State awaits new round of rate hikes

“Most of it is weather driven,” said Steve Manders, director of insurance product review at the Georgia Department of Insurance.

A series of damaging storms in 2008 and 2009 resulted in most companies paying out an unusually large number of claims, Manders said. Those losses have pushed most of the companies to request higher premiums. The latest rate hikes do not even factor in this year’s deadly tornadoes that resulted in millions of dollars in damage statewide.

Allstate, Georgia’s second-largest writer of homeowners coverage, enacted a 23 percent increase earlier this year. It had originally proposed increases of between 49 and 68 percent for its four Allstate companies operating across the state. Allstate would not say if it plans to increase rates again soon.

Mary Ellen Nicol, a homeowner in the Chamblee-Dunwoody area, said Allstate notified her that it would boost her premium about one-third when her policy renewed this year.

“I wasn’t willing to absorb that increase,” said Nicol. During 20 years as a customer she had filed one claim, and that was 11 years ago.

She shopped around and, instead of paying about $300 extra a year, will save $420 by buying a new homeowners policy with her auto insurer.

Nicol works as a housing counselor at CredAbility, the nonprofit credit counseling agency. She said many consumers don’t closely track what they pay for homeowners coverage because the bills are paid by the mortgage company through an escrow account. But she said the insurance tab is “the only part of their mortgage payment that [consumers] can control.”

Insurers must inform the state Department of Insurance when they plan to raise rates and supply detailed statistical information showing why. Georgia law does not give the commissioner the authority to set the rate, but the department negotiates based on what it believes is reasonable.

“In 2010 we paid out more than we took in, which has been the trend now for several years,” said Justin Tomczak, a State Farm spokesman. Manders said most Georgia insurers are in the same position — with some paying out twice what they have received in premiums during 2008 and 2009.

Natural disasters have hurt insurers’ bottom lines in recent years, but most remain financially stable when all lines of business are factored in.

As Hurricane Irene began to slap companies with another round of claims, the Insurance Information Institute said the industry had more than half a trillion dollars set aside that could absorb the costs of the hurricane, even after $15 billion in claims from major storms that struck between April and June.

Allstate spokesman John Heid said that Allstate’s prices simply reflect the costs of providing the coverage. “Allstate is making responsible business decisions to remain strong and positioned to deliver on its promise to customers,” Heid said in an email. He said Allstate recommends that customers work with their agents to make sure they are getting every discount they are eligible to receive.

Homeowners insurance has never been a cash cow for insurance companies, according to industry experts. Auto coverage is the lucrative line of business; but a good deal on a homeowners policy often means the company might get a family’s auto business as well.

The average homeowner in Georgia paid about $750 a year for insurance in 2008 — just below the national average, according to the National Association of Insurance Commissioners most recent state-by-state data.

Former insurance commissioner John W. Oxendine said the companies put themselves at risk by pricing homeowners coverage without much of a profit margin and that regulators should keep that in mind when reviewing rate filings.

“They routinely will use [homeowners] as a loss leader just like the department stores do to bring people in,” Oxendine said. “Now they’re trying to get the [insurance] department to make up the difference for their own business decisions.”

Manders said Ralph Hudgens, the current insurance commissioner, is concerned about the rate increases and that the department is using its influence to protect consumers from major hikes.

But when big losses pile up, even some large rate increases win approval because of the need for insurers to stay solvent. Regulators also want to make sure the state market stays competitive. In some coastal states with hurricane losses, some insurers have dropped out.

Insurance pricing for Georgians cannot be influenced by losses that insurers had in other states — only costs related to Georgia policies can be factored into the equation. But those costs are significant, Manders said, and may lead to more increases in 2012.

Manders said consumers should consider options if they get a steep increase — including raising their deductible. But he said those who have been with the same company for years should be cautious because longtime customers are less likely to have a policy canceled if they file claims.

“But if you have been with a company for less than five years,” Manders said, “I would take a look at shopping.”

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Homeowners Insurance

Insurers that sell homeowners coverage in Georgia have been raising prices — and more increases are coming. Here’s a look at some recent rate changes filed with the Georgia Department of Insurance.

State Farm Fire and Casualty

Jan. 2011: +9.1%

Jan. 2010:+10.9%

Allstate Fire and Casualty

Jan. 2011:+23.9%

June 2010: +11%

Allstate Property & Casualty Insurance Company

Jan. 2011: +25%

June 2010:+11%

Travelers Group, The Charter Oak Fire Insurance Co.

Nov. 2010: +10.31%

Aug. 2008: +9.43%

Travelers Property and Casualty Company of America

Nov. 2010:+10.42%

Aug. 2008: +9.41%

Georgia Farm Bureau Mutual

Aug. 2010: +11.4%

Aug. 2009:+9.54%

USAA Casualty Insurance Co.

May 2011:+15.4%

Jan. 2008:-2.7%

Liberty Mutual Fire

July 2010: +11.9%

July 2009:+9.3%

Cotton States Mutual

June 2010: +13.9%

June 2009:+10.6%

Nationwide Property and Casualty

June 2011:+9.6%

June 2010:+10.3%

Source: Georgia Department of Insurance