Summary
What is a business or homeowner's biggest fear? One of them is the fear that something will happen and the insurance company will not be able to pay their claim. This is simply a false fear in this day and age. Simply stated, insurance companies are running a business and they understand that if they are unable to pay claims, they will not only lose the trust of their company shareholders, they will also lose the trust of their clients. Insurance companies operate in a competitive market, however they do not rely on low prices to sell their products. Would a retail firm sell their product at below cost. Most likely they would not due to the fact they would not make any money and could go out of business. Insurance companies, under the same mantra, do not price their products so low that they can not retain a profit in the event of claims.
Analysis
Property & Casualty rates will always be based on the particular risk that is being insured. If you live on the Florida coast or on Cape Cod, then you will pay more in a surplus lines market for insurance because a standard insurer will not protect you. A standard insurance company knows that the risk is too high and if they insured all homes in that area they could suffer the issue of not being able to pay claims. Surplus lines companies charge more in order to pay the claims that will happen on more risky properties and businesses.
If you live in the suburbs in Boston in a new home with risk prevention such as an alarm, winterizing alarms, water heater shut off valves and alarms and a nice friendly dog, then you will see a lower rate for insurance.It is all about the risk that is being looked at. Overall, yes, rates are a bit lower this year than last, however I do not see this as a direct relationship to lower losses from hurricanes in the last couple years.
Overall, if people are risk averse and utilize tools to reduce the risk in their own home/business, then they will see better rates. Competition is a part of the flat or reduced premiums, however, they are still in the realm of allowing insurers to pay claims.
Moreover, it is important to understand that extra profits over the last couple years due to less than the normal amount of hurricanes (claims) have allowed the insurance companies to charge less for their insurance, however, not to the point of stupidity. Insurance companies can be trusted, just like many other companies in many other industries.
