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Here come home rate increases

By Jay MacDonald ·
Friday, December 23, 2011
Posted: 10 am ET

I don't know about you but when I hear the phrase "Just in time for Christmas," I keep one hand on my wallet. This year, it might be a good idea to keep one eye on your homeowners insurance as well.

According to the global insurance brokerage firm Marsh, nearly half (48 percent) of all home insurance policies renewed in the current quarter included an increase in premium rates of at least 1 percent. Of those, 1 in 5 was renewed at a rate increase of more than 10 percent.

By contrast, just 31 percent of U.S. home policies saw a rate increase in the first half of 2011.

Marsh says home insurance rates increased 1.7 percent on average across all policies during the period. Just 20 percent of policy renewals were issued at the same rate as the prior policy.

Not that this was a Christmas surprise exactly. In fact, it would have been a Christmas miracle had home premiums not responded to a record worldwide $100 billion in insured catastrophe losses this year.

In Japan, where the March 11 earthquake and tsunami caused billions in insured losses, policies with earthquake coverage renewed at increases of up to 50 percent. In Thailand, where flooding resulted in an estimated $10 billion in damages, home policies jumped 30 percent, according to Marsh.

The likelihood of a premium hike for your homeowners insurance depends in part on your insurance company's global exposure. Who knows, you may even see a rate decrease.

"While most of those rate increases were applied to programs with catastrophe exposure, accounts with little or no such exposure or losses were often able to secure rate decreases during the second half of the year," according to the Marsh 4Q report.

Even if our rates take a modest bump, we should curb our outrage; home insurance prices were on a precipitous decline during the aughts, leaving some at decade-long lows.

So yes, Virginia, there is a pony!

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