While one insurance company is lowering its homeowners insurance premiums, another is raising them. Insurance Commissioner Tim Temple has approved a rate decrease of 7.5% on average for both SureChoice Underwriters and Elevate. Temple says this is testament that the insurance reforms passed by the legislature are working.
“It’s good for consumers. It’s a step in the right direction. I certainly want and expect more rate decreases from additional companies, and we were able to make some meaningful property reforms and we’re starting to see the results of that,” Temple said.
Temple says smaller companies like SureChoice and Elevate base their rates in large part on reinsurance costs.
In the homeowners market, reinsurance is a major component of rate. And we’re seeing reinsurance costs go down. And when those costs go down, those get passed on to the consumer,” Temple noted.
Bigger companies like State Farm, however, rely much less on reinsurance to set their rates. State Farm uses a different model that involves things like in-house hurricane forecasting; and with that company projecting higher future losses due to hurricanes, it requested an increase of nearly 10%, which Temple approved.
“They have a much bigger book of business in Louisiana. They write approximately 20% of all of the residential homes in the great state of Louisiana. Therefore, they got much broader exposure,” Temple explained.
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