; in some areas more than others.

NH Automobile Insurance: We’ve come off some of the most competitive years of auto insurance pricing and some carriers that have very low rates are starting to bring rates up to average levels.  Some auto insurance carriers in NH are keeping rates level, others are taking anywhere from a 2% increase to a 10% increase on average.  Keep in mind that these rate increases are filed and approved by the State’s insurance department.

NH Homeowners Insurance: Home insurance will see the highest increase in rate in 2012. NH and other New England states have seen some of most extreme weather events in the past several years; October 2011 snowfall, Hurricane Irene, tornadoes, severe wind storms of February 2011 and 2010, and of course the Ice Storm of 2008.  All of these weather events have caused severe losses and that ultimately translate in higher rates for home insurance customers.  Most carriers are increasing rates from 5% to 10% on average and some outliers looking at 25%.  Again, keep in mind that these rate increases are filed and approved by the State’s insurance department.

Commercial Insurance: Most carriers are talking about increasing rates and that the end of the “soft market” is here.  That may be the case or it might just be an attempted self-fulfilling-prophecy.  Only time will tell as we move further into 2012.

Overall, most carriers are looking for increases as claims are on the rise over the past several years.  There are several factors that contribute to these increases.  Don’t forget how insurance works; premiums of the many are accepted by insurance carriers, that premium is invested, the premiums of the many are supposed to pay for the losses of the few.  You know that the investment market has been less than reliable as of late and insurance carriers cannot make good returns on their investment of premiums so carriers must make an “underwriting profit”.  That means, the premiums taken in must exceed the losses they pay out including all of the operating expenses of the insurance company.

The lack of investment return, series of natural disasters, combined with a struggling economy where insurance customers wouldn’t normally file a smaller claim and where the average claim is growing in size has helped push rates up in several areas. 

We’ll expand on each line of business as the year progresses and report back on how rates have changed in the various lines of business; auto insurance, home insurance, and business insurance.

Keith Beausoleil, CPCU