Regarding “Home insurance rates rise” (News, Aug. 27): Insurance premiums aren't affected by one storm, but by the history of many. When it comes to insurance rates, homeowners should know that an increase in rates is never a “knee-jerk” decision. Rates are carefully calculated based on several factors including an assessment of losses from previous storms and the likelihood of experiencing future claims.
Weather-related events play an important role in the pricing of homeowners insurance. In 2011, Oklahoma had nearly 1,100 severe weather-related reports — the 10th highest in the nation. Over the past five years, catastrophes represented roughly two-thirds of the state's total paid homeowners losses, higher than other states, including Gulf Coast states. Homeowners' catastrophe insurance claims have more than doubled in the past decade. The average claim cost has risen from $4,000-$6,000 to $10,000-$11,000.
While unfortunate, these rate increases are unavoidable. Premiums in Oklahoma haven't been enough to cover related losses and expenses. Insurers remain committed to paying claims quickly, fairly and helping residents get back on their feet. But for insurers to be able to meet the needs of customers, premiums must increase to keep up with rising costs.
Joe M. Woods, Austin, Texas
Woods is vice president of state government relations at Property Casualty Insurers Association of America.