February 2012
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Insurers on the fritz

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An increase in natural disasters decreases the availability of homeowner's insurance

by Nancy Mann Jackson
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After several record hurricane seasons, 20 percent of homes on the Alabama coast are without any wind insurance, according to Carl Schneider, owner of Schneider Insurance Agency Inc., Mobile, Ala., and member of Alabama's Affordable Homeowner's Insurance Commission. This lack of insurance is becoming more common—and problematic—as insurance companies adjust their risk models to account for increased potential payouts caused by changing weather patterns. As storms become more frequent and severe, the new models translate into staggering rate increases or companies' unwillingness to write policies in U.S. coastal areas.

Storms are expensive

The four largest insurance companies—Alfa Insurance,® Allstate® Insurance Co., Nationwide® Mutual Insurance Co. and State Farm Insurance®—have cancelled 50,000 policies in coastal Alabama, Schneider says. When the next storm comes through, homeowners without insurance will be hard-pressed to afford repairs caused by the storm—and that's bad news for your roofing business.

Unfortunately, coastal Alabama isn't the only area affected. Changing weather patterns have led to increasing numbers of tornadoes, hurricanes and earthquakes across the U.S. These storms result in an overwhelming number of homeowner's insurance claims, leaving many insurance companies to cut costs...



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Expensive natural disasters of 2011



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