Why are MY rates increasing when I haven’t filed any claims? You could find yourself asking this very question over the next 18-24 months. And there is a simple answer to this question: REINSURANCE!
What Is Reinsurance?
Reinsurance companies insure insurance companies against catastrophic losses. They are essentially a global backstop for all insurance companies. The cost of reinsurance is included in your insurance premiums. Rates for reinsurance are based upon global disasters. So, an event occurring on one continent affects ALL continents.
Warning: 2017’s Global Catastrophes Will Probably Hit Your Wallet
The estimated global economic losses in 2017 — a whopping $306 billion from natural and man-made disasters — represents a 63 percent jump from $188 billion in 2016. Natural disasters represented about $300 billion of the total, while man-made disasters another $6 billion.
As a direct result, reinsurance rates are expected to increase. Those costs will in turn be passed along to insurance companies and ultimately to consumers. It will affect all lines of insurance: business, workers comp, home, auto, and more.