Kelli Hindsman's homeowners insurance has risen each year since she purchased her three-bedroom Villa Rica house in 2009, though she's never made a claim.
She could understand the first increase, she said, because the company offered additional coverage in exchange. But last year, she learned that the cost would increase again -- by about $200 dollars -- with no additional benefit. When she called her insurance agent to ask about the price hike, she was told only "It's happening to everyone," she said in an e-mail.
Her agent, while brief, was basically right.
Most of Georgia's insurance providers sought and received rate increases from the state's Office of Insurance and Fire Safety Commissioner last year, and those hikes are starting to kick in. State Farm Fire and Casualty, for example, won approval for a 7 percent increase, AllState Fire and Casualty got 23.9 percent, and Nationwide Property and Casualty got 9.6 percent, to name a few.
Industry insiders say the increases are necessary for two major reasons -- devastating weather events and insurance fraud, especially roofing scams -- which have taxed cash reserves. In addition to raising rates, some companies are opting to not renew some policies and to deny new applications for coverage in order to reduce their risks.
Last year saw more federal disaster declarations than ever before. Nationwide, insured losses for the first nine months of 2011 totaled $32.6 billion -- almost double the average, according to the Insurance Information Institute.
"It has been a horrendous time for insurers," said Dave Colmans, executive director of the Georgia Insurance Information Service, a trade association of property and casualty insurance companies. "What is going on now, especially because of the severity of the catastrophe claims, they are paying out at $1.085 per dollar they make."
Even so, Hindsman isn't sympathetic.
"As a single parent [I] have to set a ‘reserve' for those rainy days or years of terrible weather," Hindsman said. "Why do the insurance companies not do a better job on this?"
As for the cost of fraudulent claims, she said that shouldn't become her problem.
"When they hike my rates up over $200, then I'm being punished by the individuals who have filed claim after claim, or those who have no morals and have no problems filing false claims just to get the insurance money," Hindsman said.
Travis Webb, president of the Roofing and Sheet Metal Contractors Association of Georgia, said roofing fraud is a real problem that has given his industry a black eye.
Because Georgia does not require roofing contractors to be licensed, fly-by-night outfits that Webb called "storm chasers" may offer to inspect a homeowner's roof, then actually inflict damage in order to scam the insurance company, he said.
That kind of scheme "hurts everybody, it hurts the insurance companies and legitimate roofing contractors,” Webb said.
To stem such abuses, he said, his organization is backing legislation that would require Georgia roofers to be licensed.
Jay Florence, the legislative liaison in the Office of Insurance, said the bill has not yet been reviewed by the committee that oversees licensing activities. He said it may or may not be introduced during this year's legislative session.
The public perception is that homeowners insurance is hightly profitable, but that's not the case, said Robert Klein, an associate professor of risk management and insurance at Georgia State University.
"People have this basic perception that insurance is a ripoff, that they [insurance companies] collect these premiums, and since people may never file a claim, they think they’ve paid into something and gotten nothing back," he said. "But our studies have shown the profits in most lines of insurance, including homeowners and auto insurance, are not big."
In addition to the recent surge in natural disasters, Klein pointed to a lesser known reason for price hikes -- the rising cost of reinsurance (the practice of an insurance company buying insurance for itself).
"The reinsurers have also had huge claims and payouts because of catastrophes and other weather related losses in the U.S. and elsewhere, so their costs have gone up," he said. "Their capital has been depleted."
Steve Manders, director of insurance product review at the state's Office of Insurance, said companies seeking rate increases must provide detailed statistics on their revenues, costs and profit projections.
He said competition between companies has kept pricing down during the past two decades, "probably down lower than it really needed to be." As a result, he said, taken as a whole the past 20 years have probably produced a net loss for underwriters of homeowners' policies.
That's no real comfort to people such as Amy Barnes, of Marietta, who decries the rate hikes and believes consumers are powerless against them.
Barnes' home is near the area that was flooded during the historic rains of 2009, but it is on a hill. She sought a new homeowners policy last year when her rates increased, she said, getting quotes that ranged as high as $4,000.
"Because of the national disasters and the flooding, we discovered that several companies stopped insuring our area altogether," she said. "It was a very daunting task."
Barnes said she was also put off by some of the questions she was asked, including how often she has visitors, her work schedule, how tidy she keeps her home, whether she has pets, and more.
"As a consumer, I have zero control over what the industry decides to do, and I am held captive by this industry," she said.
But Klein said consumers do still have a choice between companies. "I'd say that is their primary protection -- shopping around."
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