2017 wasn’t very happy for the insurance industry thanks to three nasty grinches named Harvey (in Texas), Irma (in Florida) and Maria (in Puerto Rico). Because coastal development has been so strong over recent decades, these hurricanes could result in total losses of $100 billion! Despite that massive number insurance carriers are not forecast to be overly stressed because only 18-20% Florida and Texas residents have flood insurance, and carriers have their own insurance (called reinsurance) to cover excessive loss.

Still, homeowner rates in Florida and Texas are expected to rise. Rates in Florida are already twice as high as the national average and after 2017 will likely increase more.

The news isn’t much better on the automotive side. The recent increase in miles driven was the most in 25 years. And everybody loves their cell phones: more than 400,000 people were injured in distracted driving incidents last year. Then when they are in accidents, new technology makes cars more expensive to repair. A study showed minor front-end damage to an Acura ILX that cost $1,844 to fix in 2014 cost $3,551 in 2016. It all adds up to pressure for auto rate increases nationwide.

Here in California we had devastating summer fires in the north and surprising winter fires in the south resulting in nearly $10 billion in insurance claims. Claims are high because of coastal development, questionable land management practices and the high cost of homes, particularly in Southern California. And unlike flood, fire is covered by all standard homeowners policies.

What does that all mean for you? Because many areas previously thought safe were proven to be dangerous, carriers will be taking a hard look at how they define “fire prone area”, particularly for new business. So if you live in or even near a fire prone area it’s important to keep your insurance paid up because if you let it lapse for even one day it may be non-renewed. If you buy a new house in a fire prone area and can’t get insurance from your existing carrier don’t be alarmed… at Desert Insurance Solutions we have multiple carrier options for each situation, but you can expect new policies in fire prone areas to be more expensive.