Some of the largest home insurance companies in Alabama and in Oregon are increasing their rates this year because of bigger amounts of claims, higher construction costs and declines in the values of their insurance investments.
In Alabama, three of the biggest home insurers have received approval from state regulators to increase their rates. These are State Farm Fire and Casualty Company, Alfa Mutual Group and Farmers Insurance Group. Together, these three firms account for 57 percent of total home insurance premiums in the state.
The insurance companies explained that the rates will vary based on the locations of homes, the conditions of houses and other factors. They explained that they need to raise premiums to ensure that they are able to cover all losses in the future.
In 2006, based on data from the National Association of Insurance Commissioners, policies issued by home insurance companies in Alabama averaged $894, the ninth highest average premium in the country.
In October, Farmers Insurance, who launched its operations in Alabama by introducing low rates, will be increasing its rates by 25.7 percent. This increase is the third consecutive year that Farmers increased its rates in Alabama, putting its total percentage increase in the state to 60 percent since 2007.
David Bishop, spokesperson for Farmers, explained that Farmer’s profitability in Alabama has been weak so the firm needed to raise its rates.
Alfa Mutual, which said it has not raised its rates since 2006, is pushing up its rates by 5.8 percent statewide. It will however triple its discounts for clients buying both house and auto insurance policies.
As these home insurance firms raise their rates in October in Alabama, they have already increased their rates in Oregon.
Farmers Insurance has increased its rates in Oregon by 13 percent in February and Farmers Insurance Exchange has raised its rates by 15 percent.
Allstate Insurance has raised its rates by 27 percent in August and Allstate Property and Casualty Insurance has increased its rates by 30 percent.
The two Farmers companies control 15 percent of the Oregon insurance market while the two Allstate firms control six percent.
The largest insurer in Oregon, State Farm Fire and Casualty, increased its rates by only 5.3 percent. This firm controls 25 percent of the statewide market share.
Two home insurance companies, Foremost Signature Insurance Company and Safeco Insurance Company of Oregon did not increase their rates, according to state insurance officials.