Companies have used passed figures to help determine insurance premiums particularly in areas along the coast. Hurricane activity and the damage caused by that activity has played into the calculations. Now companies are using computer models to help predict possible activity and then calculate the expected losses. They are adjusting rates up according to these predictions.



It is amazing that there is any shock or complaint. The billions of dollars in insurance claims that occurred during the active hurricane season of 2005 should have been the first sign that things would have to change. More people are spending more money to build in locations that are known to experience catastrophic storms and it should be those people that pay for the location and not other policy holders.

The scientist may not be able to agree on how bad storms will be in the future or where those storms might hit. But it is safe to assume that a home owner in Kansas is not likely to file a claim due to hurricane damage. People in flood prone areas are now paying higher premiums to be insured. By the same reasoning the people in hurricane prone regions should be paying higher premiums as well.

Insurance is a gamble and in gambling the house always finds a way to win. When you purchase insurance you are betting that something will happen to make that insurance worth while. The insurance company is betting that nothing will happen. The stakes go up in areas prone to natural disastrous (which simple translates into higher premiums).