Hawaii Insurance

Insurance for homes and cars with a cost increase of 10 percent or more in some countries, and perhaps also become more difficult to obtain, after the staggeringly large losses for insurers of Hurricane Andrew and other recent disasters.

Losses this year, estimated at over $ 10 billion, comes after several difficult years for damage to the industry. And they come, while lower interest rates are reducing return on investment of insurance companies. Accordingly, analysts and industry leaders say, many companies are bottlenecks experienced cash in the next 12 months and will be under pressure to higher prices. An excuse for solar plexus?

Yet, say the lawyers of consumers, many insurance companies are much more healthy, they would have as the public might believe and try to use them as a pretext to disasters iron trough of public opinion.

The conflict has been stoked, if an internal memo from the American International Group, a large damage insurers, was published in The Washington Post. In him, JW Greenberg, Executive Vice President, wrote that Hurricane Andrew was “an opportunity for price increases now. Maurice R. Greenberg, AIG chairman and JW Greenberg father, “said the message’s meaning was out of context. Last month, the Insurance Commissioners of Florida and Louisiana, the unusual step of freezing AIG’s premiums. The debate on how consumers are concerned until the year of disasters - the largest edition of the insured loss in this century - goes beyond disagreement on the number of casting strides in areas of disaster in Florida, Hawaii and other countries. It is part of a continuing war between supporters of consumers and industry on how America should distribute the costs for major risks and insurers are whether the fair treatment of consumers.

At the heart of their conflict, the debate between defenders of consumers, on the one hand, and many economists and analysts on the other side of how the financial soundness of the insurance sector should be evaluated.

Some companies say moderation of price increases on the lines of personal insurance in countries bordering Texas to Florida and the East Coast, perhaps as far north as New Jersey. Prices may also be affected, California, where the disaster for the insurer to pay reinsurance for earthquakes. Nobody is safe, as many phrases could go in any state, industry analysts say, perhaps 5 to 15 percent.

One thing that could prevent price increases, analysts say, it would be a strong reaction from the public and regulatory authorities.

“Hurricane Andrew was a shock to the system,” said an executive of a large insurance company, insisted on anonymity. “Either the prices are going to have to go to something disasters in the States or companies will have to return to operation.”

He added: “But the assurance that the commissioners in California John Garamendi said:” With golly, I did not so that people suffer. “” Mr. Garamendi, an elected official, exasperated with the industry policy that calls by consumers, but say that many companies are another way of his political ambition. Teuerste ever disaster

According to an initial estimate of $ 7.3 billion loss in Florida, industry experts last week revised their estimates to $ 10.2 billion in Florida, more than an additional $ 500 million in Louisiana. These losses are twice as high as $ 4.2 billion in insurance, which was lost the nation’s most expensive storm, Hurricane Hugo in 1989.

While insurers still bring their breath after Hurricane Andrew and Iniki Hit Hawaii an additional cost of $ 1.6 billion, so the nation the third most expensive of the storm. And all this before losses on Los Angeles riots and flooding in downtown Chicago, as well as severe weather, hail and other disasters.

Overall, the industry expected to pay at least $ 16 billion in debt to disasters this year, according to the American Insurance Services Group, estimates industrywide damage resulting from natural disasters. Most insurers can return more than one-third of losses after taxes. The last four years, in which other losses such as the collapse of oil platforms and the earthquake in San Francisco, the most expensive of this century, on which the damage and accident reinsurance.

But this is not the only one that creates pressure losses, prices will rise, some analysts say, but long-term trends in the industry.

“Hurricane Andrew will not raise prices,” said Orin Kramer, an analyst and industry consultant in Fort Lee, NJ “But the greatest catastrophe insurance losses follow the story of five years, a total deterioration of the financial capacity and increased cash flow problems. “Losses insurance

Mr. Kramer drew attention to the magnitude of losses of the insurance industry - and the fact that the industry has paid more than it has taken, with premiums for all types of property insurance accidents. AM Best, the insurance rating companies concern Oldwick, New Jersey, said the industry has lost an average of almost 10 cents on the dollar underwriting during the last ten years.

In many years, companies more than the loss of income from investments. Since 1986, income from capital has covered those losses, but the industry has left little margin of 5 to 8 per cent.

John Snyder, Senior Vice President of AM Best, said that lower interest rates, damage and accidents should be to achieve capital income of only 3 to 4 per cent this year. With heavy losses this year, profits are more difficult to achieve, “he said.

During recent weeks, Wall Street has speculated, intensely whether the storm losses leading to higher rates of commercial insurance, the premiums charged to the company. The impact on industrial tariffs remains uncertain, many analysts say the losses are spread over an industry of 160 billion dollars of capital.

But Bruce Ballantine, a senior analyst at Moody’s Investors Service in New York, said a point, often in these discussions is that losses resulting from Hurricane Andrew have not been equitably between insurers. She declined proportionately on the segment of the industry that specializes in personal lines of insurance and perhaps a third of the entire sector of the capital. An eye on invested capital

Allstate and State Farm, for example, write Overall, about one third of the nation’s owner of the car and home. Allstate’s losses after tax in the amount of $ 1.1 billion to more than 20 percent of the company’s capital. State Farm’s $ 1.4 billion in the same losses by about 8 percent of the capital.