Here's some good news, with what is expected to be an active hurricane season less than a month away: Your home insurance company is flush with cash.
A new report released from the Insurance Information Institute (III), the Property Casualty Insurers Association of America (PCI) and the data firm ISO finds that U.S. property and casualty insurers hauled in $33.5 billion in profits after taxes in 2012, a considerable leap from the $19.5 billion in profits they took in during 2011.
The additional revenue bumped the net worth of property insurers to a record $587 billion, despite an investing environment that kept the rate of return on their investments at 5.9 percent. That's down 3 points from the 8.9 percent average return during the last half-century.
Analysts say that despite fourth-quarter payouts for Superstorm Sandy, home insurers enjoyed a relatively uneventful claims year in 2012 compared to 2011, which saw widespread flooding from Hurricane Irene and a rash of tornadoes, including the twister that devastated Joplin, Mo. ISO says last year's $32.1 billion in net insured losses from catastrophes was down $5.9 billion from $38 billion the year before.
III President Robert Hartwig notes that a jump in overall premium income of 4.3 percent came in nearly a full point above the 3.4 percent growth in premiums in 2011, and also exceeded the 4 percent growth rate of the overall U.S. economy. "(It's) the strongest growth so far recorded in the post-crisis era," Hartwig says.
Not everyone was overjoyed with the news, however.
Bill Newton, executive director of the Florida Consumer Action Network, says he'll celebrate when home insurers pass along some of those profits to homeowners in the form of lower rates.
"They've been making money hand over foot," says Newton, who notes that the cost has fallen for reinsurance, which insurance companies purchase to cut their risk of catastrophic losses.
But PCI Senior Vice President Robert Gordon tells the Tampa Bay Times that everyone benefits from a healthy hurricane fund.
"The horrific damage and suffering caused by Sandy serve as vivid reminders that now is the time for all of us to take the steps needed to minimize the economic damage and human tragedy that will occur when catastrophes strike," he says.
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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.