Some insurance companies will make hikes of 18% or more on specific homeowners insurance lines in 11 states, which include Tennessee; South Dakota; Kentucky; Arizona; Virginia; Maine; Colorado; South Carolina; Alabama; Kansas; and Georgia, according to Best's State Rate Filings since Dec. 1.
Some rate changes have greater impact than others. For example, Travelers Personal Security Insurance Co. raised one of its homeowners products 25.5% effective Dec. 23, which impacted about 50,000 policyholders, according to Best's filings. Three EMC Insurance Cos. subsidiaries in Alabama raised rates on specific homeowners lines about 20% effective Dec. 1, which impacted about 3,800 policyholders.
Raymond Thomson, an A.M. Best Co. senior financial analyst, told BestWeek weather in recent years has been a big factor and is taking a toll on insurance companies. He said the Southeast and Midwest regions have been particularly hard hit, and companies are seeking aggressive rate increases in response, along with other risk mitigation efforts. "When a company's recent underwriting results are profitable, it's very difficult for them to get a rate increase," Thomson said.
In BestWeek Europe, with an economy about the same size as that of the United States but with only about a third the number of captives, the European Union should expect to see an increase in its captive sector, according to Clive Thursby, a senior market development director for A.M. Best.
"One would think over the longer term there is still a lot of potential for captive formation in Europe," said Thursby, who is responsible for Europe, the Middle East, Africa and South Asia.
Also in BestWeek U.S./Canada, American International Group's brand has weathered the financial crisis, and is making a comeback, experts said.
"Looking back on it, it was a surprise to see how many experts were willing to leave [the AIG] brand for dead," said Scott Piergrossi, vice president of creative development for Brand Institute, a branding consultant. AIG has "a story in history. Ultimately, the storm has passed. A brand is never dead; it may be down, but it's not out."
On Jan. 24, AIG announced plans to merge the group benefit operations of two units into a new organization to be called AIG Benefit Solutions. Also, a pilot program, which had been slated to expire next month, has been so successful in marketing term life insurance under the AIG brand that the company is planning to expand it. Marketing experts say AIG's brand has rebounded as the specific details from the financial crisis have faded from most Americans' memories. "I don't think it's enough time to say people have forgotten, but they've probably forgotten the specifics," Piergrossi said.
"The public issue dissipates over time."