It happened in the stock market, and it happened in the home building industry. Stock slumps and high prices that trickled down, first to the insurance companies, and then, no bones about it, to you.
"Insurance companies pool risk and so we have to pass on the loses we experience," explains Peter Kuhnmuench, executive director of the Insurance Institute of Michigan
HOMEOWNERS INSURANCE PREMIUM INCREASES
YEAR IN MICHIGAN NATIONWIDE
2000 3% 2.7%
2001 16 8
2002 23 12
2003 15.4 9
2004 12.5 2.8
From 2000 to 2004, the interest group that represents the companies calculates an 85 percent total increase in premiums. You can see on this chart above, the numbers are far higher than the average increases nationwide.
Kuhnmuench admits Michigan's seeing tremendous, and unusual increases. Still, he says the industry has room for even higher premiums. He says they've were underperforming as compared with companies elsewhere in the past decade.
As for the state regulators, the Office of Insurance and Financial Services says there's not much they can do. Spokesman Andy Schor says they've already researched the numbers, but "the rates aren't excessive according to the law because there's competition."
Because they believe the competitive rates are unaffordable, they made recommendations to the legislature, but until laws are changed their hands are tied.
They're hopeful the industries are feeling less tied down this year by the losses they were suffering in the past. Schor says he can't judge without year-end statistics, but he thinks 2005 may slowdown the rapid premium increase.